11 ms·

June Inflation Drops to 3%

138 points by mgh2 3y ago

deleted 3y ago
[deleted]
dartharva 3y ago
https://archive.ph/4GlAd https://archive.ph/4GlAd
wing-_-nuts 3y ago
Well, this is good news. Rate rises might slow, but I wouldn't expect them to come down all that quickly based on our last fight with inflation in the 1980s. The era of zero interest rates are probably over for good. That's probably a good thing, but VCs won't be playing nearly as fast and loose with funding as they were over the past decade.
- Workaccount2 3y ago
  >That's probably a good thing If you own a home already...
  - KptMarchewa 3y ago
    If you don't, then the prices won't be pushed as fast as they would outside of that. Low rates==home price rise.
    - lolinder 3y ago
      Can confirm. We bought during the minimum rates, and the competition for housing was absolutely insane.
    - Workaccount2 3y ago
      Except that in areas where people actually live, higher rates haven't done much to lower those "low rate" prices. There is an insane supply problem and the fed's hand in the mortgage market doesn't make anything better. It's sensible for mortgages to all be ARMs, then rates will actually have a very real and unavoidable impact on home values. We are now going to be stuck with this before covid and after covid homeowner situation. People who bought prior to 2022, and especially prior to 2020 will be death gripping their 2% mortgage, to the point that you could basically write off that parcel of land as even existing for the next 20-25 years.
      - zpeti 3y ago
        That takes years to play out. Also, except for Miami every major city has had price decreases, so your personal anecdote is not what the stats show. And in fact, at 10% inflation, if prices don’t rise, that means they are getting 10% cheaper in real terms. So in fact prices definitely are falling, no city has had a 10% price rise in the last 12-18 months.
        Workaccount2 3y ago
        "Haven't done much" refers to reversing the price increases seen during low rates. Prices ran 20-30% in major markets and now getting pull backs of a few percent, mostly on the back of totally choked supply. Raise rates all you want, if there aren't houses being put on the market, it's not going to do shit.
        zpeti 3y ago
        There are plenty of houses being put on the market, just not in super trendy blue metropolitan areas.
        nebula8804 3y ago
        by living in the hood or in MAGA country you are paying the same price, its just taken out of your wealth in different ways. The market is pricing things appropriately.
        zpeti 3y ago
        Spoken like a true liberal elite.
        nebula8804 3y ago
        There is something that is scaring people away from living in those areas. the market does not care about your political views. You can deny reality all you want.
    - andy_ppp 3y ago
      You can expect house prices to continue to rise given the money printing and where it ended up during COVID. A lot of rich people need somewhere to put their increases in wealth post COVID, my guess is a boom for about 2-3 years before big problems and they might not need the size of mortgage to get a decent return that the interest rate matters all that much.
    - bluefishinit 3y ago
      You can get much less house for the same monthly mortgage payment now then you could before rates went up. The small decline in home prices doesn't offset the much higher monthly payment you have to pay now. People are constrained by how much they can afford to pay every month, not the overall amount they have to borrow.
  - wing-_-nuts 3y ago
    Or you're a cash buyer (I'm not in the Bay Area, obviously)
- femiagbabiaka 3y ago
  What are you using to draw this conclusion?
  - JumpCrisscross 3y ago
    The yield curve would be one [1]. Markets have materially increased their long-term rate expectations in the last month and year. [1] https://www.bloomberg.com/markets/rates-bonds/government-bonds/us https://www.bloomberg.com/markets/rates-bonds/government-bon...
    - femiagbabiaka 3y ago
      It seems like a flawed argument -- the yield curve didn't predict rate increases either.
      - JumpCrisscross 3y ago
        > the yield curve didn't predict rate increases either Neither did, by its own admission, the Fed.
        femiagbabiaka 3y ago
        Agreed. Seems like the only certainty is uncertainty in that case?
        nmhancoc 3y ago
        Every prediction has error bars, some error bars are smaller than others. I wouldn’t be so quick to throw my hands up. For example, the yield curve inversion has had quite good predictive ability so far, and it’s predicting a recession. If you buy the fed’s data driven approach, that means its predicting rate decreases. In that case the long term bond market’s prediction is supported more strongly than the fed’s prediction.
        3y ago
- zeroonetwothree 3y ago
  Predicting interest rates accurately in the long run is impossible, you have no basis for these statements.
  - wing-_-nuts 3y ago
    As someone who's studied economics, predicting interest rates in the long run is fairly straight forward. It's the short term movements that are impossible. I base my statements on historical fed moves in a similar environment, but I'm not paul volcker
    - deleted 3y ago
      [deleted]
    - hotpotamus 3y ago
      I've also studied finance and economics, like in university and everything, though not to any great extent. I came away from the experience thinking that it might have a bit more predictive power than reading chicken entrails. What long term predictions from the past accurately tell you today's rates? That is do you have any back testing?
  - reaperman 3y ago
    Long term (>9 months), yes. Medium term (3-6 months) predictions of medium precision is entirely reasonable given the size of the economy (like steering/stopping a container ship) as long as your cite your assumption that no black swan event will occur.
  - throw0101c 3y ago
    > Predicting interest rates accurately in the long run is impossible, you have no basis for these statements. Define "long run". Because over a few centuries the trend has been down: * https://www.bankofengland.co.uk/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018 https://www.bankofengland.co.uk/working-paper/2020/eight-cen... * https://www.visualcapitalist.com/700-year-decline-of-interest-rates/ https://www.visualcapitalist.com/700-year-decline-of-interes...
- rubyn00bie 3y ago
  Powell has said the Fed plans to hold rates. We’ll likely see one last increase this month, before a flat-lining and then an eventual cut. I wouldn’t expect the cut(s) to be substantial unless demand falls off a cliff. Powell goes with what the market is pricing in, if you want to know what that is look at “fed funds rate” odds: https://m.investing.com/central-banks/fed-rate-monitor https://m.investing.com/central-banks/fed-rate-monitor I’ve been using that tool for over a year now and it absolutely will show what Powell will do. The odds will change as information enters the market but in general it’s spot on.
  - lotsofpulp 3y ago
    This is the source for that: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html https://www.cmegroup.com/markets/interest-rates/cme-fedwatch... > I’ve been using that tool for over a year now and it absolutely will show what Powell will do. >The odds will change as information enters the market but in general it’s spot on. Sounds more like “it absolutely will show what Powell might do”. Also, Powell does not do it single handedly, there are 12 members on the Federal Open Market Committee that vote on setting the interest rate policy.
    - rubyn00bie 3y ago
      I know there are other members of the committee it’s just a colloquialism I suppose. And yeah, I thought about saying it “will absolutely show” but my inner economist said “it depends” because there could be a surprise (even though it’d be absolute madness).
- onlyrealcuzzo 3y ago
