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Consumer Price Index Report Adds to Economic Woes

Rising consumer prices are raising Americans' cost of living, adding to economic woes, according to a new economic report. Analysts discuss the recent report and what it means for American consumers.

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    News that consumer prices soared last month made official what many Americans are already feeling: Consumers are paying more for everything, from gasoline to food to transportation.

    The inflation numbers come amid ongoing economic anxiety, fueled in part by a turbulent stock market, rising unemployment, and slow growth, the failure of California bank IndyMac, and an emergency government plan to rescue mortgage giants Fannie Mae and Freddie Mac.

    There were glimmers of good news today. Despite fears of continued mortgage-related losses at financial firms, the stock market went up; for a second day, oil prices fell; and the government reported that industrial output, measuring production at factories, mines and utilities, unexpectedly rose 0.5 percent last month.

    For some analysis, we're joined by Roger Altman, who served as deputy secretary of the treasury in the Clinton administration. He's now CEO of Evercore Partners, an advisory and investment firm.

    And Michael Boskin, he chaired George Herbert Walker Bush's Council of Economic Advisers. He's now a professor of economics at Stanford University and a senior fellow at the Hoover Institution.

    Roger Altman, let me start with you. If you had to put together a diagnosis for this economy, what are the signs that you see? How would you assess the health of the economy?

  • ROGER ALTMAN, Evercore Partners:

    Ray, by any objective standard, it's poor. Huge sectors of the economy, housing, the financial sector, autos, to name three, are in terrible shape.

    And the question now is whether the disease which has infected the financial sector will spread into the rest of the economy. I suspect that it will, because consumers will be scared or are scared by bank failures like IndyMac and all of the publicity over that, and fears of other failures, and by events like the Fed-Treasury rescue over the weekend of Fannie Mae and Freddie Mac.

    Those, of course, don't inspire confidence. Quite the opposite. And while we have had over the past couple of quarters essentially no growth, 0 percent to 1 percent real growth in GDP, my guess is that we may well see negative numbers, meaning contraction, before the end of the year.