Inflation Pressure Plummets: ECRI's FIG at 47-Year Low

The Economic Cycle Research Institute, a New York-based independent forecasting group known as ECRI, said inflation pressure is at a 47-year low. (More about ECRI)

ECRI's US Future Inflation Gauge (US-FIG), an index designed to anticipate cyclical turning points in inflation, plunged to a 47-year low.

The USFIG dropped to 88.5 (1992=100) in November from 92.7 in October, while its smoothed annualized growth rate dived to -35.3% from -31.8%. The gauge was pulled down in November by disinflationary moves in all available components.

"With the USFIG nose-diving to its lowest reading since 1961, U.S. inflation pressures have collapsed" said Lakshman Achuthan, managing director at ECRI.

Click to view full size chart courtesy of ECRI

The very low US-FIG means means the Federal Reserve can keep the Fed Funds rate low or cut it more since inflation pressures are still in a cyclical decline.

Oil Prices Per Barrel courtesy of Stockcharts.com

With gasoline selling for under $2.00 per gallon, even in Taxifornia, this should act as a stimulus package to help consumers.

The US Fig is at a 47-year low. Curious enough, my father bought his first home to raise our family in 1960 about 48-years ago, using a 4.00% CAL-VET loan. (He served in the US Navy during the Korean War.) Now there is talk the Fed will buy home loans to target a 4.5%, 30-year fixed mortgage rate. The low interest rates of the 1960s were followed by the high inflation of the 1970s and 1980s. Will history repeat itself?

More Information:

• More about ECRI US-FIG Growth Rate
  
  
• US Treasury Rates at a Glance
  
  
• World Stock Markets at a Glance
  
  
• Libor Rates at a Glance
  
  

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Term	Date	Highest Rate (APY)	Where? (Click link for Full Rate Sheets)
Daily Savings	12/04/08	2.60%	Vanguard Prime Money Market Fund
Tax Exempt	12/04/08	1.13%	Vanguard Tax Exempt Money Market Fund
Online Savings	12/04/08	3.25%	High Performance Money Fund @ Wachovia Bank
3-Month Treasury	12/04/08	0.01%	US Treasury Rates at a glance
6 Months	12/04/08	4.32%	State Bank of India & 3.76% at Ascencia Bank
6-Month Treasury	12/04/08	0.29%	US Treasury Rates at a glance
7 Months	12/04/08	2.60%	Wachovia Bank
1 Year	12/04/08	4.68%	State Bank of India & 4.10 @ Umbrella Bank
1 Year Treasury	12/04/08	0.64%	US Treasury Rates at a glance
18 Months		4.40%	UmbrellaBank & 4.30% @ Capital One
2 Years		4.51%	1st Source Bank & 4.45% @ GMAC Bank
1 Year Treasury	12/04/08	0.90%	US Treasury Rates at a glance
3 Years		4.80%	1st Source Bank & 4.75% @ Intervest National Bank
3-Yr Treasury	12/04/08	1.09%	US Treasury Rates at a glance
4 Years		5.05%	Intervest National Bank & 4.96% @ Capital One
5 Years		5.25%	Intervest National Bank & 5.20% @ Capital One
5 Yr Treasury	12/04/08	1.61%	US Treasury Rates at a glance
7 Years		5.50%	Capital One & 5.00% @ PenFed CU
10 Yr Treasury	12/04/08	2.63%	US Treasury Rates at a glance
7 Years	12/04/08	5.31%	Intervest National Bank
30 Yr Treasury	12/04/08	3.13%	US Treasury Rates at a glance