Inflation is Starting to “Drop Like a Rock”, leading to deflation.
Mate27
TUSCL’s #1 Soothsayer!
This guy has been right more than anyone else I know on Wall Street. The fact that this is the biggest I told you so to those mongers fearing the sky is falling is besides the point. The balancing act of this current market is starting to level out. $20 dance prices are here to stay for a while, so don’t get scared, carry on with your lives.
Next year, possible rate cuts to stimulate the economy from its whipsaw. No more free lunch from the gobernment. Energy prices down, supply chains improving, and everyone is tired of fucking Joe Biden. Amen!
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Monthly statistical blips will always occur, just as they did in the 70s. It's why we measure inflation using a rolling 12-month gauge. We also need to look at broader structural issues which drive inflation in setting forward looking policy.
Labor markets are as tight as ever, which is definitely not helped by the never-ending expansion of Obamacare subsidies and the never-ending "state of emergency" that has continued to allow many states to waive work requirements for food stamps.
Our energy bills are about to jump even more too. Natural gas recently hit a 14 year high and most of our electric providers pass that on to us in surcharges. Labor and energy price inflation impacts every other aspect of the economy and are significant drivers of future price inflation.
Housing prices are still at unsustainable levels. While they are starting to come down a little, they have a long way to go to be within historical norms as compared to average household income.
Oil and auto gas, while coming down a bit from recent highs, are still very high compared to a year ago. Those increases are still rolling through the economy on a delayed basis, but will continue to feed price increases for some time to come until they are fully absorbed.
States are still awash in excess cash and are back to handing out goodies to residents. This is not helping matters either.
Until the Fed raises rates high enough for long enough to burst asset bubbles and bleed money/demand out of the economy, high inflation will inevitably persist.
IMO the reason the market went down over the past few trading days is because Powell made comments that made him look like just a little bit less of a pussy than they previously perceived him to be. But IMO they're still ultimately betting that he's going to cave long before inflation is truly tamed.
People need to either start stealing en masses or boycotting businesses
What kind of fucking donuts were .75 in L A or Vegas?
Are you dumpster diving with the creep now? Lulz
That era is coming to an end. China is collapsing rapidly before our eyes. All that manufacturing capacity will need to be be rebuilt somewhere else, which will take years, cost Trillions, and result in supply chain shortages.
Most of the worlds fertilizer is sourced to Russia and China. They have essentially stopped exporting this. Food output is plunging, as we’ll see over the next year.
Well established trade systems, like energy exports from Russia to Europe, are being wiped out. In Germany, they are chopping wood to prepare for winter without natural gas.
We are in for a rough 5 years as everything is turned on it’s head. Inflation will continue. It will be worse outside the US, in places without our energy and agricultural resources, but it will be bad here too.
It's called "San Francisco." Poop and used needles on the sidewalk sold separately.
"or boycotting businesses"
Yeah, we'll drill our own gas, manufacture our own cars, raise our own cows, and build our own houses.
God damn you are stupid today, pimpy.
Without business owners or corporations, there would be no jobs and no food or other goods for purchase.
Other than that, it’s a good plan.
What about quasi pimp wannabes? How human are they? Asking for a friend.
SJG
Sometimes I wonder if you say all this stupid shit just to make me feel smarter then I am, pimpy.
SJG
Look at the advances that came out of capitalist America at the same time as the communist USSR--and this was a communist empire that valued R&D and science education. And we still outdid them.
Look at all the great scientific advances coming out of non-capitalist economies now. And before you cite China, look at what they did before and after Deng Xiaopeng introduced capitalist reforms there. Night and day, makes my point.
In the end, people like you are left raging out on internet message boards.
Icee's waiting for someone else to pick up a gun and start his revolution.
Not sure which is more, as Donald Trump would say...SAD!
Most industries actually do better when the Venture Capitalists get out and they can fund stuff themselves from customer generated proceeds. What the VC's want is too focused on explosive gains, and so it more often than not fails.
Capitalism works best when it is highly regulated and taxed, not like it is now.
Things were better in the US before Reagan.
SJG
Free - Wishing Well
https://www.youtube.com/watch?v=oMqZSp0d…
When they can fund stuff from customer generated proceeds; that isn't always an option. In biotech, you can shell out hundreds of millions before you sell your first dollar. Unless you want unregulated drugs, you need VC funding. Even when you don't have that barrier to entry, it could be years without funding before you have enough to sell.
The VC model is to fund a bunch of failures, a couple break-evens, and one big winner that more than pays for the rest. That's the risk profile of early stage businesses period, from restaurants to tech platforms.