  If the market thought interest rates were never going back down, then the 30-year rate would be higher than the 1-year rate. The bond market isn't always right, but it's usually closer to the truth than some random speculator on the Internet (wisdom of the crowd, and all). A simple bit of reasoning with the Federal government being in debt $33T - means that if rates were to forever stay this high - their interest burden would be AT LEAST $1.75T per year. Current Federal tax receipts (minus payroll taxes) is $1.93T. Either Federal Tax rates are going to ~75%, the government stops doing anything beside servicing debt, we default on our debt, or short-term Interest Rates eventually go back to ~0%. Gee, I wonder which one people will vote for.
  - jmoak3 3y ago
    Or we let inflation eat away the debt, turkey style. But for real I agree in general - where is the money going to come from? The interest on the debt and the federal receipts don’t work! I see the ratio (linked below) hitting 0.5 this decade. What’s crazier is that % of GDP taxed according to the FRED is at historically normal levels dating back to 1950 - we’re not even at a point of low taxation relative to output. FRED data ------------- Debt to GDP: https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S % GDP Taxed by Federal Gov: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S Interest Payments / Federal Receipts: https://fred.stlouisfed.org/graph/?g=sOG https://fred.stlouisfed.org/graph/?g=sOG
    - onlyrealcuzzo 3y ago
      Except Turkey keeps adding to their debt, so it's not getting eaten away...
      - jmoak3 3y ago
        Also true. Most of our largest expenses - Medicare, Social Sec, Medicaid, Mil - are a mix of soft/hard pegging to inflation I believe.
    - khuey 3y ago
- MuffinFlavored 3y ago
  > Rate rises might slow Why is it good for rates to come down: financing mortgages/cars/etc. comes down Why is it bad for rates to come down: money market accounts/etc. won't yield ~4.75% for doing nothing Anything I am missing? Do they weigh each other out perfectly? Is one a bigger deal/better/worse than the other?
  - nmhancoc 3y ago
    > Why is it good for rates to come down: financing mortgages/cars/etc. comes down Not necessarily, it depends on the principal cost as well. If principal costs increase in tandem with rate declines, the financed cost doesn’t necessarily change. You’re missing the inputs into rates rather than the outputs from rates. Rates mathematically represent the value of a dollar available today versus a dollar available in N years. If we were to find capital intensive, large scale, low assessed risk, economically productive ventures tomorrow, we would expect rates to rise ceteris paribus as the dollars necessary for those ventures would compete with bonds for investment dollars today. For example wide spread nuclear fusion, or some kind of rail infrastructure, etc. In that sense secular declines in rates represent a society that has decided it has reached diminishing returns on capital, at least on a risk adjusted basis. Similarly rates embed a consideration for default risk, or in the case of a bond denominated by the issuer currency risk. In this sense rates going up is bad. There’s also the sheer debt and deficits governments run. Higher rates imply higher costs for both. Which situation you want probably starts to encroach on your political leanings, subject to a few parameters.
- lamontcg 3y ago
  > The era of zero interest rates are probably over for good. The ZIRP policies held for ~12 years probably created a lot of malinvestment due to kicking-the-can-down-the-road financing which will need to get cleared out in the next recession, when that recession hits, the Fed will slash rates again. Nothing really fundamental has changed in the way the Fed operates, and it still has its 2% inflation target. They just increased rates at what was a pretty breakneck pace and are talking foldly of Volker. This isn't the post-WWII Fed that let inflation get up to 10% in the 70s. Most of the effects of inflation and rates were due to shocks caused by the pandemic, which are over now. I don't see why people think that inflation or rates have fundamentally changed.
tootie 3y ago
People don't call out government competency nearly enough. Remember the Silicon Valley/First Republic catastrophe a few months ago? Contagion was fully contained, confidence restored, inflation is nearly on target with employment remaining rock solid. I wouldn't put it as pat "Biden did it", but Biden did everything in his power correctly, the Fed was fully vindicated, the bureaucrats at the FDIC did everything right, Congress did, uh, nothing wrong? It's a banner year for good government.
- zeroonetwothree 3y ago
  You mean the same government that caused inflation in the first place? To be fair it was different parts of the government, but the comparison sure doesn’t favor the elected officials.
  - b112 3y ago
    The government caused covid, and supply chain issues, which led to this? If so, which government was in power for the start and height of covid?
- wing-_-nuts 3y ago
  Just like IT, government never gets kudos when things run smoothly, but catches all of the blame when shit hits the fan.
  - mxuribe 3y ago
    Exactly this! And, the same could be said for other "entities" or "infrastructure", that, when things are fine no kudos; or worse, complaints asking "Why do we have X?", but then whining when something is not in place. :-)
    - tootie 3y ago
      If you're a football fan, the offensive line only gets called out when they screw up even though they're probably the most critical function of an offense.
seydor 3y ago
And NVidia stock is up 3%. Must keep nvidia even higher to bring inflation down even lower
- dnadler 3y ago
  Obviously there's a lot going on here, but one major factor is going to be discounting future earnings. Lower inflation means lower interest rates which means that the present value of future money is higher. So, in other words, growth is more valuable when rates are expected to be lower.
zgluck 3y ago
(US)
- mahmoudhossam 3y ago
  The only country that matters /s
  - xadhominemx 3y ago
    When it comes to the global economy, it’s basically true. Only the US and China, and to a lesser extent Europe collectively, really matter - everyone else follows.
    - zgluck 3y ago
      So I just checked the World Bank 2022 numbers (GDP in USD): US: 25.4T Europe (well, just EU+UK since I'm lazy): 19.7T China: 18.0T (<-- totally not cooked numbers) EU: 16.6T
      - xadhominemx 3y ago
        US and China are growing, Europe+UK is not for the past 10 years. So they are big but not a driver.
        zgluck 3y ago
        > Europe+UK is not [growing] for the past 10 years. That's not correct. Also UK is actually still in Europe. Mortal Engines is fiction, not a documentary.
    - soligern 3y ago
      India definitely belongs on this list.
      - zgluck 3y ago
        India's GDP in 2022 was 3.4T USD. They did beat the UK (at 3.1T USD) - but of course with a much larger population. (https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=IN https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?location...) (And since someone mentioned California: 3.6T.)
enraged_camel 3y ago
[flagged]
- deleted 3y ago
  [deleted]
- guhidalg 3y ago
  Is it the administration or Jerome Powell that we should be thanking?
  - codyb 3y ago
    Why not both? Biden certainly isn't urging the Fed to continue cutting rates despite a strong economy, while also cutting taxes increasing monetary velocity, during a time of increased monetary velocity due to COVID stimulus funds to keep things running.
  - RSHEPP 3y ago
    The administration chose to keep Jerome Powell in his position. So both?
    - alkibiades 3y ago
      no they didn’t LOL. they wanted their stooge brainard but congress refused to approve her
      - ModernMech 3y ago
        Wanting someone else doesn’t mean they didn’t keep Powell, which in fact they ended up doing. It also doesn’t mean she would have done a worse job. She could have done better, we will never know.
- alkibiades 3y ago
  yeah thank god republicans won the house and stopped the out of control spending that was causing inflation
berkle4455 3y ago
In other words: The massive inflation experienced across 2021 and 2022 is here to stay and it's still getting worse, just a wee bit slower. Edit: Downvotes? Pointing out the big picture is too inconvenient a truth? We shouldn't be celebrating 3%, we should be demanding why it's not -3%.
