"The ranks of domiciled U.S. producers are being greatly thinned out (witness the -2.353 million drop in U.S. domiciled production workers since 2000, and the weak growth in U.S. industrial capacity since the year 2000), and the rising core crude prices and core intermediate prices are increasingly being absorbed by the profit margins; productivity gains; and real wages of overseas producers, suppliers, middlemen and workers.

At the end of the global economy's supply chain sits the U.S. consumer, burdened by: already high first, second, etc., mortgage payments; rising home equity payments; and rising property taxes. Other factors include a gasoline price that has more than doubled from the 1990s decade average of $1.12 per gallon price; and modest growth in wages and salaries, especially in "real disposable terms."

The bottom line: With China's national goal of 'full employment,' and not "the widest company profit margins," Chinese domiciled producers' profit margins and Chinese workers' real wages are absorbing the rise in core crude and core intermediate prices; those pipeline pricing increases are failing to be "passed through" to the U.S. end-using consumer.

The end result: Until Chinese aggregate demand "catches up" to Chinese aggregate supply (may be in 15 years), we continue to look for benign core U.S. PCE (personal consumption expenditure) deflator inflation.