Your opinions on when capitalism works are just that, opinions. Entrepreneurs are coming and getting funded here. We're doing something right. The big problems of the 21st century--aging, green energy, quantum computing, AI--will be solved by innovators, not wealth redistribution.
When the VC's are doing it, different stuff is done different ways than when it is funded internally.
This new America Competes Act is not really that much money, it will supplement internal funding, not encourage stupid stuff.
THings work better with less VC direction.
Doug Henwood:
https://www.amazon.com/Wall-Street-How-W…
Very little of the money put into the stock market funds new ventures. It is really just paying off old investors, and these have a strangle hold on our productive capacity.
SJG
Biotech will soon stop funding COVID. It's already not the money maker it used to be. What it is funding is new drugs for cancer, heart disease, and neurodegeneration. Some are looking at the aging process itself. Glibly dismissing it all as "dystopia" only shows your ignorance. Without VC, you're relying on angel investors and a small handfuls of philanthropies with a very limited success record (cystic fibrosis is one of the few ones, and Vertex Pharmaceuticals put in the cash to develop the drugs).
VC funding hit $109 billion in Apr-Jun 2022 alone. This is where the next generation of cleantech, biotech, IT are all coming from, that and much-derided profits that aren't suctioned away by taxation. Venture funding funds a lot more innovation than shareholder buybacks and dividends, which are literally what big companies do when they don't have better uses for it.
Once a busts starts, it is hard to stop it. But if you refuse to support the booms, then something good is accomplished.
The semi-conductor industry had made more progress after it went off the radar of the VCs. It will be like this in other fields too.
SJG
https://www.brownstoneresearch.com/bleed…
The "wealth gap" is the price to pay for extreme prosperity for some. We could have no wealth inequality if we were all hunter-gatherers dying at an average age of 30.
And there can be different kinds of stuff we do today.
SJG
"Different stuff," if it requires money, is going to require funding. Unless Icee can point out some breakthrough technology that was founded in a co-op or commune. Still waiting.
SJG
My Org is happening and it will take care of our people extremely well. But we are not to be a nation state.
As far as the nation state we will always be fighting for the Radical Left, Social Democracy.
SJG
We need more people that can think straight. Gender studies and racial grievance is the Newsmax of the left, it shouldn't even be called "academic" as it isn't in the pursuit of truth. We want Americans who will treat each other as brothers and sisters, not who are re-segregating and taking us backwards.
We need scientists and engineers. Humanities only if they've gone through a rigorous "great books" program with training in philosophy and logic--something that teaches them _how_ to think rather than _what_ to think.
https://1.bp.blogspot.com/-gYxghS05F20/Y…
Tetra, do you know that they key texts for Gender Studies and Racial Grievance are? Read them?
Probably they are Marx / Foucault inspired.
SJG
I have read some of Kendi and DiAngelo for example, and to call them crap would be an insult to all types of feces. They are all heat, no light. They make no attempt to intellectually defend their positions, literally only to insult those who disagree with them. They have no merit whatsoever.
If they were inspired by Marx and Foucault, that would explain why they're so destructive.
Sounds interesting:
https://www.rochester.edu/newscenter/ibr…
Also looks interesting:
https://www.youtube.com/watch?v=45ey4jgo…
SJG
If you say you're racist, then you're racist.
If you say you're not racist, then you're racist.
Real scholar, that one is.
SJG
https://www.youtube.com/watch?v=45ey4jgo…
SJG
If we don’t find a way fill these tax paying jobs, the whole system comes tumbling down, including the collapse of Medicare, Social Security, and every other government program. A society where half the population is old and retired cannot survive. And, that’s where we will be soon based on our current demographics.
Really, the only answer is to greatly expand LEGAL immigration using a merit based system. Let’s open the borders to young, English speaking, law abiding, educated workers from around the world. And, let’s control the border to stop illegal immigration from unqualified border crossers.
IF that could be done who defines “living wage”? So the business either raises prices, cuts staff or has to shut down.
As more people have more disposable income prices across the board go up and that living wage has you back where you started. I know just tax the rich cause they can afford it and raise corporate taxes because companies never pass on their higher costs to consumers.
Another option is to take advantage of our capitalist free market and build a better mouse trap that makes you rich. It’s amazing what hard work and initiative can accomplish for you.
Rising wages never made prices go up. Greed did.
