Fed, Voters Get Another Disastrous Inflation Report

Fed, Voters Get Another Disastrous Inflation Report

US consumer prices rose more than expected in April, closely-watched data out Wednesday showed. The headline and core gauges rose 8.3% and 6.2% YoY, respectively. Economists anticipated an 8.1% annual increase in the all-items index and a 6% gain on core (figure below). Although not dramatic, the overshoots (versus consensus) could undermine sundry "peak inflation" narratives and add to pervasive market angst. If you're inclined to optimism, you might suggest that the YoY prints are at leas
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7 thoughts on “Fed, Voters Get Another Disastrous Inflation Report

  1. There is really no reason to think any of this is going to improve in the near term. Russia’s war, China’s Covid zero protocol, Trump’s tariffs (see Smoot-Hawley tariff act), wage increases, full employment with 11.5M unfilled openings (gosh, immigrants seem like a smart idea right now!), and increased oil prices impacting the cost of global supply chain shipping. No way inflation abates any time soon regardless of how much QT the Fed pours on it.

    Stagflation seems like the best worst case scenario at this point.

    1. I absolutely concur with you and I’m not sure why talking heads like Larry Summers are not more honest about the many causes of this inflation.
      Prices are high in things people have to buy: food, gas (and oil based products), shipping, energy, shelter, and the usual culprit healthcare. People will bid up those scarce necessities even if they have less money as they don’t have a choice.
      Russia’s going to be sanctioned for awhile (Putin’s not planning on going anywhere), so oil (a key input to food) will be expensive for awhile.
      There’s not enough housing, without supplies nor labor it won’t be built, and it’s increasingly owned by a smaller group (who therefore benefit from scarcity); high interest rates won’t help mortgages so an even more captive audience to rent raises.
      The US demographics are no longer favorable to growth, and ask China – it doesn’t get fixed quickly; immigration would help a lot but between racists and unions it’s also not going to improve.
      Result: higher prices are here to stay and while deflating speculation is necessary a Recession and lost jobs (and companies) will just compound the pain for the bottom lf the economic dogpile. I wish the excess had been invested in Renewable Energy, Infrastructure, and Automation as then we’d have deflation to counterbalance.

    1. 8% from the 4% of last years April. At least the average of 6% cleared the 2% mark!
      This month will be the last freebie from the 2020 halt. June needs to be lower to indicate a somewhat functioning economy from 2020 and the 2 years out is realistic.
      2.5 rates to neutralize inflation growth is what many fed offer the rest is unspoken.

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