- KeplerBoy 3y ago
  Duh, nobody would want deflation.
- ceejayoz 3y ago
  > we should be demanding why it's not -3% The answer is readily available. https://en.wikipedia.org/wiki/Deflation https://en.wikipedia.org/wiki/Deflation
  - berkle4455 3y ago
    and deflation is a good thing when you've had a massive run-up.
    - ceejayoz 3y ago
      Economists don't seem to agree.
- dragonwriter 3y ago
  > We shouldn't be celebrating 3%, we should be demanding why it's not -3%. Deflation is bad, actually. (Inflation slower than wage growth would be nice, though.)
- cthalupa 3y ago
  We do not want deflation, particularly in an economy where the average household debt has increased significantly. -3% means that the real value of all this debt that has been accrued over the past few years is increasing at higher rate - not only are you paying interest, but every dollar paid is worth more and more as deflation occurs. If you're hoping for a recession for whatever reason, I guess you could demand deflation, but for the rest of us, we just want inflation to slow down. The goal is to keep inflation at a low enough rate that wages keep up.
adam_arthur 3y ago
The next few months will show low CPI on a MoM basis due to "base effects" of pandemic spending starting to ebb. Prices swung too far too fast on the upside, especially in rents. We see concurrent rent data declining over the past few months, but it has started to rebound more recently. However, structurally inflation is likely to resurge on a MoM basis later in the year. The labor market is tighter than ever before and wages are rising at 5-6% annualized. Oil looks set to rebound, as a lot of the decline was due to recession betting and US SPR releases distorting supply (which are still happening, but obviously can't go on forever). Inflation will only go away structurally once a recession ultimately hits. Very unlikely that it stays around 2% with markets, bonds, commodities rallying alongside 6%+ wage gains. The cycle length depends on whether the Fed decides to see through nominally lower numbers. If not, will be similar to the 70s/80s false troughs and re-steepening in inflation.
- jonnycomputer 3y ago
  Well, what does month over month say? We don't have to hae a recession to kill inflation. We can just have a soft-landing.
  - adam_arthur 3y ago
    MoM gives you a more current view of the state of inflation. Even better is to annualize the previous 3m, 6m, 12m Why care about inflation at all? Well, you can reference the history of most South American countries for that
    - jonnycomputer 3y ago
      Ok Adam "I answer questions you didn't really have" Arthur.
      - adam_arthur 3y ago
        You had one question in your comment which I answered, whether rhetorical or not. Saying "we can have a soft landing" with no context or supporting reasoning isn't really saying anything at all. History shows only really 1 instance of a "soft landing", and the economy was less overheated and policy much more proactive back then. Back then the Fed actually tried to move ahead of inflation by assessing structural tightness... not reactive based on CPI
jameslk 3y ago
Notably core inflation is still 5%: Fed officials are focused on cooling stubbornly high core inflation, which excludes volatile food and energy prices. Economists see core prices as a better predictor of future inflation than the overall inflation rate. Rising car prices, strong demand for labor-intensive services and an earlier surge in housing-rental prices have contributed to core inflation. “Where inflation is proving sticky is in services—getting haircuts, getting your car repaired, buying car insurance,” said Leo Feler, chief economist at Numerator. Economists estimate that core prices rose 5% in June from a year earlier, compared with 5.3% in May. From: https://www.wsj.com/articles/consumer-price-index-report-june-inflation-ede7f4b1 https://www.wsj.com/articles/consumer-price-index-report-jun...
- JumpCrisscross 3y ago
  > Notably core inflation is still 5% 4.8% YoY. Down from 5.3% in May and lower than the 5% expected by 20 bps. So situation not solved, but far from intractable.
- mikeyouse 3y ago
  Core inflation over the past 12 months is close to 5%. Core inflation in June, 0.2%, was much below expectations and annualizes to 2.4%. In charts; The trailing 12 month rate: https://fred.stlouisfed.org/graph/fredgraph.png?g=16YXk https://fred.stlouisfed.org/graph/fredgraph.png?g=16YXk The monthly rate (actually 0.156% in June so 1.9% annualized): https://fred.stlouisfed.org/graph/fredgraph.png?g=16YXN https://fred.stlouisfed.org/graph/fredgraph.png?g=16YXN
sakopov 3y ago
Not sure if we're calling it too early. Personal savings are half of what they used to be before COVID while personal debt has doubled. It seems like what's keeping this economy afloat is people going into debt and/or dipping into their savings to spend. The job market is red-hot and the money supply is still in the stratosphere compared to pre-COVID. The housing market is a mess for probably the next 10 years as the builders try to catch up with demand. There is really not a lot of great things going right now and I hope the FED has learned it's lesson from the 70/80s when they stopped raising rates too early and the CPI shot up to even higher highs from new lows.
- Eumenes 3y ago
  I just made a comment that pretty much is aligned with yours. Taking a victory lap on inflation numbers is just silly. There's some serious rot going on atm. We're probably a small disaster away from a really big problem.
  - genghisjahn 3y ago
    Aren't we always a small disaster away from a really big problem?
    - gjsman-1000 3y ago
      "It hasn't happened yet, therefore it can't happen." Well, yes, we are always at that risk... but even basic numbers are getting much worse. Depending on who you ask, about 37% of Americans (give-or-take) cannot withstand a sudden $400 expense without using debt. This is ~5% higher than it was a year before, in 2021 when it was 32%. https://www.federalreserve.gov/consumerscommunities/shed.htm https://www.federalreserve.gov/consumerscommunities/shed.htm It goes without saying that there is a finite ceiling for how much debt a person can obtain. When 1/3 of the country risks hitting that ceiling with how debt use has increased, is unable to get more debt, and can't afford $400; you have a perfect recipe for extreme social unrest in the future if things don't turn around. It's made worse by inflation eating away at pay, and also the record-high APRs that credit cards are demanding; and high rates in general for debt of any kind.
Eumenes 3y ago
These numbers are borderline meaningless for the average American. Economists, wall street, and financial news pundits can go back and forth all they want, the average person is most definitely feeling a massive crunch and a percentage number isn't going to explain away the rot building underneath the floor. IMO, the big elephant in the room is household debt - people are extremely leveraged, and inflation data doesn't illustrate this. Inflation #s to me is a political chip that administrations on both sides use for finger pointing.
- elforce002 3y ago
  Basically, Microeconomics vs Macroeconomics.
  - somenameforme 3y ago
    I think it's something beyond just this. Inflation, especially how it's being used today, increasingly feels like a metric almost as pointless as GDP. Because what people, laymen and expert alike, refer to when they speak of inflation is all driven by a focus on what really matters - prices. Obviously the rate of change of prices, inflation, is extremely important but only as a means of gaining insight into the prices themselves. But now inflation is being considered as a metric of priority, by itself - which distorts its purpose (akin to what happened to GDP). And we're in a perfect illustration of why. Prices have dramatically increased, but now that they're continuing to increase beyond this at a rate of change is "only" 50% higher than the desired rate of change the Fed was aiming for, back when prices were lower, you have some people ready to unfurl "Mission Accomplished" banners. Clearly, the metric has become more important than the meaning, again like GDP. Gallup maintains an active economic impressions survey here [1], and currently we're at lows matched only during the housing market crash in terms of economic confidence. And I've no doubt this is playing into it. From the perspective of people continuing to pay intolerably high prices for effectively everything, seeing economists cheer about this is going to look alot like the 'this is fine' meme to basically everybody on the outside. [1] - https://news.gallup.com/poll/1609/consumer-views-economy.aspx https://news.gallup.com/poll/1609/consumer-views-economy.asp...
