Looking for some good economic news

Well, it's a good thing that consumer prices are tame because the housing market just keeps getting worse. New home construction tumbled again in August and the rest of the year doesn't look any better for home builders.

The long-term chart below, swiped from the always-excellent Calculated Risk blog, shows that there is room to run to the downside.

Taking into account an almost 20 percent increase in the U.S. population since 1991 puts a back-of-the-envelope calculation at perhaps another 25 percent reduction in home construction to match the 1991 low.

[Admittedly, simply adjusting for inflation may not be fair - back in 1991, most people only owned one house.]
The inflation data was encouraging, that is, unless you look at what's in store in the months ahead. Memories of the 0.1 percent decline in the overall level of consumer prices in August and the tame year-over-year increase of 2.0 percent are likely to vanish quickly starting next month.

Soaring oil prices will help to reverse the 2.5 percent monthly decline seen in the most recent energy price index and, more importantly, look what big negative numbers start rolling off the year-over-year comparisons starting in next month's report.

The annual inflation rate goes up by almost a full percent in the next two months if prices remain where they are today. More likely, we'll see overall inflation closing in on four percent by the time the weather gets really cold.