And the hardest working people in capitalism are the poorest. Stop with the work hard get rich fantasy. That's just political propaganda from the cold war
We've had 14 years of bipartisan low interest rates and a ton of spending. Highly competitive sectors like used cars have seen some of the greatest increases.
But don't confuse Icee with facts or he'll tard rage. Lulz.
Sorry man, I don't speak Loser. Google translate for me, please.
Huh? Sorry, still don't speak Loser.
Can you speak a language that successful, happy people use?
Sad little "man." Go bleach your skin and eat some boiled potatoes.
I'm part of this great melting pot that is America.
And for Tetra, most of the semiconductor advances from 1990 were made without VC help.
SJG
More supporting documentation on the perspectives that I admire from one of wall streets most accurate prognosticators, Tom Lee. Take heed to his call regarding all is clear on investing in the equity markets, despite all the commudger-isms we find here. In 5 years or so the market will be about 50% higher than it is today. Dow will be 45k, and the S&P will be at 5,500. It’s not an exact science, but it does use common sense of you’re into that sort of thing.
China is collapsing from an aging population and the end of global trade. Within the next year, they will face mass starvation and economic collapse.
Europe is approaching a depression because of the end of cheap natural gas from Russia. They either shut down their businesses or ( as the UK plans ) take on massive debt to subsidize energy cost.
The US will continue to see higher prices as we are unable to buy cheap goods from abroad, but it will be a cake walk compared to the rest of the world.
Another article supporting the claim that inflation is falling. They even stated there was deflation for the month of August. Some guys thrive in telling a doomsday story it becomes their shtick. Probably because nobody reacts to positivity as much as they do negative sky is falling narratives. People are addicted to their feelings, and you feel tye pain of loss more than the euphoria of winning. I’ve done my good deed for fellow TUSCLers by setting them straight. Inflation has been tamed for the past 2-3 months. In 9-10 months we will see the CPI inflation rate at 5% or lower for looking back 12 months. Your welcome!!
^^ you haven’t tried buying a home with cash, because you’re a broke traveling pharmaceutical sales rep hopping from one homie to another homie’s apartment throughout the southwest?
^^ you don’t buy groceries because we know you’ve admitted on here that yiu steal from grocery chains.
Sure, I’m the delusional one. I see. I just got back from a family vacation with my kids, but you say I’m the one who doesn’t get out much? Something’s missing from your line of logic. It’s steeped in fantasy.
Headline inflation still dropped, and so much of the core CPI is weighted in housing and food that makes it sticky. 12 months from now we will get headline #s at 3%, because there is such a long lag from housing and food, and we have just started seeing national declines for housing partly fueled by the fed’s inflation mandate. Food and services will remain high, but if you’re not buying then inflation isn’t that bad. It really affects those house hunting or looking for vehicles, and many people already have those. Demand destruction is evident on Main Street, people buying less.
Anyhow, the old saying is that we have some really smart people (and kids) out there creating solutions to all of these problems and will capitalize on it. Mark’s dire outlook doesn’t figure in USA ingenuity to create viable solutions with our vast resources. Overseas people are also used to a certain standard of living which will cause them to conform with the speed and agility of American ingenuity, and guys like Tom Lee and Cathy Wood make a living out of that vision.
The government was still buying mortgage backed securities in March of 2022, and now those slickers are turned off by the government, we are just beginning to see the offset of taking away the punch bowl that was prominent the past 18 months.
I don’t doubt our ingenuity, I just respect the clock. We need to add steel capacity, chip factories, fertilizer plants, mining operations, pharmaceutical plants, etc. Those are all multi year projects. Like I said, we’ll be just fine in 5 years but it’s going to be a bumpy ride.
Our natural resources are no longer what they once were either. U.S. population has gone from 200 to 300 million over the last fifty years. More people mean less resources for each person. Large parts of the country have depleted water resources and are facing water shortages. Soil depletion is worsening. We've used up a majority of our oil. Large scale fracking was only viable when fracking companies could borrow money at low interest rates, but interest rates are going up. The days of cheap gas for your car are over.
Our wealth was based on human resources, natural resources and a free-market economy but there have been declines in all three areas.
We can reliably send our low added value manufacturing jobs to Mexico and sell our high value added goods to them. It’s a good fit.
Similarly, Canada will be a source of natural resources needed in our expanded manufacturing. And, they will be a market for goods as the American population ages ( 70 year olds don’t consume a lot, they downsize ).
Inflation won't seriously subside until we bleed enough of the excess cash out of the system to seriously reduce demand for goods and services. Labor and energy demand are two of the leading indicators of inflationary conditions because they feed into the prices of virtually everything else and both were flashing red in August.