- 3y ago
ttul 3y ago
The figure is slightly misleading because it’s a measure of year-on-year change in CPI, rather than being a point-in-time measurement, as many assume it to be. June’s one month CPI increase was 0.2%, coming on the heels of May at 0.1%. The annual rates for May and June respectively are thus 1.2% and 2.5% respectively - significantly lower than the year on year rate would suggest. If we assume the true point in time rate is between 1.2 and 2.5%, then the economy has rapidly cooled. The strongly inverted yield curve reflects this slowdown and predicts - with some degree of confidence - that the Fed will have to drop rates soon because the slowdown is leading us towards a recession. I find it interesting that the S&P is close to its height prior to the start of last year’s bear market even though the yield curve suggests extreme caution is warranted. A recession would imply that the interest rate policy has worked. But it would also imply reduced corporate profits and growth, both of which feed into fundamental measures of equity value. This is a nerve wracking time to be invested in stocks.
- JumpCrisscross 3y ago
  > then the economy has rapidly cooled No, price levels have decelerated. > recession would imply that the interest rate policy has worked No, it would not. Price levels and the economy are fundamentally related, but they can and do move separately. Stagflation is one such condition. The Fed is targeting its opposite. Plunging America into a recession would be a clear policy failure. No views on the stock market here. Just pointing out that rising wages and thus rising spending, with rising production permitting low inflation and a Fed calmly and confidently lowering rates over years while unemployment stays low is achievable.
  - lamontcg 3y ago
    LEI growth rate is very negative: https://www.conference-board.org/topics/us-leading-indicators https://www.conference-board.org/topics/us-leading-indicator... Manufacturing is negative: https://www.supplychaindive.com/news/manufacturing-pmi-ism-s-and-p-june-looming-recession-layoffs/685274/ https://www.supplychaindive.com/news/manufacturing-pmi-ism-s...
    - 3y ago
wskinner 3y ago
I find directly looking at the CPI rather than the trailing growth rate to be more informative. Since March 2020, the CPI is up 17%. Source: https://fred.stlouisfed.org/series/CPIAUCSL https://fred.stlouisfed.org/series/CPIAUCSL
alkibiades 3y ago
this is really good but let’s not celebrate til the battles over and it’s sustainably back to 2%. well see how it all shakes out in 18 months as a lot of fed tightening is delayed in effects i think everyone needs to do some reflecting. i certainly need to reconcile why i was so sure that the economy would have to crash from high interest rates in order to stop inflation one camp seems to want to take credit for inflation falling but ignore the incompetence of it rising in the first place the second seems to want pretend it’s not coming down when it clearly is. imo 2 things are undeniable: 1. both transitory (pandemic) and policy errors (overzealous spending and interest rates) caused it in first place. 2. both transitory (base effects of pandemic going away) and policy successes (fed raising rates and congress stopping socialist spending) are causing it to come down
Dig1t 3y ago
My stupid defcon ticket is $440 this year. 2018: $280 2019: $300 2021: $300 2022: $360 2023: $440 This is insane. Still seems pretty high to me every time I go to buy stuff like this.
- mwint 3y ago
  Defcon tickets are that cheap? Man, I just assumed it was a 1200+ thing.
  - nebula8804 3y ago
    I think you are thinking of blackhat.
- nebula8804 3y ago
  I'm glad i'm not the only one who had a jaw drop moment this year. I wonder how many con goers will be surprised when they show up with only $360 dollars this year. I was shocked at 300$ since I was used to the cheap cheap prices of CCC.
somenameforme 3y ago
Do the people cheering this understand that inflation is not a 'baseline' measurement, but a relative one? CPI (which inflation is measured off of) is based on the cost of a fixed bucket of goods, which you can see here [1]. In January 2020, this bucket of goods cost $259 units. Today it costs $304. For context, had the CPI maintained target interest levels of 2% per annum, then today that bucket of goods 'should' cost somewhere around $278. And even this substantially inflated bucket cost continues to rise, quite rapidly. In other words, this news does not mean that prices are going to go down - let alone return to the normal. A slowing inflation rate is better than the opposite, but that's really all this is. We are not at the finish line or anywhere remotely near to it, yet. It will be important to see how inflation continues, especially as wages adjust. In particular, a raise of ~18% over the past 3 years (in total), would be the break-even point. Below that and you'd be seeing a real decline in wages, which I think is almost certainly the vast majority of people. [1] - https://fred.stlouisfed.org/series/CPIAUCSL https://fred.stlouisfed.org/series/CPIAUCSL
- sangnoir 3y ago
  > Do the people cheering this understand that inflation is not a 'baseline' measurement, but a relative one? Yes, of course. Inflation is a derivative, and when the rate at which prices were increasing slows down: that is worth cheering. It's a good thing (for consumers) in and of itself.
- ryanwaggoner 3y ago
  Yes, I think most people who are paying any attention to either inflation rates or the economy know that an inflation rate of 2% does not imply deflation. And there is no finish line, this is an infinite game, not a finite one. Lastly, wages are also up over the last three years (that’s a huge driver of inflation!). Obviouslyy not evenly distributed, but I don’t think you can make the case that real wages are sharply decreasing (especially once you remove the weird outlier spike that 2020 gave us): https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
TradingPlaces 3y ago
This was definitely a mild report, but that headline YoY number is being pulled down by base effects with June 2022. July will reverse that effect, so it will look high in comparison
netbioserror 3y ago
>The New York Times reports that the government's calculation of its own inflation statistic is X%. We live in clownish times, shepherded by clownish people.
mark_l_watson 3y ago
The NYT used to be one of my favorite news sources. After their cheer leading for invading Iraq I started to change my mind. Fast forward to today, their whole reason to exist now seems to promote pro war democratic politicians and to lie and slander anyone who is anti war or critical of big pharma. Their hit piece on Kennedy's wife Cheryl Hines was shameful. EDIT: my point here is that they want to make the Biden administration look as good as possible. I want to era of Walter Cronkite back.
- spywaregorilla 3y ago
  Oh no, NYT posted on a high level economic indicator as they usually do. Better complain about their war coverage a couple decades ago.
  - mark_l_watson 3y ago
    To be fair, the NYT’s war mongering is fairly constant. That is just my opinion, which does not matter really, but it is my honest opinion. Our endless wars kill too many innocent people. I love my country, but I wish we would change our collective behavior on the constant war thing.
    - chris_wot 3y ago
      If it is your opinion, why do you believe it does not matter?
- deleted 3y ago
  [deleted]

