3.4% Inflation is Worst in 5 years

Here’s something that only got minor play this week:  CPI data for December, and the full year were released, and it waren’t purty:

For 2005, inflation rose at the fastest rate since 2,000 — while Personal Income gains failed to keep pace with price  increases.

I’d like to see someone try to spin that positively.

CPI rose 3.4% for the year, despite Consumer Prices declining 0.1% in December, and 0.6% in November. AP noted that this "represented
the first consecutive monthly declines in two years, but both months
were heavily influenced by declines in gasoline and other fuels that
are expected to be reversed in January."

For the full year 2005, Energy prices were up 17.1%, followed by Medical Costs up 4.3%, Housing Prices up 4% and Education 2.4%.

All kinds of Energy went up in price: Gasoline prices were up 16.1 percent, Natural Gas prices jumped by 30.2 percent, and Home Heating Oil was up 27.2 percent. These are huge increases being felt by consumers in their higher heating bills, just about . . . NOW.

This data makes me wonder:  Why do some economists insist on focusing on the core rate? Because volatile food and energy can throw the data off for a month?  With inflation up 3.3% in 2004, and plus 3.4% in 2005, remind me again why we insist on ignoring food and energy?

That makes little sense after 2 consecutive years of significant, broad price increases.

What’s the Fed have to say about this?

Jeffrey M. Lacker, president of the Federal Reserve Bank of Richmond, stated:  "I think it is too soon to declare that the ‘pass-through risk’ is entirely behind us."


File: Download cpi_2005.pdf


Consumer Price Index Up 3.4 Pct. in 2005
AP, Wednesday, January 18, 2006

Inflation Hit Five-Year High of 3.4% Last Year
Wages Didn’t Keep Up, Labor Department Says
Nell Henderson
Washington Post, Thursday, January 19, 2006; Page D01

Category: Inflation

The Big Mac Index

Category: Currency, Retail

Picture This: Steve Jobs Running Disney

Category: Media

Media Appearance: CNBC’s Morning Call (1/19/06)

Category: Media

Will Disney Buy Pixar? Will Jobs Become Heir Apparent?


Today’s WSJ has a major, front page scoop: Disney is in advanced talks to buy Pixar:

"Walt Disney Co. is in serious discussions to buy Pixar Animation
after months in which the two animation giants have been
exploring ways to continue their lucrative partnership, according to
people familiar with the matter.

In the deal under discussion, Disney would pay a nominal premium to
Pixar’s current market value of $6.7 billion in a stock transaction
that would make Pixar Chairman and Chief Executive Officer Steve Jobs
the largest individual shareholder in Disney, according to people
familiar with the situation. That would vault Mr. Jobs into an even
more influential place in the media world, where he already holds
tremendous sway as head of Apple Computer Inc. Yesterday, Apple
reported that net income nearly doubled in the latest quarter on huge
demand for its iPod music players. (See related article.)

People familiar with the situation caution that the talks are at a
sensitive stage and that the outcome isn’t certain, noting that other
options are possible."

Disney needs some sort of deal to guarantee its future stream of animated films. Whether the best structure is a takeover or some other relationship is subject to debate.      

What is especially curious about a Disney takeover of Pixar will be the potential role of Jobs in Disney. Disney CEO Robert Iger is 55, Jobs is 4 years his junior — might there be succession issues?

Recall that when Apple bought NeXT, they got Steve Jobs as a consultant. From that role, he eventually engineered his return as CEO. Will a Disney/Pixar deal give Jobs a springboard to eventually takeover running Disney?

I wonder if we will see history repeat itself . . .


click for larger graphic


Chart courtesy of WSJ 

UPDATE:  January 20, 2006 5:56am

The NYT weighs in:

"And the merger could give Mr. Jobs a pivotal role, if he wants one, in helping shape the convergence of new media and old at Disney. "He’s one of the handful of people who has shown the ability to guide both technology and entertainment companies and that might be quite useful to Disney," said Bran Ferren, a former Disney Studios Designer and technologist, who is now co-chairman of Applied Minds, a technology consulting firm based in Glendale, Calif. "What he has that is rare is taste, and that’s a very valuable commodity if you can focus it and harness it."

Deal Could Offer New Disney Role for Apple Chief
Published: January 20, 2006



UPDATE: January 26, 2006 3:31pm

Slate joins team "Jobs as heir apparent at Disney"

Robert Iger vs. Steve Jobs
Only one man can control Disney. I know who I’m betting on.
Daniel Gross
Slate, Wednesday, Jan. 25, 2006, at 6:13 PM ET


Walt Disney Is In Serious Talks To Acquire Pixar
Stock Deal for Animator Would Make Jobs Top Holder Of Entertainment Giant
THE WALL STREET JOURNAL, January 19, 2006; Page A1

Is Disney/Pixar the sequel to Apple/NeXT ?                         

Jobs to become Heir Apparent at Disney?                        

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