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Inflation on its last legs.

Judging from current information on wholesale prices as well as the recent performance of the bond markets, it certainly looks like inflation is on its last legs.

The prices that businesses pay were down sharply in August, falling in some categories by nearly a percent. Sluggish demand and a variety of special factors pushed the Producer Price Index for Finished Goods down in August for the fourth consecutive month, a 0.6 percent drop from July. It was the largest fall of the four months, and tobacco and energy were the biggest contributors--food prices actually were up 0.5 percent. To get some perspective on these statistics, consider that wholesale prices for finished goods were only 0.6 percent higher than they were a year earlier.

Meanwhile, the bond market is in the midst of a rally that has pushed yields for long-term Treasury bonds down to levels not seen in more than 20 years.

In Indiana, the July unemployment figures were for most major Hoosier cities sharply lower than the estimates from June. Unfortunately, these rosy figures say more about the flaws in the Commerce Department's statistical methods than they do about the state's true economic health. The fall in unemployment rates--when it really happens--will be much more gradual. [TABULAR DATA OMITTED]
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Title Annotation:Indiana Indicators
Publication:Indiana Business Magazine
Date:Oct 1, 1993
Words:213
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