138 points by mgh2 3y ago

deleted 3y ago

[deleted]

dartharva 3y ago

https://archive.ph/4GlAd https://archive.ph/4GlAd

wing-_-nuts 3y ago

Well, this is good news. Rate rises might slow, but I wouldn't expect them to come down all that quickly based on our last fight with inflation in the 1980s. The era of zero interest rates are probably over for good. That's probably a good thing, but VCs won't be playing nearly as fast and loose with funding as they were over the past decade.

Workaccount2 3y ago
>That's probably a good thing If you own a home already...
- KptMarchewa 3y ago
  If you don't, then the prices won't be pushed as fast as they would outside of that. Low rates==home price rise.
  - lolinder 3y ago
    Can confirm. We bought during the minimum rates, and the competition for housing was absolutely insane.
  - Workaccount2 3y ago
    Except that in areas where people actually live, higher rates haven't done much to lower those "low rate" prices. There is an insane supply problem and the fed's hand in the mortgage market doesn't make anything better. It's sensible for mortgages to all be ARMs, then rates will actually have a very real and unavoidable impact on home values. We are now going to be stuck with this before covid and after covid homeowner situation. People who bought prior to 2022, and especially prior to 2020 will be death gripping their 2% mortgage, to the point that you could basically write off that parcel of land as even existing for the next 20-25 years.
    - zpeti 3y ago
      That takes years to play out. Also, except for Miami every major city has had price decreases, so your personal anecdote is not what the stats show. And in fact, at 10% inflation, if prices don’t rise, that means they are getting 10% cheaper in real terms. So in fact prices definitely are falling, no city has had a 10% price rise in the last 12-18 months.
      - Workaccount2 3y ago
        "Haven't done much" refers to reversing the price increases seen during low rates. Prices ran 20-30% in major markets and now getting pull backs of a few percent, mostly on the back of totally choked supply. Raise rates all you want, if there aren't houses being put on the market, it's not going to do shit.
        zpeti 3y ago
        There are plenty of houses being put on the market, just not in super trendy blue metropolitan areas.
        nebula8804 3y ago
        by living in the hood or in MAGA country you are paying the same price, its just taken out of your wealth in different ways. The market is pricing things appropriately.
        zpeti 3y ago
        Spoken like a true liberal elite.
        nebula8804 3y ago
        There is something that is scaring people away from living in those areas. the market does not care about your political views. You can deny reality all you want.
  - andy_ppp 3y ago
    You can expect house prices to continue to rise given the money printing and where it ended up during COVID. A lot of rich people need somewhere to put their increases in wealth post COVID, my guess is a boom for about 2-3 years before big problems and they might not need the size of mortgage to get a decent return that the interest rate matters all that much.
  - bluefishinit 3y ago
    You can get much less house for the same monthly mortgage payment now then you could before rates went up. The small decline in home prices doesn't offset the much higher monthly payment you have to pay now. People are constrained by how much they can afford to pay every month, not the overall amount they have to borrow.
- wing-_-nuts 3y ago
  Or you're a cash buyer (I'm not in the Bay Area, obviously)
femiagbabiaka 3y ago
What are you using to draw this conclusion?
- JumpCrisscross 3y ago
  The yield curve would be one [1]. Markets have materially increased their long-term rate expectations in the last month and year. [1] https://www.bloomberg.com/markets/rates-bonds/government-bonds/us https://www.bloomberg.com/markets/rates-bonds/government-bon...
  - femiagbabiaka 3y ago
    It seems like a flawed argument -- the yield curve didn't predict rate increases either.
    - JumpCrisscross 3y ago
      > the yield curve didn't predict rate increases either Neither did, by its own admission, the Fed.
      - femiagbabiaka 3y ago
        Agreed. Seems like the only certainty is uncertainty in that case?
        nmhancoc 3y ago
        Every prediction has error bars, some error bars are smaller than others. I wouldn’t be so quick to throw my hands up. For example, the yield curve inversion has had quite good predictive ability so far, and it’s predicting a recession. If you buy the fed’s data driven approach, that means its predicting rate decreases. In that case the long term bond market’s prediction is supported more strongly than the fed’s prediction.
        3y ago
zeroonetwothree 3y ago
Predicting interest rates accurately in the long run is impossible, you have no basis for these statements.
- wing-_-nuts 3y ago
  As someone who's studied economics, predicting interest rates in the long run is fairly straight forward. It's the short term movements that are impossible. I base my statements on historical fed moves in a similar environment, but I'm not paul volcker
  - deleted 3y ago
    [deleted]
  - hotpotamus 3y ago
    I've also studied finance and economics, like in university and everything, though not to any great extent. I came away from the experience thinking that it might have a bit more predictive power than reading chicken entrails. What long term predictions from the past accurately tell you today's rates? That is do you have any back testing?
- reaperman 3y ago
  Long term (>9 months), yes. Medium term (3-6 months) predictions of medium precision is entirely reasonable given the size of the economy (like steering/stopping a container ship) as long as your cite your assumption that no black swan event will occur.
- throw0101c 3y ago
  > Predicting interest rates accurately in the long run is impossible, you have no basis for these statements. Define "long run". Because over a few centuries the trend has been down: * https://www.bankofengland.co.uk/working-paper/2020/eight-centuries-of-global-real-interest-rates-r-g-and-the-suprasecular-decline-1311-2018 https://www.bankofengland.co.uk/working-paper/2020/eight-cen... * https://www.visualcapitalist.com/700-year-decline-of-interest-rates/ https://www.visualcapitalist.com/700-year-decline-of-interes...
rubyn00bie 3y ago
Powell has said the Fed plans to hold rates. We’ll likely see one last increase this month, before a flat-lining and then an eventual cut. I wouldn’t expect the cut(s) to be substantial unless demand falls off a cliff. Powell goes with what the market is pricing in, if you want to know what that is look at “fed funds rate” odds: https://m.investing.com/central-banks/fed-rate-monitor https://m.investing.com/central-banks/fed-rate-monitor I’ve been using that tool for over a year now and it absolutely will show what Powell will do. The odds will change as information enters the market but in general it’s spot on.
- lotsofpulp 3y ago
  This is the source for that: https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html https://www.cmegroup.com/markets/interest-rates/cme-fedwatch... > I’ve been using that tool for over a year now and it absolutely will show what Powell will do. >The odds will change as information enters the market but in general it’s spot on. Sounds more like “it absolutely will show what Powell might do”. Also, Powell does not do it single handedly, there are 12 members on the Federal Open Market Committee that vote on setting the interest rate policy.
  - rubyn00bie 3y ago
    I know there are other members of the committee it’s just a colloquialism I suppose. And yeah, I thought about saying it “will absolutely show” but my inner economist said “it depends” because there could be a surprise (even though it’d be absolute madness).
onlyrealcuzzo 3y ago
If the market thought interest rates were never going back down, then the 30-year rate would be higher than the 1-year rate. The bond market isn't always right, but it's usually closer to the truth than some random speculator on the Internet (wisdom of the crowd, and all). A simple bit of reasoning with the Federal government being in debt $33T - means that if rates were to forever stay this high - their interest burden would be AT LEAST $1.75T per year. Current Federal tax receipts (minus payroll taxes) is $1.93T. Either Federal Tax rates are going to ~75%, the government stops doing anything beside servicing debt, we default on our debt, or short-term Interest Rates eventually go back to ~0%. Gee, I wonder which one people will vote for.
- jmoak3 3y ago
  Or we let inflation eat away the debt, turkey style. But for real I agree in general - where is the money going to come from? The interest on the debt and the federal receipts don’t work! I see the ratio (linked below) hitting 0.5 this decade. What’s crazier is that % of GDP taxed according to the FRED is at historically normal levels dating back to 1950 - we’re not even at a point of low taxation relative to output. FRED data ------------- Debt to GDP: https://fred.stlouisfed.org/series/GFDEGDQ188S https://fred.stlouisfed.org/series/GFDEGDQ188S % GDP Taxed by Federal Gov: https://fred.stlouisfed.org/series/FYFRGDA188S https://fred.stlouisfed.org/series/FYFRGDA188S Interest Payments / Federal Receipts: https://fred.stlouisfed.org/graph/?g=sOG https://fred.stlouisfed.org/graph/?g=sOG
  - onlyrealcuzzo 3y ago
    Except Turkey keeps adding to their debt, so it's not getting eaten away...
    - jmoak3 3y ago
      Also true. Most of our largest expenses - Medicare, Social Sec, Medicaid, Mil - are a mix of soft/hard pegging to inflation I believe.
  - khuey 3y ago
MuffinFlavored 3y ago
> Rate rises might slow Why is it good for rates to come down: financing mortgages/cars/etc. comes down Why is it bad for rates to come down: money market accounts/etc. won't yield ~4.75% for doing nothing Anything I am missing? Do they weigh each other out perfectly? Is one a bigger deal/better/worse than the other?
- nmhancoc 3y ago
  > Why is it good for rates to come down: financing mortgages/cars/etc. comes down Not necessarily, it depends on the principal cost as well. If principal costs increase in tandem with rate declines, the financed cost doesn’t necessarily change. You’re missing the inputs into rates rather than the outputs from rates. Rates mathematically represent the value of a dollar available today versus a dollar available in N years. If we were to find capital intensive, large scale, low assessed risk, economically productive ventures tomorrow, we would expect rates to rise ceteris paribus as the dollars necessary for those ventures would compete with bonds for investment dollars today. For example wide spread nuclear fusion, or some kind of rail infrastructure, etc. In that sense secular declines in rates represent a society that has decided it has reached diminishing returns on capital, at least on a risk adjusted basis. Similarly rates embed a consideration for default risk, or in the case of a bond denominated by the issuer currency risk. In this sense rates going up is bad. There’s also the sheer debt and deficits governments run. Higher rates imply higher costs for both. Which situation you want probably starts to encroach on your political leanings, subject to a few parameters.
lamontcg 3y ago
> The era of zero interest rates are probably over for good. The ZIRP policies held for ~12 years probably created a lot of malinvestment due to kicking-the-can-down-the-road financing which will need to get cleared out in the next recession, when that recession hits, the Fed will slash rates again. Nothing really fundamental has changed in the way the Fed operates, and it still has its 2% inflation target. They just increased rates at what was a pretty breakneck pace and are talking foldly of Volker. This isn't the post-WWII Fed that let inflation get up to 10% in the 70s. Most of the effects of inflation and rates were due to shocks caused by the pandemic, which are over now. I don't see why people think that inflation or rates have fundamentally changed.

