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Economists Wrong Again As Core Inflation Tame Despite Tariffs
"LOWER THE RATE!"
Shouted a livid Donald Trump, somewhere.
Underlying price growth undershot expec
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How long were significant tariffs in effect as opposed to announced and postponed?
The average US tariff rate’s far higher now than it was in December. Look, the inescapable bottom line here is that so far, the tariffs simply haven’t resulted in the kind of inflation bump that economists expected. It is what it is.
As a friendly reminder to everyone: I’m not going to spend four years imparting an anti-Trump spin on every, single data point. God knows I don’t think he’s fit for office, but unless I have stone, cold proof that the data itself is being manipulated (and there’s no such proof yet), then the numbers just are what they are. When they suggest, as they do currently, that economists are wrong and Trump’s right, then that’s what they suggest. If it’s 24-hour anti-Trump coverage you want, there’s MSNBC for that.
Understood. But I was asking for some clarity. I’ve been confuzzled by just what tariffs are already in effect versus threatened.
Investors have come to expect instant gratification on everything (as I did years ago when I was dating.) JL carefully pointed out a week or so ago, any impacts are unlikely to manifest until the fall. That’s too long to wait I guess.
Things almost always take longer than you expect. By my personal definition, the inflationary spike was transitory, I guess I just have a longer timeline than others. Another example is a house I bought in 2003 as I was starting a new business where I was employed and I had a near zero net worth. The bank offered me a mortgage of 110% of the purchase price. I figured this couldn’t continue but it did for five more years. Unless there are some major changes, it will get here. I just don’t know when.
Definitely appreciate your second paragraph Mr H. We all have our political preferences. But continuous ideological diatribe and demonizing just gets boring. Your critical economic and capital markets analysis is always valued.
Overall CPI-U +0.3% MOM SA in June, after +0.1% in May, +0.2% in Apr.
Core CPI +0.2%, after +0.1%, +0.2%.
Seems the half-full/half-empty debate is “2.5% annualized” vs “but moved up”.
Is it worth noting the recent progression of MOM SA inflation, as a clue to future direction? For example, here are some heavily imported categories, they seem to have an accelerating trend.
– Fruit and veg (the part of Food at Home most likely imported) +0.9% in June after +0.3% May, -0.4% Apr.
– Household furnishings (also heavily imported) +1.0%, +0.3% May, +0.2% Apr.
– Apparel (ditto) +0.4%, -0.4%, -0.2%.
Cars are also heavily imported, but large-ticket and sensitive to demand/rates – they look different, slumping into deflation.
– New cars -0.4%, -0.5%, +0.1%
– Used cars -0.7%, -0.5%, -0.5%
In contrast, categories that are almost pure “services” are no-trend or cooling-trend.
– Rent of shelter +0.2%, +0.3%, +0.4%
– OER +0.3%, +0.3%, +0.4%
– other services similar choppy, no clear pattern. “Services less rent” +0.4%, +0.2%, +0.3%.
thanks for additional breakdown, John L.