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Rapidly Rising Food Prices Continue to Hurt Consumers and Stall Economic Growth

Pop1387 views  2012-09-24 02:49   Tagsconsumer  spending  corporate 
In the article “World Food Prices Rise at Alarming Rate; Up 10% in July,” Lombardi note that corporations can pass their higher costs onto their customers, but in return, if consumers don’t buy as much because of higher prices, the corporate earnings will decrease.

The more money consumers spend on food, the less they’ll have left to spend on other goods, reasons Lombardi.

“…consumer spending in [the] U.S. accounts for 70% of the gross domestic product (GDP),” says Lombardi. “Thus any change in consumer spending can have a ripple effect on the economy and corporate earnings.”

U.S. consumer spending rose 0.4% in July compared to June, but Lombardi highlights the fact that while a 0.4% increase in consumer spending may sound good, by no means is it impressive. He points out that this increase is overshadowed by the fact that there was no change in consumer spending in June and there was a decline in May.

From all the evidence provided, Lombardi concludes that there are clear signs consumer spending is at the point of breaking down further due to higher food prices—which is not a good sign for economic growth.

Profit Confidential, which has been published for over a decade now, has been widely recognized as predicting five major economic events over the past 10 years. In 2002, Profit Confidential started advising its readers to buy gold-related investments when gold traded under $300 an ounce. In 2006, it “begged” its readers to get out of the housing market...before it plunged.

Profit Confidential was among the first (back in late 2006) to predict that the U.S. economy would be in a recession by late 2007. The daily e-letter correctly predicted the crash in the stock market of 2008 and early 2009. And Profit Confidential turned bullish on stocks in March of 2009 and rode the bear market rally from a Dow Jones Industrial Average of 6,440 on March 9, 2009, to 12,876 on May 2, 2011, a gain of 99%.

To see the full article and to learn more about Profit Confidential, visit www.profitconfidential.com

Michael Lombardi, MBA, the lead Profit Confidential editorial contributor, has just released his most recent update of Critical Warning Number Six, a breakthrough video with Lombardi’s current predictions for the U.S. economy, stock market, U.S. dollar, euro, interest rates and inflation. To see the video, visit http://www.profitconfidential.com/critical-warning-number-six.

 

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