How so many market participants were so confused by this is mind boggling. Do they not go to the grocery store or pay electric bills? Do they not have even the most basic education in what happened in the 70s?
Inflation has come to a point where the Fed needs to do a lot more than continue tip toeing around to bring it under control. To break its back they're going to need to cause real economic pain. It's becoming increasingly clear to me that they don't have the stomach to do it.
Bottom line, inflation peaked a couple months ago when housing nationwide started falling.
That probably means overall inflation will trend lower than 9%, but food alone, plus anything where we rely on China, will keep us well above the target 2% for at least another year. Probably two years.
For example, we need new sources of potash and nitrogen fertilizer. Without that, yields will be low, as we are about to find out. It takes at least 2 years to develop new supplies.
Just look at what has happened with cars and chips. Two years in, we still haven’t solved that supply chain bottle neck.
How fucking stupid can the dems get? They're lowering the bar every day!
Another lucid article pertaining to how journalists are overhyping inflation reports. Really, Forbes is seeing it but why don’t the journalists see it? Because accurate reporting doesn’t scare the average reader like the typical journalist thinks they have to do in order to sell advertising.
I haven’t bought a house, a car, (nor a grocery store) for years so if you’re in the same situation as most people inflation mostly affects your food and fuel costs, not much of a household budget. The hype is way overblown and the last two-3 months show disinflation is taking place with energy and shelter costs dropping. That’s the truth! My clubs still have $10 high contact dances and many customers and dancers exchanging funds for services. Start investing cash if you haven’t already.
What I've seen in the past week, my last trip to the grocery store last week prices were higher than ever. This is Monday, gas has gone up 20 cents since Friday.
I just paid the electric bills on my 2 houses, The temps have been cooler for the last 5-6 weeks so I barely ran the AC, less than the previous billing period, but the bill on my main house is higher than last month's bill.
Sorry buddy, I hope I'm eventually proven wrong, but what I see is higher prices for food, gas, and energy.
10 Year Treasury Yield is 3.77% right now as the Bond rout continues. For reference, it began the year at 1.38%.
The wealthy are betting their assets that inflation will stay high for years.
Six months ago, there were over 100 huge container ships waiting to enter the port of Long Beach. Most recently, there were only 8. The flow of critical goods has dried up.
Russia is a major supplier of oil, gas, and the chemicals needed for fertilizer. As a result of the Ukrainian embargo, only a fraction of this is being exported. And, since Russia relies on American technology and technologists to run its energy wells and pipelines, Russia’s ability to produce fossil fuels is crumbling.
Inflation results from an excess of demand over supply and our supply of critical goods has plunged.
The federal debt is now over $30 Trillion. As short term interest rates have risen from zero to the new target of 4.5 %, the federal government has an added interest expense of $1.5 Trillion per year, and rising. That’s about $15,000 per year for every taxpayer. Since government debt is ultimately taxpayer debt, that means your annual income just dropped by $15,000 ( payable either through higher taxes or inflation ). Start the money printing presses !
Given all this, the reason some “experts” are telling us that inflation is going away, is political propaganda.
The CPI put out by the government is rigged. It shows a 6% increase in the cost of housing, but median house prices are up 30%. Rent prices are up more than 6% too. My rent went up 11% this year. They are just gaslighting the public here.
Biden and the Democrats are trying to improve their chances in the upcoming election using gimmicks like these.
And so many of you love to live in the past!
In the article it poses the question “Are we all renters all of a sudden?”
What has happened to the whole population of home owners out there, do they suddenly not matter anymore? Consumer is still strong, but not pissing away their money anymore. Just more selective. I’m sure at this point the fed is simply trying to save face and act tough in order to take credit for taming inflation after all of their prior miscalls. Powell is a trained attorney, and was accommodating too long because that’s what he was told to do. Paybacks a bitch, but if things continue they will need to cut rates sooner, possibly before 2024. We should be getting another lower gdp report next month is my guess. Hinting at recession fears.
I built my first house in my 20s and it was completed in 2006. I remember being happy with 6.35% being my interest rate back then. How times have changed… that was a once in a lifetime opportunity for many people from about 2010 until now. Nobody on here will probably see rates that low again in our lifetime.
If Russia blows up the Norwegian pipelines in retaliation, it could lead to all out war.
