3Q2023 core inflation at 2% vindicates Powell's March 2021 prediction that inflation would be transitory

 

Maybe Trump is polling well because people remember a little actual food deflation under him, unlike now

 

Inflation rate at 4% year over year two months in a row is not the soft landing we were promised

 

Core pce inflation, which excludes food and energy measures, is still high at 3.5% year over year in October 2023, down 0.2 points from September or 5.4%

 Price increases at 3.5% instead of 3.7% year over year. This level remains outside of most people's experience since the late 1990s.

The broad measure fell to 3.0% from 3.4%. The energy goods and services component yoy has been negative, that is deflationary, for eight months in a row. The food component was up 2.0% year over year in October but is now in its tenth month of declines out of twelve on a year over year measure monthly.

Declining energy input costs have been the story behind declining inflation measures overall, primarily natural gas which is twice as important to the U.S. economy as gasoline on a BTU basis.

The Biden administration's green energy policy is at war with the reason for the happy circumstance of declining inflation measures it finds itself in, and Biden could be sailing to re-election if he were instead supporting fossil fuel production, which would slay the inflation dragon dead.

Gasoline averaged $2.48825/gallon for the four years 2017-2020, which Obama infamously said was impossible

Add in 2015 and 2016 and it averaged $2.42383.

In October 2023 under Obama 2.0 Americans pay 56% more than that.

 

In October 2023 it still costs 24% more to keep the lights on at home than it did on average for the four years 2017-2020

 

In October 2023 it still costs 33.26% more to heat your home with natural gas than it did on average for the four years 2017-2020

 

Dim bulb Jonathan Martin says Joe should heave Bidenomics into the dumpster just as broad inflation tanks from 3.7% yoy in September to 3.2% yoy in October

Perhaps the most overwhelming economic messaging advice I picked up from Democrats was for him to heave “Bidenomics” into the dumpster. Attempting to make voters believe something they don’t is folly. Attaching your name to that strategy borders on masochistic.

Here’s How Biden Can Turn It Around

Joe would be well on his way to re-election right now if he weren't shooting himself in the foot with his stupid green energy policies, which are keeping inflation from coming down harder than it already is.

That's what needs to go in the dumpster.

Core pce inflation at 3.7% yoy in September 2023: Two years and five months in excess of 3%

 Overall pce inflation has been stuck at 3.4% yoy for three months running as of Sep 2023, which indicates to me the Fed will at the very least keep rates where they are, or possibly raise them again as progress has stalled.

 

overall

core

 

Alfredo Ortiz for The Messenger discovers that permanently higher food prices are sticking it to consumers

 He points to food prices having gone up about 20% since Biden took office, here, because this index is up that much since Biden took office. He wonders why food prices are actually up much more than that.

He obviously doesn't understand how this works.

On a quarterly measure, and year over year, the increases for this index are as follows after Biden taking office in 1Q2021:

2Q2021 0.9%

3Q         3.3%

4Q         6.1%

1Q2022 8.7%

2Q       11.6%

3Q       13.2%

4Q       12.1%

1Q2023  9.9%

2Q          5.9%

3Q          3.0%.

 

Assume the worst example from the shopper's list:

 

"A pound of turkey breast went from $3.14 to $6.72, a 114% increase" from late 2020 until now.

 

$3.14 goes to $3.17 in 2Q2021, and so on down the list until you come up with $6.41 by 3Q2023, pretty close to the $6.72 from the example. Remember this index is for all food at home, not turkey specifically nor any other individual food item. Some food prices go up more than others. 

 

There's actually a turkey index. It's up a whopping 214%, not 20%. The shopper could be paying a lot more than $6.72 right now. Year over year prices were up 20% in 2021, and 72% in 2022 in the wake of an avian flu epidemic which wiped out the supply. In the first half of 2023 prices were up another 47% year over year.

Unless there's actual deflation in overall food prices, that is, sustained negative year over year reports instead of quarterly increase yoy after quarterly increase, higher prices are here to stay.

Core consumer price inflation year over year continues in excess of 4% in September 2023

 

The gas and electric utility Consumers Energy here in Michigan is price gouging under Green Energy Joe, yours probably is too

Compared to November 2020, my new budget plan payment for combined natural gas and electric for the coming winter will be 42% higher than it was three years ago, despite the fact that natural gas prices have normalized almost to the penny.

Electricity is up 25% since Green Energy Joe got elected and isn't coming down, but that can't account for it since I consume far less electricity than natural gas on an average basis. More than 65% of my energy consumption in kWh is from natural gas in the last year, as it is every year, less than 35% is from electricity.

A 25% increase to 35% of my old bill would result in a total payment today less than 9% higher. Instead it's 42% higher.

Remember that the utility uses natural gas to generate the electricity, too, and it's paying normal prices today for the gas, not the inflated prices of the recent past.

There's no excuse for the extra cost I'm paying.

The utility is price gouging.

