What Falling Milk Prices Say About an Economic Slowdown
By Jeff Cox, CNBC.com Senior Writer
NEW YORK (CNBC) -- The decline of milk prices this year has been a welcome development for consumers pressured by $4 a gallon gas, but could be a bad sign for the economy.
Falling milk prices--particularly over the past decade--have been a warning signal for a slowdown, while rising prices have accompanied upturns in the economy, according to research from Nicholas Colas, chief market strategist at ConvergEx in New York.
"That's good news for this high-profile consumer good and its effect on inflationary expectations," Colas said. "At the same time, milk prices have been cyclical since the Great Depression. The pullback in 2012 could therefore be a useful early warning sign about a slowing U.S., and global, recovery."Prices pulled back during the recessions of 2002-03 and 2009, while they surged in 2001, 2004, 2007 and 2011.
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