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In this article
According to the Labor Department, 12,000 fewer Americans filed for unemployment benefits last week.
Analysts were figuring on a 0.3% increase per month in February. Instead we saw 1/3 that.
The bean counters at Labor announced 1.9% wholesale cost increases in commodities across the board, and a 5.3% increase in gasoline.

Ever see a movie, and get an eerie feeling that you've already seen it? Either they stole the plot from a famous author, or maybe it's yet another remake of an old classic. Or maybe there really are but so many plot lines available to Hollywood, and they can't help but repeat themselves?

Today's economic news engenders that same sense of déjà vu. The more I read, the more I feel like I've lived through this story before.

More folks are working harder. According to the Labor Department, 12,000 fewer Americans filed for unemployment benefits last week, making for the second consecutive weekly decline after big increases earlier in 2007.

And they are spending more, but not on luxuries. Rather they appear to be spending on stuff they really need. Analysts were figuring on a 0.3% increase per month in February. Instead we saw one-third that.

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And even that flattened overall figure disguises cold reality. A 0.9% spike in auto sales as families unload gas-guzzling SUVs has masked drops in spending on home furnishings, building and garden supplies, clothing, electronics and appliances, sporting goods, books, music and dining out.

Economic Forecast: The Third Shoe Drops

Delete heavily discounted auto sales from the mix, and February sales' 0.1% loss makes for the worst performance since last October. And that's still relatively good news: the 1.2% drop in sales at bars and restaurants was the worst since September 2003.

And now the third shoe drops (okay, I know that sounds weird, but work with me here). Today, the bean counters at Labor announced a 1.9% wholesale cost increase in commodities across the board, and a 5.3% increase in gasoline.

In a day or so, we will hear how this has impacted consumers when the CPI numbers hit. But I think those spending figures give one a pretty good idea of what's coming down the pike.

Hmmm, folks work harder, ask for more and spend even more. Savings goes down. Borrowers default. Banks go under. Real estate sits empty.

We've read this story before. It's called inflation, people. It takes a big man to stop it. And quite frankly, I don't see any big men around right now.

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Related Resources
BLS: The beans they are counting this week. - Bureau of Labor and Statistics
Petroleum and Gas Prices: The latest gas pains. - EIA
Crude Prices: Crude oil futures straight from the camel's mouth. - NYMEX.com