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Inflation rose more than expected, up 6.4% from a year ago
- jeffbee 4y agoMarkets don’t seem very surprised. All the index futures popped up slightly, nothing dramatic.
- FollowingTheDao 4y agoYou need to wait till after 2PM.
- anotherman554 4y agoWhy would you have to wait until 2PM? The market knows the new information from opening.
- FollowingTheDao 4y ago> Why would you have to wait until 2PM? I was a series 7 broker. There are patterns in the market. https://www.thebalancemoney.com/common-intra-day-stock-market-patterns-1031456 https://www.thebalancemoney.com/common-intra-day-stock-marke... > The market knows the new information from opening. Dow is down 400. Guess not!
- qclibre22 4y agoNo they didn't. They were all green, dropped to flat at 8:30am.
- cmrdporcupine 4y agoThere's popular and political pressure (EDIT: maybe mostly up here in Canada) to avoid more rate hakes, but I don't see how central banks -- at least in North America -- can realistically avoid another one. The Bank of Canada did a .25% hike last time and has signalled that it really wanted/wants to keep things flat and stop hikes; but then a jobs report came out last week that showed an unexpected drop in the unemployment rate and 150,000 new jobs added. Similar situation in the US. Tough situation, it should be interesting how this spring shakes out in the real-estate market.
- afarrell 4y agoIt might be that at this point the solution to inflation is to let things settle and get more efficient after the significant disruptions we’ve seen.
- kasey_junk 4y agoThe fed has been saying for a year that they aren’t stopping until at least 5.25% rates, the market is priced with that as a target.
- cmrdporcupine 4y agoSounds like the US fed is managed better than the Bank of Canada. I think the real estate lobby has too much voice up here.
- neom 4y agoShame they couldn't get Carney back in, guy is one of the most pragmatic and responsible central bankers we've seen in a long time. The fact that he's running a hedge fund is a real shame.
- neom 4y agoHeck Powell has even gone so far as to reference Volcker multiple times. It's clear he doesn't want to take his foot off the neck of inflation till he thinks he's brought it to its knees.
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- jannyfer 4y ago> up 6.4% from a year ago Is this the correct way to refer to inflation percentage vs. last year? On the graph, it shows that inflation was 7.5% in Jan 2022. The wording makes it sound like it's now 7.5% + 6.4% = 13.9%.
- ajross 4y agoNeither are correct. Inflation is a year-over-year metric. Prices now are 6.4% higher than they were in January of 2022. Prices then were 7.5% higher than they were in January of 2021. In general it's not very informative to talk about a change in the derivative ("inflation rose"). But if you did, you'd have to talk about an immediate delta and not a YoY. So in fact, the headline is simply incorrect. CPI inflation was 6.5% in December. So in fact "inflation is dropping". But that doesn't get clicks.
- KoftaBob 4y agoThe headline of the article itself more accurately describes what you're saying. Not sure if either the headline was changed, or the need to shorten the headline for HN's annoyingly restrictive character limit caused it to be confusing.
- FollowingTheDao 4y agoCORE Inflation is more important. Compared to December, the CPI rose 0.5%, the most in three months, mostly due to the higher cost of shelter, food, gasoline, and natural gas. And you think inflation is dropping? Also, if you look at the annual inflation rate, well; 2014 - 0.8% (!) 2015 - 0.7 (!) 2016 - 2.1 2017 - 2.1 2018 - 1.9 2019 - 2.3% 2020 - 1.4% (!) 2021 - 7% 2022 - 6.5% 2023 (so far) - 6.4% So, this means the FED will raise rates, by a lot. Because they cannot keep a 6.4% inflation rate going. And we have not had a business climate with inflation this hiugh for years. You can pretend like things are fine, but they are not.
- lotsofpulp 4y agoYou should put some money on your predictions, you stand to earn a ton as everyone else is thinking only a 0.25% increase is in the cards right now. https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html https://www.cmegroup.com/markets/interest-rates/cme-fedwatch...
- pavlov 4y agoExpectations are tempered by other expectations too. The Fed interest rate is projected to peak at 5 - 5.25% this year, so 6.4% is in ballpark. It's not like a year ago when inflation was at 8.5% and the Fed was still at zero. That was a very volatile combination.
