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The Stock Rally, Inflation And The Midterms
Capitalism, and especially American-style capitalism post-1980, is an easy enough game to play.
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Surprised you didn’t have a comment on the BLS deciding to not publish the inflation report anymore….
That is not accurate. The BLS did not decide to stop publishing “the inflation report anymore.” Everyone seems to have read an Axios headline and not bothered to read the actual Axios article. When you read it, in full, you discover that the uproar isn’t warranted.
Here: https://x.com/JedKolko/status/1969389460832780795
Folks, there’s enough misinformation out there as it is without good people like us making things worse. Use some common sense: If the BLS ever says “We’re not publishing the monthly CPI report anymore,” you can be absolutely sure that BBG and WSJ will blast out so many stories in such a short period of time that you’ll think the world’s ending. And so would I. And so would the FT. And so would NYT. Etc. The administration’s not going to sneak something like that by with only an Axios reporter noticing it. That’s absurd. And, again, that Axios article, if you actually read it, does not make that claim, which is a good thing because it’s not true.
I believe there is a delay in a report used to update the weighting of CPI components. Perhaps the upcoming CPI report will have to be revised when the weightings are updated, but I doubt the revision will be large.
That said, the US government’s data gathering and reporting is eroding. Look away from economic data, and you see reports being terminated in hunger, public health, etc. In economic data, even before the deliberate manipulation has manifested, quality and completeness is breaking down as agencies lose funding and staffing.
Will the deterioration and/or falsification of economic data affect the midterms? I don’t think US voters decide if inflation is high or rising based on CPI PCE PPI or other reports. They key on prices they pay in daily life: groceries, gas and electricity, insurance, etc. For political purposes, the inflation reports to watch are approval ratings and perhaps consumer inflation expectations.
I guess data dis-integrity can also matter to the extent that it changes financial markets – drives up rates, etc. That might be hard to discern given everything else going on.
The good news for Trump is that inflation disapproval number is pretty close to the ceiling already. I’m confident that 35% will never be unhappy with Trump no matter how badly their fortunes turn. Fox and Newsmax would never allow that 35% to hear that it’s in anyway Trump’s fault.
The 35% is probably fairly accurate for the “safe” ceiling for Trump. That’s just about the proportion of the electorate that voted for him.
So good – you have it nailed. BUT what can he do to hide inflation when everything says it is going up?
If I recall correctly, President Trump did not promise only to bring inflation down. He promised to bring prices down. The distinction between the level of prices and the inflation rate is probably lost on most of his supporters who look forward to deflation without any awareness of the potentially dire economic consequences. It seems obvious to me the price of gasoline and groceries drive political opinions among low-information voters. So, even at the Fed’s 2% target there will still be those voters will feel betrayed. I don’t believe that 59.1% dissatisfaction number is likely to retreat much.