Why Yesterday’s CPI report was so important
by New Deal democrat
Why Yesterday’s CPI report was so important
As promised, here is a link to my article, Why Yesterday’s CPI Report was such a Big Deal, over at Seeking Alpha.
I go into a great deal of detail parsing the report, particularly with regard to how the huge increase in house prices as has been recorded by both the Case Shiller and FHFA house price indexes, is now bleeding over into “owner’s equivalent rent,” the CPI’s official measure of housing inflation, and which is over 1/3 of the entire consumer inflation measure.
This in turn has implications for “real” wages and for “real” consumer spending, which in turn have big implications for the economy as a whole, 2/3’s of which is precisely that consumer spending.
I explain why this means that the consumer picture has darkened, and what I will be watching for to see if it spreads to the producer or financial sectors.
As usual, clicking over and reading should be helpful to you in understanding the current economy, and pay my lunch bill.
NDd
Not pretty and you portend a hard landing only to be made worse by political hardliners ganging up on Labor.
NDd,
I’d also say the headwinds are sustaining longer than the fed had predicted. Farm inputs just hit $1,100 a ton for N. Normally it’s around $168. Energy, and food are excluded from core, but end up being some of the biggest factors for the lower incomes.
The lack of truck drivers are also a big limiting factor. And that doesn’t seem to be getting better.
part of it is a Covid stimulus problem; when those checks went out, everyone went out and bought imported goods, depleting domestic inventories…so imports of consumer goods were 15% higher in the first quarter of this year than the prior peak in the 3rd quarter of 2019, and up 33.4% from the nadir…that doesn’t even count what’s still in the ships offshore… speculative financial assets can increase by a third in a year; physical transportation systems and the personal to run them, not so easily…
another problem we’ve had is with the types of things people have been buying in the wake of the pandemic….ie, it takes a lot more delivery trucks to restock when everyone is buying a year’s supplies of toilet paper than when they’re all buying new cell phones, even though the cell phones generate a much greater nominal sales volume…
All that, and: UMICH Consumer Confidence Survey – October 2021 – 71.7; November [preliminary] 2021 – 66.8 [lowest since 2011 both ‘current conditions’ and ‘expectations’ plunged].