All of this will contribute to global inflation of energy prices.
https://www.ff.org/fdrs-policies-prolong…
Biden is already taking the same road as FDR with Trillion dollar spending bills, selective loan forgiveness, destruction of the domestic oil industry, and regulating everything in sight, invoking the CoVid Emergency as his justification for over riding the constitution.
Ironically, for a country that tried so hard to go "green," they're going to rely on coal and wood this winter.
Thank capitalism for the crisis
Did you just speak to a number of Germans about this crisis, Pimpy?
Have you done any reading outside socialist websites about this issue, Pimpy?
Shut the fuck up when the adults here are talking.
Hey, California (and Mass) are banning sales of ICE cars after 2035. The state that can't produce enough power as is and is telling residents not to charge EVs at certain times. What a shit show.
SkiDumb, how do you bring about Freddie Mac when it’s the Bureau of Labor department. WTF? Lawyers must have different reading comprehension skills. Or else you’re too high to read and comprehend at the same time? Democrats definitely want to control the demand side of things and making it more difficult with interest rates rising, yet it has stopped a lot of demand from the markets squashing nflatiinfromfoing higher. Inflation peaked 3 months ago and is continuing downward trajectory since less people are buying (less demand).
The Biden administration has launched a full-scale pressure campaign in a last-ditch effort to dissuade Middle Eastern allies from dramatically cutting oil production, according to multiple sources familiar with the matter.
The push comes ahead of Wednesday’s crucial meeting of OPEC+, the international cartel of oil producers that is widely expected to announce a significant cut to output in an effort to raise oil prices. That in turn would cause US gasoline prices to rise at a precarious time for the Biden administration, just five weeks before the midterm elections.
FYI: I didn’t vote for him either, but that was a pretty cool pardon even for you to admit.
As far as marijuana goes. It should be legalized every where. It's idiotic for someone to go to jail for something legal across a state line
This suggests that a lot of people have exhausted their savings, leaving credit card debt as the only way to provide necessities for their family.
These aren’t casual users with a few grams. These are dealers, many affiliated with cartels.
So, on that note, I don't understand threads like this one.
Though an interesting topic about which I am quite familiar, why are we talking about this on Tuscl?
Have you posted a list of topics you will allow on this forum
not interested in it don't click on it, it's easy to avoid.
I'm tired of Putinflation. Dark Brandon needs to take him out.
I just read an article about how federal regulators buy stock in the companies they regulate. How is that not illegal ?
Inflation is popping again. This time, wholesale prices up.
https://www.marketwatch.com/story/wholes…
The supply chain is getting more fucked.
https://www.usatoday.com/story/money/202…
The Fed Funds rate is going to hit _at least_ 5%, likely more, to cool it down. Government spending is going to get overwhelmed by debt service costs. The stock market is going to keep dropping.
@OP, time to cut your losses on inflation predictions.
I travel a ton and go into all kinds of bars solo a lot in strange towns. People in small towns tend to be a bit tribal. That is, if you are a stranger walking into a bar full of regulars, the bar will get quiet while you are checked out. This can happen in big cities too where bars have a bunch of regulars.
La Crosse Wisconsin is one place that sticks in my mind where all were wary until I talked a bit too the bartender at a small bar and told him some of my reason for being in town. Once accepted all were friendly.
I went into a bar just outside of Detroit to grab dinner and have a couple of drinks. I was the only non-black person in the bar. After a bit all were friendly here as well.
I'm hispanic and was a bit worried the first time I went to Alabama. The people were the nicest people I've run across in all my travels. White or Black.
I think it's more about how you carry yourself that will lead to how you are treated. That being said, there has been racial tensions in the US for a long time. Think Jets and Sharks. This is usually perpetuated by young gang members, not individuals.
The BLS notes the driver by saying, “a major factor in the September increase in prices for final demand goods was a 15.7-percent advance in the index for fresh and dry vegetables. Prices for diesel fuel, residential natural gas, chicken eggs, home heating oil, and pork also moved higher.”
That’s a 15.7% increase in price, in one month, for fresh and dry vegetables. Annualized that’s a rate of price increase of 188.4% for vegetables. Remember the warning about farm costs (energy, fertilizer, fuel) driving field to fork inflation at harvest? This is the leading edge of that third wave of food price increases.
So if you want to see inflation brought under control, pressure our government to increase the pressure on the Russians, maybe give the Ukrainians some longer range weapons to inflict some real pain on the Russians which would benefit the entire world.
As much as Putin alludes to his nuclear capabilities, makes me believe those capabilities don't actually exist.
Another media print pointing out the obvious with regards to inflation. Don’t be too late to the game, scaredy cats!!
