It could be argued that the current recession is a media creation, but the latest round of economic indicators were not positive. The consumer price index for July was twice as high as expected, fueled by exploding energy and food costs.

Because of the lag time. the latest numbers don’t reflect the decline we’ve seen in energy prices over the last month, but inflation for July was the largest rate in 17 years. Consumer prices rose by 0.8%, which is the third month in a row where energy and food price increases led to an annual inflation rate that would reach 5.6% for the year.

The question everyone is asking is whether the Fed will continue to ignore food and energy and look at the core inflation rate, which remains relatively low at .3%? Will the Fed keep interest rates low to help stimulate the slow-growing economy, or will it decide that it must address inflation, thus raising rates and tipping the economy over into a full-blown recession?

Regardless, inflation is beginning to take a toll on consumers. The labor department says that average weekly earnings, after adjusting for inflation, fell by 3.1% in July compared to a year ago. That’s the biggest year-over-year decline in 27 years.

Plus, gas prices in July were nearly 38% higher than a year ago, and food prices are up 6% in the last year. The $100-million question is how will the decline in spending power affect beef demand going forward?