tootie 3y ago

People don't call out government competency nearly enough. Remember the Silicon Valley/First Republic catastrophe a few months ago? Contagion was fully contained, confidence restored, inflation is nearly on target with employment remaining rock solid. I wouldn't put it as pat "Biden did it", but Biden did everything in his power correctly, the Fed was fully vindicated, the bureaucrats at the FDIC did everything right, Congress did, uh, nothing wrong? It's a banner year for good government.

zeroonetwothree 3y ago
You mean the same government that caused inflation in the first place? To be fair it was different parts of the government, but the comparison sure doesn’t favor the elected officials.
- b112 3y ago
  The government caused covid, and supply chain issues, which led to this? If so, which government was in power for the start and height of covid?
wing-_-nuts 3y ago
Just like IT, government never gets kudos when things run smoothly, but catches all of the blame when shit hits the fan.
- mxuribe 3y ago
  Exactly this! And, the same could be said for other "entities" or "infrastructure", that, when things are fine no kudos; or worse, complaints asking "Why do we have X?", but then whining when something is not in place. :-)
  - tootie 3y ago
    If you're a football fan, the offensive line only gets called out when they screw up even though they're probably the most critical function of an offense.

seydor 3y ago

And NVidia stock is up 3%. Must keep nvidia even higher to bring inflation down even lower

dnadler 3y ago
Obviously there's a lot going on here, but one major factor is going to be discounting future earnings. Lower inflation means lower interest rates which means that the present value of future money is higher. So, in other words, growth is more valuable when rates are expected to be lower.

zgluck 3y ago

(US)

mahmoudhossam 3y ago
The only country that matters /s
- xadhominemx 3y ago
  When it comes to the global economy, it’s basically true. Only the US and China, and to a lesser extent Europe collectively, really matter - everyone else follows.
  - zgluck 3y ago
    So I just checked the World Bank 2022 numbers (GDP in USD): US: 25.4T Europe (well, just EU+UK since I'm lazy): 19.7T China: 18.0T (<-- totally not cooked numbers) EU: 16.6T
    - xadhominemx 3y ago
      US and China are growing, Europe+UK is not for the past 10 years. So they are big but not a driver.
      - zgluck 3y ago
        > Europe+UK is not [growing] for the past 10 years. That's not correct. Also UK is actually still in Europe. Mortal Engines is fiction, not a documentary.
  - soligern 3y ago
    India definitely belongs on this list.
    - zgluck 3y ago
      India's GDP in 2022 was 3.4T USD. They did beat the UK (at 3.1T USD) - but of course with a much larger population. (https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?locations=IN https://data.worldbank.org/indicator/NY.GDP.MKTP.CD?location...) (And since someone mentioned California: 3.6T.)

enraged_camel 3y ago

[flagged]

deleted 3y ago
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guhidalg 3y ago
Is it the administration or Jerome Powell that we should be thanking?
- codyb 3y ago
  Why not both? Biden certainly isn't urging the Fed to continue cutting rates despite a strong economy, while also cutting taxes increasing monetary velocity, during a time of increased monetary velocity due to COVID stimulus funds to keep things running.
- RSHEPP 3y ago
  The administration chose to keep Jerome Powell in his position. So both?
  - alkibiades 3y ago
    no they didn’t LOL. they wanted their stooge brainard but congress refused to approve her
    - ModernMech 3y ago
      Wanting someone else doesn’t mean they didn’t keep Powell, which in fact they ended up doing. It also doesn’t mean she would have done a worse job. She could have done better, we will never know.
alkibiades 3y ago
yeah thank god republicans won the house and stopped the out of control spending that was causing inflation

berkle4455 3y ago

In other words: The massive inflation experienced across 2021 and 2022 is here to stay and it's still getting worse, just a wee bit slower. Edit: Downvotes? Pointing out the big picture is too inconvenient a truth? We shouldn't be celebrating 3%, we should be demanding why it's not -3%.