Americans will be eagerly awaiting the House Republican bill to reduce inflation. But if the trend continues into 2023, Biden may end up getting some or most of the credit.
https://www.cnbc.com/2022/11/09/stock-ma…
Thanks Biden!
The U.S. lender on Sunday forecast core personal consumption expenditure (PCE) –– the Federal Reserve's preferred measure of inflation –– falling to 2.9% by December 2023 from 5.1% currently.
The forecast comes as Fed governor Christopher Waller warned over the weekend that the central bank may consider slowing the pace of rate increases at its next meeting but that should not be seen as a "softening" in its commitment to lower inflation.
Since 3 months ago, when Mate declared inflation will “ drop like a rock”, it has gone down by 1%. That’s a pretty small rock.
Yes, inflation is going down. Yes, the supply chain is being fixed. Yes, demand is dropping for discretionary items but Food and Energy are still being hit hard.
Should the Fed still be aggressively raising rates ? No, they’ve already slowed demand enough. But, these things take months before their effect is fully seen. Another year of pain is guaranteed.
About when they read it. See comments above per emotional factor. Again, you’re welcome!
Expert predictions about inflation for 2023
Over the weekend, analysts from Goldman Sachs forecast that one key measure of inflation — the core price consumption expenditures index, or core PCE — could drop to 2.9% by the end of 2023.
Core inflation is different from headline inflation. Core inflation excludes food and energy prices, which tend to swing more frequently and dramatically than other prices. The Federal Reserve keeps a close eye on core PCE inflation, and targets a level of 2% in a healthy economy. (To make it even more confusing — these numbers are different from inflation measured via the consumer price index, or CPI, which came in at 7.7% on an annual basis in October, down from 8.2% in September.)
Right now, core PCE is at 5.1%. Goldman’s experts expect that number to drop as supply chain constraints improve, rental price growth slows down, and wage growth slows down, too. Those three factors are signs the economy is on its way back to a healthier state.
Other experts agree, though some are more optimistic than others
More I told you so news!!
Great, those of us who don't eat or drive have it made.
Oh yeah, did I mention that I told you so? Today’s most updated report, which I accurately called last summer. You’re welcome!
In response to this, the Fed will likely abandon its policy of increasing interest rates and high inflation will resume. There will be a great deal of political pressure on them to keep the country from going into Great Depression II and they are likely to cave into that pressure. Volcker and Reagan resisted that political pressure in the early eighties in a similar situation, but this is a different era. We have Powell and Biden now, neither of which are likely to have the political courage to do the same.
Interest rates are the price of borrowing money. The best long-term course would be to let the market set interest rates just as it sets other prices, but our current governing elites won't allow that.
https://apple.news/AE5aOQm0vRz6WIQzRhlOk…
Have the labor markets loosened? Has the federal government stopped pouring shitloads of money into the economy (like through the Infrastructure bill that is finally just disbursing into the private sector)? Have we stopped paying people NOT to work via Obamacare and food stamp transfers?
No? Then why are we talking about inflation being gone?
It may slow down a bit in certain sectors. It did so at times in the 70s too in response to Fed actions. But it always reared its ugly head again when the Fed took its foot off the gas. Until we do enough to stamp out the underlying conditions causing the inflation, it will continue to simmer under the surface, popping up in response to the slightest challenge. Until we solve the labor market issues that are driving continued wage growth, serious long-term reductions in inflation are unlikely.
China is collapsing, not just as an economy but as a nation.
Sanctions have put the Russian economy on a glide path to failure.
Europes business model, which relied on cheap Russian energy and the US paying for their defense, is no longer workable.
Global trade, along with the concept of globalization, is declining rapidly.
Onshoring of jobs is at a historic pace in the US and Mexico.
The era of zero interest rates is over. Companies with business models that relied on zero interest will fail.
In 10 years, the world will look very different than it does now. Inflation is just a byproduct of these changes.
https://apple.news/ATSo06GhhRDSgEr0OutEQ…
The Labor Market
The evidence that a Recession has begun is evident except in the traditional measures of the labor market. We suspect that the unemployment rate has been sticky due to labor hoarding after a couple of years of insufficient labor supply. Instead of shedding employees, firms are adjusting to the Recessionary climate by aggressively slashing the workweek and overtime (see charts).
In addition, the headlining Payroll Survey doesn’t distinguish between full- and part-time jobs. That data is found in the Household Survey, and December’s report confirmed a 670K+ move to part-time work.
