Deflation now ready to expose itself through lower residential rentals
Tania Sonders
May 16, 2007

One of the major components in the Consumer Price Index is the residential rental cost. Because of the housing bubble and mortgage bubbles, in the last seven years people left rentals and bought homes. The same people are now getting foreclosed and returning back to rentals. It was a well-orchestrated act of getting them into homes they really cannot afford and then throw them back into rentals to hike the rents. It is not working. The builders have stopped building condominiums and are now converting their half finished projects into rental apartments.

The supply of rental apartments are rising 65% faster than the rental demands from foreclosures. As a result the rents are falling rapidly again. This will create a negative CPI later part of the year.

In spite of dollar at its lowest, the gold market is struggling. The reason is the same – the deflation in the economy is ready to become overt. The Consumer Price Index and Producer Price Index will both start contracting later part of the year.

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Deflation now ready to expose itself through lower residential rentals
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In spite of dollar at its lowest, the gold market is struggling. The reason is the same – the deflation in the economy is ready to become overt. The Consumer Price Index and Producer Price Index will both start contracting later part of the year.
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