KeplerBoy 3y ago
Duh, nobody would want deflation.
ceejayoz 3y ago
> we should be demanding why it's not -3% The answer is readily available. https://en.wikipedia.org/wiki/Deflation https://en.wikipedia.org/wiki/Deflation
- berkle4455 3y ago
  and deflation is a good thing when you've had a massive run-up.
  - ceejayoz 3y ago
    Economists don't seem to agree.
dragonwriter 3y ago
> We shouldn't be celebrating 3%, we should be demanding why it's not -3%. Deflation is bad, actually. (Inflation slower than wage growth would be nice, though.)
cthalupa 3y ago
We do not want deflation, particularly in an economy where the average household debt has increased significantly. -3% means that the real value of all this debt that has been accrued over the past few years is increasing at higher rate - not only are you paying interest, but every dollar paid is worth more and more as deflation occurs. If you're hoping for a recession for whatever reason, I guess you could demand deflation, but for the rest of us, we just want inflation to slow down. The goal is to keep inflation at a low enough rate that wages keep up.

adam_arthur 3y ago

The next few months will show low CPI on a MoM basis due to "base effects" of pandemic spending starting to ebb. Prices swung too far too fast on the upside, especially in rents. We see concurrent rent data declining over the past few months, but it has started to rebound more recently. However, structurally inflation is likely to resurge on a MoM basis later in the year. The labor market is tighter than ever before and wages are rising at 5-6% annualized. Oil looks set to rebound, as a lot of the decline was due to recession betting and US SPR releases distorting supply (which are still happening, but obviously can't go on forever). Inflation will only go away structurally once a recession ultimately hits. Very unlikely that it stays around 2% with markets, bonds, commodities rallying alongside 6%+ wage gains. The cycle length depends on whether the Fed decides to see through nominally lower numbers. If not, will be similar to the 70s/80s false troughs and re-steepening in inflation.

jonnycomputer 3y ago
Well, what does month over month say? We don't have to hae a recession to kill inflation. We can just have a soft-landing.
- adam_arthur 3y ago
  MoM gives you a more current view of the state of inflation. Even better is to annualize the previous 3m, 6m, 12m Why care about inflation at all? Well, you can reference the history of most South American countries for that
  - jonnycomputer 3y ago
    Ok Adam "I answer questions you didn't really have" Arthur.
    - adam_arthur 3y ago
      You had one question in your comment which I answered, whether rhetorical or not. Saying "we can have a soft landing" with no context or supporting reasoning isn't really saying anything at all. History shows only really 1 instance of a "soft landing", and the economy was less overheated and policy much more proactive back then. Back then the Fed actually tried to move ahead of inflation by assessing structural tightness... not reactive based on CPI

jameslk 3y ago

Notably core inflation is still 5%: Fed officials are focused on cooling stubbornly high core inflation, which excludes volatile food and energy prices. Economists see core prices as a better predictor of future inflation than the overall inflation rate. Rising car prices, strong demand for labor-intensive services and an earlier surge in housing-rental prices have contributed to core inflation. “Where inflation is proving sticky is in services—getting haircuts, getting your car repaired, buying car insurance,” said Leo Feler, chief economist at Numerator. Economists estimate that core prices rose 5% in June from a year earlier, compared with 5.3% in May. From: https://www.wsj.com/articles/consumer-price-index-report-june-inflation-ede7f4b1 https://www.wsj.com/articles/consumer-price-index-report-jun...

JumpCrisscross 3y ago
> Notably core inflation is still 5% 4.8% YoY. Down from 5.3% in May and lower than the 5% expected by 20 bps. So situation not solved, but far from intractable.
mikeyouse 3y ago
Core inflation over the past 12 months is close to 5%. Core inflation in June, 0.2%, was much below expectations and annualizes to 2.4%. In charts; The trailing 12 month rate: https://fred.stlouisfed.org/graph/fredgraph.png?g=16YXk https://fred.stlouisfed.org/graph/fredgraph.png?g=16YXk The monthly rate (actually 0.156% in June so 1.9% annualized): https://fred.stlouisfed.org/graph/fredgraph.png?g=16YXN https://fred.stlouisfed.org/graph/fredgraph.png?g=16YXN

sakopov 3y ago

Not sure if we're calling it too early. Personal savings are half of what they used to be before COVID while personal debt has doubled. It seems like what's keeping this economy afloat is people going into debt and/or dipping into their savings to spend. The job market is red-hot and the money supply is still in the stratosphere compared to pre-COVID. The housing market is a mess for probably the next 10 years as the builders try to catch up with demand. There is really not a lot of great things going right now and I hope the FED has learned it's lesson from the 70/80s when they stopped raising rates too early and the CPI shot up to even higher highs from new lows.

Eumenes 3y ago
I just made a comment that pretty much is aligned with yours. Taking a victory lap on inflation numbers is just silly. There's some serious rot going on atm. We're probably a small disaster away from a really big problem.
- genghisjahn 3y ago
  Aren't we always a small disaster away from a really big problem?
  - gjsman-1000 3y ago
    "It hasn't happened yet, therefore it can't happen." Well, yes, we are always at that risk... but even basic numbers are getting much worse. Depending on who you ask, about 37% of Americans (give-or-take) cannot withstand a sudden $400 expense without using debt. This is ~5% higher than it was a year before, in 2021 when it was 32%. https://www.federalreserve.gov/consumerscommunities/shed.htm https://www.federalreserve.gov/consumerscommunities/shed.htm It goes without saying that there is a finite ceiling for how much debt a person can obtain. When 1/3 of the country risks hitting that ceiling with how debt use has increased, is unable to get more debt, and can't afford $400; you have a perfect recipe for extreme social unrest in the future if things don't turn around. It's made worse by inflation eating away at pay, and also the record-high APRs that credit cards are demanding; and high rates in general for debt of any kind.

Eumenes 3y ago

These numbers are borderline meaningless for the average American. Economists, wall street, and financial news pundits can go back and forth all they want, the average person is most definitely feeling a massive crunch and a percentage number isn't going to explain away the rot building underneath the floor. IMO, the big elephant in the room is household debt - people are extremely leveraged, and inflation data doesn't illustrate this. Inflation #s to me is a political chip that administrations on both sides use for finger pointing.