An almost daily occurrence, of late, is a headline about layoffs especially in the tech world (i.e., America’s growth industry). Some examples:
AmazonAMZN: -18,000
Alphabet (Google): -12,000
Meta (Facebook): -11,000
MicrosoftMSFT: -10,000
Salesforce: -7,000
The list goes on.
We need to feel a lot more pain before we break the back of inflation, like a serious decline in the demand for goods and services and widespread layoffs. The Fed needs to keep bringing the pain, but the question is whether they have the political will to do so.
The only way to break the back of a wage-price spiral is to slow the economy down enough that unemployment rises substantially and demand dramatically declines. Basically a reboot. Otherwise all we are doing is temporarily suppressing inflation until one bump in the road causes it to come roaring back.
https://www.reuters.com/article/sponsore…
Oh, I forgot to say “I told you so!”
This article by Barron’s provides further support why my call last summer is correct, in turn leading to the most almighty “I told you so” in tuscl history! Money supply is actually starting to decrease.
What happens in the future and when remains to be seen but what I see is..
Gas price drastically jumped and peaked around $5 a gallon around a year ago and slowly came down to slightly below $3 a gallon around a month ago but since then have jumped up again, over 60 cents a gallon in the past month.
Home energy costs, gas and electricity went up the past year and prices have remained high.
Grocery prices are at an all time high, restaurant prices have gone up and haven't come down.
Home appliance prices are at an all time high.
Home improvement prices on lumber etc
Anyway, I don't know and don't claim to know what the future holds and no matter what others say, what regarding what affects my life inflation is still going strong.
https://www.bls.gov/news.release/cpi.nr0…
https://mishtalk.com/economics/huge-cpi-…
The Consumer Price Index (CPI) for January showed a 0.5% increase in prices over the past month, an acceleration from the prior reading, government data showed Tuesday. On an annual basis, CPI rose 6.4%, continuing a steady march down from a 9.1% peak last June.
https://apple.news/AWx0k8gbbTxGxeQBitglr…
Of course SkiDumb will think it’s an Apple News article…..
Rent
Shelter costs, which account for about 40% of the core inflation increase, rose 7.9% over the past year. Rent costs jumped 8% and hotels/motels 8.5% on an annual basis.
New leases are lower, and renters are leaving their apartments and going to places with lower affordability, except in Manhattan. We see this all over the Phx metro which lead the nation 2022 in shelter increases.
The whole point of this exercise is to analyze the smoky mirrors. The original intent wasn’t to say there is no inflation. Duh, or course it is, but it’s such a faulty representation of what is actually happening on the ground. Have fun!
You did read this piece guys, right? That is compared with 0.1% in December. That was not a good one month reading. Worse, it came from the three areas that consume the most household income - housing, energy and food. If it runs like that for the next 11 months then the 2023 annual inflation rate would come in at almost 6.2%.
This tells us that inflationary pressures are still unacceptably high and that the inflation dragon has not been slain, but just waits for any ease up to rear its ugly head. As I have said time and again in this thread, the Fed is doing just enough to temporarily suppress it, but not nearly enough to kill it.
The drops in inflation are never linear, and I believe you Dugan commented on “momentary blips”. The seasonal #s seen after the holidays with jobs and January incomes resetting due to employers giving raises contribute to the distortions. By the way, this was the first inflation report in 5 months that didn’t come in better than expected! If we have another blowout jobs report in March and an even higher CPI next month, which we won’t, then yiu may have a case to make. Until then, the distortions from the gauges are what’s important. Volley never raised short term rates 475 bps in one year, and this isnt the 70’s or 80’s. Incomes aren’t even keeping up with inflation.
When will deflation kick in ?
That's because past lessons are just as applicable today. For example, when you flood the economy with gobs of M2 Money Supply, inflation spikes. When it goes on for too long and triggers a wage price spiral (this time helped by by government policies which continue to sideline able bodies workers), inflation becomes sticky. Once inflation grows deep roots, the only way to kill it is to move the Fed Funds rate well above the inflation level.
Rinse, repeat. As should be obvious by now, the lessons of the past are just as applicable today as they were the last time this nonsense happened.
As far as your notion that the rate hikes have yet to bear fruit, hogwash. Mortgage rates have already long since adjusted, credit card interest rates have moved up, fixed income products have long since become more attractive again, etc., etc. The problem is one of magnitude. They aren't doing enough to crush demand quickly enough. Demand for services continues to be high, no doubt because labor market tightness continues to pad paychecks. Even mortgage applications are back on the rise.
