I hope not. There's an absurd amount of dumb money floating around, and YoY inflation is still at 6.5%. Higher interest rates are going to force companies and investors to actually post profits instead of functioning as giant leeches on the economy.
And in the housing market as well. All sorts of silly things have happened with home prices due to all the cheap money.
The Fed uses PCE. It is likely to behave similarly to CPI, though part of the reason the Fed has been as aggressive as long as it has is that PCE diverged more than is historically common from CPI during the inflation spike, spiking higher and coming down more slowly..
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch...
For context:
https://www.macrotrends.net/2015/fed-funds-rate-historical-c...
I couldn't find this particular piece of data published anywhere, but I did a little math and arrived at an annualized rate of inflation for the last 6 months of 5.85%, well above the 2% target.
They’ve barely unwound any of the Feds balance sheet. I think it’s ridiculous for the markets to assume the fight is over and position for a pivot.
Imagine what would happen if the fed started selling $100B+ in treasuries per month. EVENTUALLY we’re gonna have to address that plus our enormous congressional deficit.
It doesn’t take a genius to observe cash is GUARANTEED to loose value. In the current environment it’s the least safe asset…it just doesn’t have the same volatility to it!
In that sense the inflation is now baked in, and we only make future increases slower but we don't unwind back to the original price without some serious deflation.
* Fuel oil -16.6%, biggest decline since February 1990
Seems important to point out to anyone reading your comment
I don’t care what the government publishes. My friends around the country all confirm this. My own bills (I track itemized) show it as well. Though, to your point, much of the increase occurred in 2021 - it just never came down.
2. Fuel is only down because the US has used its strategic reserve to increase supply. At the same time demand dropped dramatically, with China lockdowns & increased prices forcing manufacturing / transportation to cease. Now the election season is over I suspect the strategic reserve will stop being drained; further if price caps work on Russia… we will see a massive reduction in the global fuel supply (Russia will just stop pumping as its unprofitable).
I hear this everywhere, but as far as I can tell its a complete myth. The "basket of goods" that CPI is based on does keep track of changes in quality and quantity of the goods.
> If the selected item is no longer available, or if there have been changes in the quality or quantity (for example, a container of orange juice containing 59 ounces instead of 64 ounces) of the good or service since the last time prices were collected, the data collector selects a new item similar to the old item. This is referred to as a substitution.
> When substitution occurs, the commodity analyst reviews the new item and price. The new price may be quality adjusted for use in index computation. Conceptually, the CPI seeks to be a constant-quality measure, though accurately quantifying quality change may not always be possible. Detailed information about quality adjustment procedures is in the calculation section.
That's not actually in disagreement with the notion that inflation has come down a lot.
(for prices to come down you'd need deflation)
In addition, a series of issues unrelated to monetary policy have hit individual items like eggs (avian flu) and lettuce (INSV) and so on, because food is messy.
2. The election season has been over for two months, and yet the SPR is continuing to contribute to US supply[0], so apparently not everybody thinks solely in election terms.
Russia is more complicated; they are at least as focused on their limited opportunities to earn and spend money given sanctions as on hurting us, which they might see as less easy to do now that the election season has been over for two months.
0. https://ycharts.com/indicators/us_ending_stocks_of_crude_oil...
Poppycock. From StatCan, who do the CPI numbers in Canada:
> 7.10 Quantity adjustment entails accounting for changes in the quantity (e.g. package size, number of tissue ply, etc.) of observed POs. This is another implicit method of quality adjustment because it is assumed that the quality per standardized unit is the same over time.
* https://www150.statcan.gc.ca/n1/en/pub/62-553-x/62-553-x2019...
> 2. Fuel is only down because the US has used its strategic reserve to increase supply.
Fuel is down in Canada as well, which has no strategic reserve. Or it could be because geopolitical events have stabilized a bit and global oil prices are down:
Yeah, the data is inflation going down (and not to negative values) year over year, not prices going down. Just means prices are inflating slower, not going negative.
And shrinkflation has been around for decades. It was a thing even when inflation was at 'normal' 2% levels.
Edgar Dworsky is the guy that all the media companies bring on as the expert on shrinkflation (just look up his name, pretty much all news sites have articles about him), has had his blog up pointing out all the instances of shrinkflation since as far back as 2006[1].
If the 60% increase in butter prices over the last year is hitting your budget, you probably would benefit from eating less butter. (And I say this as someone who eats a good amount of butter...)
Every month for the last six months has produced the same comment. Overall inflation is low so somebody picks out a specific thing that went up a lot and implies that the government numbers are either misleading or lies. Interestingly, it is a different chosen product each month.
Egg prices are also being driven largely by disease and culling and don't really represent something that should be attacked with monetary policy.
This is not a meaningful phrase.
>> This is not a meaningful phrase
> Sure it is,
No, it is not. You meant some sort of recession, as if thats an undesired massive financial correction. This has been a long time coming and is better in the long run if the correction happens sooner than later. Good luck with whatever.
in any case, I adjusted the comment to clarify
What I'm trying to say is, unless for investment or research, these data doesn't have much to do with we as individuals. You can see people arguing that "You all feel X goes up but I don't feel that", and I'm just saying the same thing but from a different perspective.