elforce002 3y ago
Basically, Microeconomics vs Macroeconomics.
- somenameforme 3y ago
  I think it's something beyond just this. Inflation, especially how it's being used today, increasingly feels like a metric almost as pointless as GDP. Because what people, laymen and expert alike, refer to when they speak of inflation is all driven by a focus on what really matters - prices. Obviously the rate of change of prices, inflation, is extremely important but only as a means of gaining insight into the prices themselves. But now inflation is being considered as a metric of priority, by itself - which distorts its purpose (akin to what happened to GDP). And we're in a perfect illustration of why. Prices have dramatically increased, but now that they're continuing to increase beyond this at a rate of change is "only" 50% higher than the desired rate of change the Fed was aiming for, back when prices were lower, you have some people ready to unfurl "Mission Accomplished" banners. Clearly, the metric has become more important than the meaning, again like GDP. Gallup maintains an active economic impressions survey here [1], and currently we're at lows matched only during the housing market crash in terms of economic confidence. And I've no doubt this is playing into it. From the perspective of people continuing to pay intolerably high prices for effectively everything, seeing economists cheer about this is going to look alot like the 'this is fine' meme to basically everybody on the outside. [1] - https://news.gallup.com/poll/1609/consumer-views-economy.aspx https://news.gallup.com/poll/1609/consumer-views-economy.asp...
3y ago

ttul 3y ago

The figure is slightly misleading because it’s a measure of year-on-year change in CPI, rather than being a point-in-time measurement, as many assume it to be. June’s one month CPI increase was 0.2%, coming on the heels of May at 0.1%. The annual rates for May and June respectively are thus 1.2% and 2.5% respectively - significantly lower than the year on year rate would suggest. If we assume the true point in time rate is between 1.2 and 2.5%, then the economy has rapidly cooled. The strongly inverted yield curve reflects this slowdown and predicts - with some degree of confidence - that the Fed will have to drop rates soon because the slowdown is leading us towards a recession. I find it interesting that the S&P is close to its height prior to the start of last year’s bear market even though the yield curve suggests extreme caution is warranted. A recession would imply that the interest rate policy has worked. But it would also imply reduced corporate profits and growth, both of which feed into fundamental measures of equity value. This is a nerve wracking time to be invested in stocks.

JumpCrisscross 3y ago
> then the economy has rapidly cooled No, price levels have decelerated. > recession would imply that the interest rate policy has worked No, it would not. Price levels and the economy are fundamentally related, but they can and do move separately. Stagflation is one such condition. The Fed is targeting its opposite. Plunging America into a recession would be a clear policy failure. No views on the stock market here. Just pointing out that rising wages and thus rising spending, with rising production permitting low inflation and a Fed calmly and confidently lowering rates over years while unemployment stays low is achievable.
- lamontcg 3y ago
  LEI growth rate is very negative: https://www.conference-board.org/topics/us-leading-indicators https://www.conference-board.org/topics/us-leading-indicator... Manufacturing is negative: https://www.supplychaindive.com/news/manufacturing-pmi-ism-s-and-p-june-looming-recession-layoffs/685274/ https://www.supplychaindive.com/news/manufacturing-pmi-ism-s...
  - 3y ago

wskinner 3y ago

I find directly looking at the CPI rather than the trailing growth rate to be more informative. Since March 2020, the CPI is up 17%. Source: https://fred.stlouisfed.org/series/CPIAUCSL https://fred.stlouisfed.org/series/CPIAUCSL

alkibiades 3y ago

this is really good but let’s not celebrate til the battles over and it’s sustainably back to 2%. well see how it all shakes out in 18 months as a lot of fed tightening is delayed in effects i think everyone needs to do some reflecting. i certainly need to reconcile why i was so sure that the economy would have to crash from high interest rates in order to stop inflation one camp seems to want to take credit for inflation falling but ignore the incompetence of it rising in the first place the second seems to want pretend it’s not coming down when it clearly is. imo 2 things are undeniable: 1. both transitory (pandemic) and policy errors (overzealous spending and interest rates) caused it in first place. 2. both transitory (base effects of pandemic going away) and policy successes (fed raising rates and congress stopping socialist spending) are causing it to come down

Dig1t 3y ago

My stupid defcon ticket is $440 this year. 2018: $280 2019: $300 2021: $300 2022: $360 2023: $440 This is insane. Still seems pretty high to me every time I go to buy stuff like this.

mwint 3y ago
Defcon tickets are that cheap? Man, I just assumed it was a 1200+ thing.
- nebula8804 3y ago
  I think you are thinking of blackhat.
nebula8804 3y ago
I'm glad i'm not the only one who had a jaw drop moment this year. I wonder how many con goers will be surprised when they show up with only $360 dollars this year. I was shocked at 300$ since I was used to the cheap cheap prices of CCC.

somenameforme 3y ago

Do the people cheering this understand that inflation is not a 'baseline' measurement, but a relative one? CPI (which inflation is measured off of) is based on the cost of a fixed bucket of goods, which you can see here [1]. In January 2020, this bucket of goods cost $259 units. Today it costs $304. For context, had the CPI maintained target interest levels of 2% per annum, then today that bucket of goods 'should' cost somewhere around $278. And even this substantially inflated bucket cost continues to rise, quite rapidly. In other words, this news does not mean that prices are going to go down - let alone return to the normal. A slowing inflation rate is better than the opposite, but that's really all this is. We are not at the finish line or anywhere remotely near to it, yet. It will be important to see how inflation continues, especially as wages adjust. In particular, a raise of ~18% over the past 3 years (in total), would be the break-even point. Below that and you'd be seeing a real decline in wages, which I think is almost certainly the vast majority of people. [1] - https://fred.stlouisfed.org/series/CPIAUCSL https://fred.stlouisfed.org/series/CPIAUCSL

sangnoir 3y ago
> Do the people cheering this understand that inflation is not a 'baseline' measurement, but a relative one? Yes, of course. Inflation is a derivative, and when the rate at which prices were increasing slows down: that is worth cheering. It's a good thing (for consumers) in and of itself.
ryanwaggoner 3y ago
Yes, I think most people who are paying any attention to either inflation rates or the economy know that an inflation rate of 2% does not imply deflation. And there is no finish line, this is an infinite game, not a finite one. Lastly, wages are also up over the last three years (that’s a huge driver of inflation!). Obviouslyy not evenly distributed, but I don’t think you can make the case that real wages are sharply decreasing (especially once you remove the weird outlier spike that 2020 gave us): https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q

TradingPlaces 3y ago

This was definitely a mild report, but that headline YoY number is being pulled down by base effects with June 2022. July will reverse that effect, so it will look high in comparison

netbioserror 3y ago

>The New York Times reports that the government's calculation of its own inflation statistic is X%. We live in clownish times, shepherded by clownish people.

mark_l_watson 3y ago

The NYT used to be one of my favorite news sources. After their cheer leading for invading Iraq I started to change my mind. Fast forward to today, their whole reason to exist now seems to promote pro war democratic politicians and to lie and slander anyone who is anti war or critical of big pharma. Their hit piece on Kennedy's wife Cheryl Hines was shameful. EDIT: my point here is that they want to make the Biden administration look as good as possible. I want to era of Walter Cronkite back.

spywaregorilla 3y ago
Oh no, NYT posted on a high level economic indicator as they usually do. Better complain about their war coverage a couple decades ago.
- mark_l_watson 3y ago
  To be fair, the NYT’s war mongering is fairly constant. That is just my opinion, which does not matter really, but it is my honest opinion. Our endless wars kill too many innocent people. I love my country, but I wish we would change our collective behavior on the constant war thing.
  - chris_wot 3y ago
    If it is your opinion, why do you believe it does not matter?
deleted 3y ago
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