IMO a soft landing is just not possible under these circumstances. Only a cold hard reboot will pop the asset and demand bubbles enough to slacken labor markets and allow us to reset. I think that Powell actually knows this, but has no intention of plunging the economy into a recession before the next election. Expect an epiphany in about 19 months from now.
Meanwhile, the labor markets are still absurdly tight, inflation came in at .5% for January and retail sales just jumped 3% in January.
The Fed is tightening too little and too slowly to kill inflation, especially when government fiscal policies are working against the Fed's efforts. But Arthur Burns, er, I mean Jerome Powell, doesn't have the stones to do what's really needed.
I wonder the accuracy of what you’re saying Dugan, because this chart shows a 10% decrease in M2 (money supply) since January of 2022. Volcker never raised the overnight funds over 450 bps in one year like Powell has. Sadly, I think most of the blame for fiscal irresponsibility lies during Trump’s tenure, and I say that even though I voted for him twice.
The jobs sector is tightest among low paying services and hospitality positions, not the high paying demanding places professionals seek. It’s why they will always remain a demand for low paying jobs, because nobody wants to do them. The tech/finance sector has shed over 100,000 jobs this past year, which is equal to about 500,000 lowly employed leisure/service paid positions. Jobs report blowout #s are just smoke and mirrors. Money supply is dropping and so is inflation. But yiu keep talking tough until you figure it out, Magic Man Dugan. Rotflmfao!!
https://m.youtube.com/watch?v=wkTi56ThWu…
That’s an increase from $30 Trillion to $50 Trillion. Just exactly how can inflation drop if we are adding $2 Trillion of debt every year ?
https://apple.news/AQB_2X_YPT-icAEXBHuMT…
“Wholesale prices decline, PPI shows, and show prices dropping .1%”
Anyway, the real time data hasn’t even shown up with drop in shelter. Just wait until the 12 month lag in rents start coming, tgen a whole new set of “I told you so” will fuel the angst towards Mark, SkiDumb, 2-bits, and Tricky Rickyboi! Every reading from here on out will continue to drop after I called the top in summer of ‘22. Your welcome!
Inflation still hasn’t dropped like a rock, the only thing that’s happened is the growth of inflation has slowed.
You really need to score the touchdown before you take the victory lap, and from the looks of things you scored at the wrong end of the field.
SMH
https://apple.news/AyZYFyvsQQ7u0agbuy0uv…
Told you so! We can even wait until September of ‘23 for a full yoy assessment if you wish, although you’d be handicapping yourself if you took that bet!
The gap between spending and tax receipts will be covered by borrowing. The debt will be monetized by the Fed printing up money and buying government bonds. This will be inflationary. If the government has to print more money to bail out collapsing banks, as is likely, the situation will be even worse. You can look for higher inflation in the future.
Oh yeah, this is the thread when I made the call last summer, and since then I have been spot on! Wait until we get the cpi #s in September of ‘23. Because all figures are backwards readings of the prior 12 months, you’re going to see more “I told you so” coming into the pipeline, throwing it into the faces of all ritards who dare to refute my accurate predictions. You’re welcome!
These items have dropped dramatically in price over the past 10 months, since I made my inflation call. Sorry two bits and your butt buddy SkiDumb, but I told you so!
Well, this explains a lot within your profile. You really should stop to assess yourself, but as we can see from all your ritarded posts that comprehension and analysis is not your forte, old man!
Biden will be running for reelection during a deep recession. By then, it will also be obvious that the Ukraine war is just another endless quagmire like Vietnam or Afghanistan. The Wall Street Journal reported last weekend that officials in the Biden administration knew the Ukrainians didn't have the weapons or training to succeed in their counter-offensive. They pushed for it anyway, the same way a gambler keeps placing bets hoping he finally gets lucky.
Comparing only year-to-year percentages misses the forest for the trees. The Biden years have left a huge hole, and it doesn’t go away. Purchasing power, and savings/accumulated wealth, are forever impaired disproportionately.
And docsavage is right, the more money they borrow or print (or “forgive”/defer/grant/etc.), the worse it will get. And that’s pretty much all the Dems got, to buy favor (& votes) from the peeps. (Well, that and the specter of Trump…)
Some would ask if I get tired of being right all the time, as proof from the latest PCE #s released causing stock market to rise to near record levels. Another “I told you so” to all the curmudgeonly nay sayers, and u know who u R!
I was right and you were rong, so what camp do you think you fit in, SkiDumb? This whole transcript proves it. Sorry, not sorry, but I told you so!