- game_the0ry 4y ago6.4% is the "headline" number. Some of the statistics that go into the inflation calculation are often manipulated [1]. Likely, the realistic number is much higher and has been for a while. Anecdotally, people only care about the incremental direction of their quality of life - is it going up or going down? The trend for that speaks for itself. [1] https://www.investopedia.com/terms/h/hedonicpricing.asp https://www.investopedia.com/terms/h/hedonicpricing.asp
- tootie 4y agoHeadline inflation, like every other headline number, is an indicator. Not a useful metric that people are going to go to the store and expect everything to cost 6.4% more. They calculate it in a consistent way so we have fixed milestone to measure against. The Fed has a limited set of tools and they can only act on aggregate demand and lending. When it comes to specific outliers (like rent) you need legislation. https://www.pbs.org/newshour/show/white-house-outlines-plan-to-address-nations-soaring-rent-prices-and-protect-tenants https://www.pbs.org/newshour/show/white-house-outlines-plan-...
- FollowingTheDao 4y agoEveryone was telling me last week that this was not going to happen. There is no way inflation will be reduced until the FED rate is well above 7%. If you thought you were hearing about a lot of lay off the last month, just wait. People do not have money, and when they do not have money they cut spending.
- kasey_junk 4y agoWhat wasn’t going to happen? The consensus was 6.2, this was well within expectations. It also showed inflation slowed. This is frankly well inline with what most analysts thought was going to happen.
- FollowingTheDao 4y agoThat it would not be higher than 6.2%. Economists surveyed by Dow Jones had been looking for respective increases of 0.4% and 6.2%. So it was not "within expectations". And CORE CPI is even more improtant it increased 0.4% monthly and 5.6% from a year ago, against respective estimates of 0.3% and 5.5%. "While price increases had been abating in recent months, January’s data shows that inflation is still a force in a U.S. economy in danger of slipping into recession this year." ANNNNNDD....they changed the weighting. "January’s CPI report will take some time to analyze, as the BLS changed its methodology in how it reports the index. Some components, such as shelter, were given higher weightings, while others, such as food and energy now have slightly less influence." Food and energy? Less influence? Housing prices, which are slowing, giving more weight? Hmmmm.....
- kasey_junk 4y agoConsensus is a band with 6.2 being the median. No serious analyst would have said it “can’t be over 6.2”. 6.5 was the top of the bell curve I saw as late as yesterday. 6.4 is just not a weird number and won’t change any market expectations.
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- forgingahead 4y agoFascinating how different outlets are reporting this. The WSJ right now has it headlined "Inflation Cooled to 6.4% In January". https://www.wsj.com/ https://www.wsj.com/ So is it rising or cooling? Can the central banks ease rate increases? Or does the WSJ just hope and pray that the Fed will stop, just please make it stop?
- tootie 4y agoCooling doesn't mean dropping. It means less hot. If you take a lasagna out of the oven to cool but decide to cut in after only waiting a minute, it will still be too hot. The Fed is trying to keep your lasagna nice and warm after burning the last tray.
- FollowingTheDao 4y agoWelcome to the bullsh!t. It rose. Period. There is more inflation. That is what the .5% increase means. And yes, you are right, the WSJ just wants it to stop. Or shoudl I say Rupert Murdoch wants it to stop. News Corp to cut 1,250 jobs after missing second-quarter estimates https://www.theguardian.com/media/2023/feb/09/news-corp-job-cuts-missed-estimates https://www.theguardian.com/media/2023/feb/09/news-corp-job-...
- kasey_junk 4y agoRate of inflation growth is cooling. It’s a weird number that is always reported in a sort of strange way. The fed is expected to go up to 5.25 and most of the market still expect that.
- mughinn 4y agoReporting is always shit, you can't really trust the journalist or the editor that put the title to give you an accurate picture Both are true, too Inflation cooled, because Year over year in January is 6.4%, while in December it was 6.5% and in November it was 7.1%. So it has a downward trend Inflation was 0.5% month over month in January, which was higher than the market expected 0.4% The overall story is that inflation seems to be slowing down, but the market seems to think that the slowdown will happen quicker than it actually is, possibly making the Fed raise rates
- aliqot 4y agoIs anybody receiving cost-of-living adjustments from their employer?
- btbuildem 4y agoRecord profits are stolen wages
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- lotsofpulp 4y agoOr simple math because if purchasing power of currency goes down by 2% then nominal profits have to increase to maintain the same profit margin. If a business has a 3% profit margin, would you expect them to have a 2% profit margin 5 years from now, and 1% profit margin 10 years from now, and 0.1% profit margin x years from now?
