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Where Have All The Good (economic) Times Gone?

This trend in oil prices may be too recent to have much of an impact on the CPI numbers for June that will be released in mid-July. But watch for inflation to perk up in the next couple months if oil prices don't start to subside.

The impact on savings accounts

The type of growth-with-low-inflation environment that the U.S. economy achieved in the second half of the 1990s is considered ideal for both businesses and consumers, and it also plays well for savings accounts and other deposits. Stronger growth would eventually push short-term rates to follow long-term rates higher, so CD, savings and money market rates would start to rise. At the same time, keeping a lid on inflation would allow those interest rates to get ahead of rising prices.

The sudden reversal into a state of disappointing growth and threatening inflation probably won't be the last twist in this convoluted economic recovery. For the time being though, it is enough to count as a setback for savings accounts.

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