US Inflation Cools Again, Giving Fed Room To Downshift on Rates (bloomberg.com) 83
US inflation continued to slow in December, adding to evidence price pressures have peaked and offering the Federal Reserve room to slow the pace of interest-rate hikes next month. From a report: Excluding food and energy, the consumer price index rose 0.3% last month and was up 5.7% from a year earlier, according to a Labor Department report Thursday. Economists see the gauge -- known as the core CPI -- as a better indicator of underlying inflation than the headline measure. The overall CPI fell 0.1% from the prior month, with cheaper energy costs fueling the first decline in 2 1/2 years. The measure was up 6.5% from a year earlier.
US stock futures dropped before paring losses and Treasuries fluctuated. All of the figures matched the median estimates in a Bloomberg survey of economists. The data, when paired with prior months' lower-than-expected readings, point to more consistent signs that inflation is easing and may pave the way for the Fed to downshift to a quarter-point hike at their next meeting ending Feb. 1. That said, the central bank's work is far from over. Resilient consumer demand, particularly for services, paired with a tight labor market threaten to keep upward pressure on prices.
US stock futures dropped before paring losses and Treasuries fluctuated. All of the figures matched the median estimates in a Bloomberg survey of economists. The data, when paired with prior months' lower-than-expected readings, point to more consistent signs that inflation is easing and may pave the way for the Fed to downshift to a quarter-point hike at their next meeting ending Feb. 1. That said, the central bank's work is far from over. Resilient consumer demand, particularly for services, paired with a tight labor market threaten to keep upward pressure on prices.
Poor prediction of inflation last time around (Score:2)
Do people think the Federal Reserve can let its guard down?
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The Fed was so embarrassed that it was so slow to raise rates, that now, it's going to overreact and keep raising them even if the facts on the ground say they shouldn't.
Re:Poor prediction of inflation last time around (Score:5, Informative)
There is a 12 to 18-month lag between changing interest rates and the effect on the economy. So it isn't the "facts on the ground" today that matter, but what those facts will be a year from now.
The Fed is trying to steer the economy while only seeing the rearview mirror. I don't envy them.
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Re: Don't talk to me about... (Score:2)
Boy, that sounds awful. Itâ(TM)s a wonder anyone can even feed and clothe themselves, let alone have the leisure time to post things on an internet discussion board.
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I keep hearing about shortages and how expensive everything has gotten and frankly, where I live I just haven't seen it....
I live in the New Orleans area.
While yes, prices in the grocery store have risen some...it doesn't appear to be THAT much at all.
My grocery budget really hasn't changed much at all....I don't have to hold back on shopping, I buy beef, pork, chicken...eggs...vegetables and fruit and I don't really feel any pain in my w
Re: Don't talk to me about... (Score:2)
Supply disruptions! Iâ(TM)ll tell you about supply disruptions. I canâ(TM)t get meow mix, any flavor!
The cats are freaking pissed!
Theyâ(TM)re looking at me with more of an evil eye than cats normally have on any given day.
Iâ(TM)ve ordered some online. They said they had it, but I havenâ(TM)t seen it yet. /s. First world problem. My cats wonâ(TM)t starve, thatâ(TM)s for sure.
Side note: my vet once said this about a home with dogs and cats: dogs eat cat food because it is
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10-15% inflation is bad but it's relatively easy to absorb on must ordinary household expenses. Are you going to notice or care that a $3 grocery item is now $3.30 or $3.50? The majority of the economy is balanced on razor thin edges and it's still going to have a major impact.
Especially on people in the lowest income brackets already living paycheck to paycheck but also the largest businesses because they seem to love taking unnecessary risks just to save pennies.
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I don't think it's a regional thing. I think it's just that the people being effected are ones who were already just getting by.
As for product out of stocks, they're definitely happening but they probably arent so dramatic that you notice. I do IT for a small chain of employee owned grocery stores and since I like chatting with my co-workers (they're good people) I pick up grocery business news. From what I understand at least in my region we're definitely still getting an above average amount of out of sto
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Speaking as an inland Californian with a $130/mo grocery budget, grocery prices seemed to go up significantly around November. It's not that bad, though. I can still keep to the same budget, I just have to make more careful purchasing decisions to do it. I do wonder why people richer than me are supposedly unable to feed themselves, but I think it's mostly the media trying to make it look that way for dramatic effect and ratings.
Gas prices have nearly halved in the last 3 months, from $6.30 down to $3.75. T
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Where I've noticed it the most is eating out/drinking out. Fast food has crept up to $12-15/per person, and you can barely get out of even a dive bar for less than $30/person if you're having a dinner and a couple of drinks. I feel like it was closer to $10-12 and $25 prior to the pandemic.
I think it's a lot like the "Boiling frog" theory. It's not like things shot up 10% overnight, and it's harder to perceive a 1%/month difference. But if you were to compare a grocery receipt from this time last year
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Here in the DC area, normally the most insulated-from-economic problems (other than high housing costs), there are shortages on the shelves. Lots of basic stuff is often unavailable. This has been going on for at least a year. And yes prices are up. I live in Arlington, VA.
Besides days when there is no milk or eggs, there is a chronic lack of Diet Coke, whose price has doubled since pre-COVID when you can get it. Also, no spring water (e.g. 2.5 gal jugs). I suspect the drink shortage is across the country.
M
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Nope, it isn't across the country.
Every shelf in my grocery stores (multiple different brand stores in this area)...full shelves, no empties.
The cola aisles are full, and generally on sale...no shortages of water, etc....I just picked up about 4-5 gallons for brewing some mead.
We haven't had anything resembling
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No. It just isn't noticeable to people who have enough money.
5% increase vs 12 months ago is minor. If your grocery bill was $100 it is now $105. You wouldn't even notice the difference in day to day life. If you were struggling to cover that $100 it is a big deal.
I'm in California: egg prices are up due to bird flu wiping out a lot of the local chickens -still on the shelf but fewer brands, gasoline was just under $4 a gallon, went up to $5+ a gallon over the summer... $4.50 now. That was a noticeable
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If the Fed instead targeted zero zero inflation, then wouldn't it be easier? I think the instability (variability) of inflation increases with the inflation target. Imagine a 20% inflation target (perhaps selected to make debts disappear quickly). It seems really unlikely that the Fed would be able to stay close to that figure. If the Fed targeted zero, then everyone would intuitively be able to help encourage it, because no calculation is required: there'd be a universal expectation that overall price
Re:Poor prediction of inflation last time around (Score:5, