But what is even more astonishing is that corporations can live in an environment with little pricing power and still earn very handsome profits.
It certainly takes the edge off the possibility of them doing something soon. There is no reason to raise U.S. interest rates without an inflation problem and risk some of the customers for some of the overseas economies. They need us to buy their goods.
Manufacturers are still selling a lot in the United States but their lack of pricing power in the top-line really puts a lot of pressure on them to become more efficient.
Though there are some prices that are declining, in fact deflation means most prices are declining and there's very little evidence that is happening.
Those areas of strength are indeed offsetting those areas of weakness as was evidenced in the manufacturing sector.
The fact that there is no inflation is not as much of a surprise to people although it is somewhat of a surprise.
It's still fairly high by historical standards. There's starting to be some influence of higher interest rates and the more volatile stock market, but not much influence yet.
The Fed has some awareness of the fact there's a flurry of Y2K ordering going on.