 

 

 

Average protein prices per pound August 2023 vs. 2019 annual average

Ground Beef: $5.076 / $3.807, up 33.3%

Pork Chops: $4.359 / $3.339, up 30.5%

Bacon: $6.502 / $5.613, up 15.8%

Chicken: $1.958 / $1.495, up 30.97%

Dozen eggs: $2.043 / $1.396, up 46.3%

Dried beans: $1.702 / $1.344, up 26.6%

Gallon milk: $3.927 / $3.036, up 29.3%

Cheddar cheese: $5.897 / $5.308, up 11.1%

Cup of yogurt: $1.576 / $1.115, up 41.3%

Fox Business' broad inflation report contained an error

 Here's Megan Henney, September 29th :

An inflation measure closely watched by the Federal Reserve ticked higher in August as steep prices continue to squeeze millions of U.S. households.

The personal consumption expenditures (PCE) index showed that consumer prices rose 0.4% from the previous month, according to the Labor Department. On an annual basis, prices climbed 3.5% — up from 3.3% recorded the previous month, underscoring the challenge of taming high inflation.

She's referring to PCEPI. 

That measure isn't up from 3.3% the previous month. It's up from 3.4%, and 3.2% the month before that.

Jeff Cox at CNBC got it right, same day, as usual:

Including food and energy, headline PCE increased 0.4% on the month and 3.5% from a year ago. Headline inflation has been creeping higher in recent months after hitting 3.2% in June.

Forbes also had it right, because it actually checked the most recent data, which Fox evidently did not:

The most recent PCE price index data was released on September 29, 2023, covering the month of August. The headline August PCE inflation figure was +3.5% year over year, which was up slightly from the revised annual rate of +3.4% in July.

 

 

 

The three year and five month embarrassment of core inflation higher than the 10-year Treasury yield finally ended in August

 Yield for the 10-year US Treasury rose to an average 4.17% in August 2023 while core inflation year over year fell to 3.87% in August 2023.

This ends the 3-year 5-month run where core inflation exceeded the 10-year yield, something which has never happened in the data.

The only time core inflation outran the 10-year previously for a comparable period was in 1974 and 1975 when core inflation averaged 7.91% and 8.35% vs. the 10-year yield which averaged 7.56% and 7.99% respectively.

That lackadaisical response to inflation by the Federal Reserve under Arthur F. Burns (1970-1978) prefigured the 1980 resurgence of core inflation to 9.19%. Under his successor Paul Volcker, interest rates were hiked to unprecedented levels to curb inflation. The 10-year yield rose to an average of 13.92% in 1981 as a result.

The current fear is that the Powell Fed has set up the economy for a repeat of this awful period of inflation.

Whatever is said about it, there is no question that inflation is a benefit to the Federal government because it depends on borrowing to finance deficit spending and consequently the debt, now at an unprecedented $33 trillion. Inflation simply reduces that cost to the government over time by making the dollars previously borrowed worth less.

It is true that new borrowing costs much more, but the debt mountain mammoth in the living room is the more pressing problem. This is why the cognoscenti teach that inflation is a good thing.

Extending the duration of inflation at the currently relatively low level has been in the government's interest. The costs born by the public in the form of higher prices for goods, services, and borrowing are becoming routinized so that the voters are becoming inured to the deleterious effects for them while clueless of the benefits for the debt mongers. 

This is particularly the case for voters who have no memory of that horrible inflation which gave rise to the backlash represented by Ronald Reagan's election in 1980, and who now vastly outnumber those who still remember.

It should not be forgotten that Jimmy Carter got elected in 1976 anyway, after the Burns' inflation. The voters then took it all in stride, too, until they didn't.

Same as it ever was.

 

We've had an unprecedented three consecutive years now where inflation has remained higher than the 10-year UST yield on an average annual basis, and our hapless FOMC looks set to make it four

 There were just two years of this in the 1970s inflation, and they too were consecutive.

Anyone who calls Jerome Powell an inflation fighter is an idiot, or a stooge for the status quo of inflation profiteers.

This is all on the backs of the people, but where is the angry mob?

So medicated, so drugged, and so otherwise anesthetized by bread and circuses that the elites don't even bother to hide the truth.

 

Core inflation higher than DGS10 yield in 2020, 2021, 2022 (annual average)

Core inflation higher than DGS10 yield January through July 2023 (monthly view)

European Central Bank hikes main interest rate to 4% with core inflation running at 5.3%

 Story.

Yeah, that'll work.

Oil market reports suggesting tighter supply and higher prices through the rest of the year and beyond have fueled inflation fears; 

Overall inflation reversed course and ticked higher in August 2023 on a monthly jump in overall energy prices

 Overall inflation jumped up to 3.7% year-over-year and 0.6% month-over-month on a 5.6% jump in overall energy inflation month-over-month in August 2023.

Month-over-month, electricity was up 0.2%, gasoline was up 10.6%, piped utility gas was up 0.6%, fuel oil and other fuels were up 8.4%. Meanwhile food was up 0.2%.

Core inflation (overall inflation less food and energy) increased mom 0.3% and is still running 4.4% yoy.

Services inflation is still running high at 5.4% yoy, less rent of shelter at 3.1% yoy.

Shelter inflation rose mom 0.3% in both measures, and 7.2% yoy seasonally adjusted.

Going forward I expect inflation pressures to persist because of Biden administration green energy fantasies and hatred of fossil fuels combining with OPEC+ production cuts continuing indefinitely. 

Scandalous: Core inflation has been running ahead of the 10-year US Treasury for an unprecedented 3-years and 5-months, and everyone just shrugs

 

July inflation go boink