- btbuildem 4y agoReplace "business" and "profit" with "employee" and "raise" and ask the question again.
- the_gastropod 4y agoNope
- akmarinov 4y agoNo, those usually lag behind
- grugagag 4y agoNo, instead they’re doubling down on layoff vibes to keep everyone in check
- shmatt 4y agoHow many employees have leverage right now to jump ship? Theres a direct connection there. Cost of living is different than cost of employing. If anything, cost of employing is going down in tech, going up in the service industry
- dcolkitt 4y agoOne thing to keep in mind is that the way the BLS measures shelter inflation is known to be extremely laggy. And shelter makes up 34% of the basket. High frequency metrics of shelter costs (like new leases or Zillow's metrics) show that housing is currently deflationary (i.e. below zero). However the CPI metrics is still reporting shelter inflation at 8.0% YoY and a 9.6% annualized rate MoM. Within the next few months we should see a very notable decline in the shelter component of inflation as it heads towards zero. The reality is because of this lagginess, "true inflation" this time last year was probably closer to 12%+, and as of the last few months is probably closer to 3%.
- 1980phipsi 4y agoBut there are good reasons for CPI to measure all leases and not just new leases. It depends on what your goal is of your measurement. If your goal is to measure the prices of a basket of goods representative of what urban consumers are spending money on, then measuring the prices of all leases is better than new leases. I would agree that a good forecast of inflation would incorporate what is happening with leases now, but I would disagree that this means anything for "true inflation".
- BobbyJo 4y agoI think most people see inflation as the change in cost to transact today vs some previous moment, as opposed to the change in broader prices paid, since a majority of the items normally talked about in the media are perishable/consumables like food and energy.
- coffeebeqn 4y agoI sure hope that makes its way to real rents by the time it’s time to renew. I’d love to hardball for the first time in 10 years and demand a lower rent instead of it slowly and sometimes fastly creeping up every year
- mberning 4y agoThe fact that 6.x% year over year is interpreted as some kind of victory is comical. Last year it was 7.x%. This year it is 6.x%. Exactly how long are people on the bottom rung of the economic ladder expected to hold on until inflation is brought back anywhere near the claimed 2% target. At this rate it's going to take a loooong time to get there. I have to imagine the fed is not very pleased with this.
- w14 4y agoDon't forget that even if inflation comes back to 2%, that's still only a rate of change. Prices continue to rise, just more slowly. The prices that we have today, that so many already can't afford, aren't going anywhere anytime soon.
- mberning 4y agoRight, it's extremely unlikely that prices will ever go down in aggregate, unless we have a very long and sustained deflationary period.
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- voisin 4y agoRight, the quick answer is that wages have to go up, but then that causes more inflation. So the real answer is that the tax system needs to be overhauled to redistribute such that economic disparities are reduced for the first time in multiple generations. But I don’t see that happening anytime soon. Not sure how this ends.
- largepeepee 4y agoWe are talking abt decision makers that effectively label having a health job market as a problem. Jobs = bad Says the same clowns who printed in excess of 40% of all dollars in existence within the last few years. All that liquidity is still in their hands today, but those being punished are the poor folks who did nothing wrong.
- 1980phipsi 4y agoThe MoM number was consistent with expectations (according to Bloomberg). The headline number expectations are harder to deal with because the report came with changes to seasonal adjustment factors as of Friday and a change to the basket of weights.
- thworp 4y agoCalculating a single number meant to represent inflation is silly. Inflation is more like a multi-dimensional field, analogue to air pressure, inside of a complex system (the atmosphere) and as such cannot be represented by a single number. Additionally the entire system of bureaucrats and politicians involved into calculating inflation have no incentive to accurately report inflation. They want to save on pensions, social security entitlements and wages. The bankers and economists want to make their fund performance look better in real terms by downplaying inflation. Keeping this in mind, I suspect inflation as has been somewhere around the S&P500 returns each year, but the people in power obviously benefit from linking wages to a cooked inflation number while they largely keep their money's value through investments.
- reducesuffering 4y agoHere's a perspective you might have not heard: Past 7 months inflation is 3.25% annualized, while fed funds rate is expected to be 4.75% next month. We're seeing high interest now for inflation that was 8 - 16 months ago.