Economists had been expecting a rebound in wholesale prices following two months of big declines. However, the 2 percent jump was four times bigger than the 0.5 percent increase they had forecast. Even excluding volatile energy and food prices, core inflation posted a 1.3 percent advance, the biggest jump in 26 years.
This jump is a big change from the consumer price index which was flat in November. This has actually been declining for the recent few months. Most of this disparity is because of energy costs, which went down in the consumer number but were up 6.1 percent in the November survey of wholesale prices.
Combine these numbers with what we are seeing in the housing industry coupled with the inverted yield curve in the bond market and you are looking at all the warning signs of recession. I wouldn't be surprised if the Fed cranks up interest rates after the first of the year and that might just push us over the edge into a full blown recession. Gird thy loins folks it may be a rough ride.