If the government is admitting inflation is running at a 4.8% rate over the last three months, then you can double that to get the real rate. With wages growing at 2.5%, do you understand why most of the country is pissed off as they become more impoverished every day?
When you see unemployment supposedly below 5%, unemployment claims at three decade lows, inflation running at 4.8%, corporate profits near record levels, Wall Street reporting billions in profits, and politicians expounding upon our resilient economy, why is Janet Yellen keeping rates at .25%?
If these economic figures were true, the Fed should have short term rates at 2% or higher.
Could it be the emergency level interest rates have nothing to do with the economy and everything to do with enriching her banker benefactors and the corporate establishment?
Just as we warned, the gas price ‘base effect’ is pressuring consumer price indices higher (Energy +1.3% MoM – up for 3rd month in a row) but even Core CPI rose more than expected (+2.3% vs 2.2% exp) back near its highest since April 2012. Shelter costs rose 0.3% MoM (but 3.5% YoY – the highest since July 2007), along with increases in education, medical care, and airline fares also sent consumer prices broadly higher. Between surging PPI and this, The Fed is increasingly cornered (and as we nopted last night, running out of excuses).
“We’re starting to see upward pressure on the inflation numbers,” Jim O’Sullivan, chief U.S. economist at High Frequency Economics Ltd., said before the report. “It reinforces the case for the Fed to resume tightening, though they’re highly risk averse right now.”
Core Cpi back near cycle highs…
Rent inflation at its highest in 9 years!!
And fuel costs are on the rise, which, as we detailed previously, the impact of the energy costs base-effect is so pronounced, that as BofA notes, an extreme bearish scenario is needed for inflation to stall. A far less extreme scenario is needed for inflation to jump dramatically. To wit:
Our analysis shows that there is a clear uptrend in CPI ahead, under most reasonable scenarios (Chart 1). CPI would accelerate to 3.5% yoy under our bull case, and rise to 1.6% under our bear case.
Supportive base effects are a key driver. It is only under an extreme
bear case (year-end wholesale gasoline price of $0.88/gallon, or retail
at $1.58/gallon), that we would see CPI inflation flatten out at 1.1%,
all else equal.
As we concluded previously, keep a very close eye on gas prices: over the next few months,
gas prices will become far more important to the Fed’s monteray policy
than even China.
So – to sum up – the base effect in energy is pushing headline higher
while surging rent inflation is now at highest in 9 years… Get back to
work Ms. Yellen!
Nothing is going to change until we return to an economy based on real production instead of the financial manipulation industry.
That means “free trade” is going to have to change and real goods production jobs be returned to America as we recover to a position of competitive parity of our workers with overseas workers.
Pay attention to what the candidates say about this and vote accordingly if you want to see this happen, or at least the start of it happening.
“Could it be the emergency level interest rates have nothing to do with the economy and everything to do with enriching her banker benefactors and the corporate establishment?”
Perish the thought…..;-)
So, it must be time to change how we calculate the CPI again. That will eliminate inflation. Now excuse me while I hold an ice cube against my thermometer, it is hot here in NY. That will fix that as well.
BREAKING: Military coup in Turkey. No news yet about whether Erdoğan is still alive or not.
Welcome to a Fourth Turning.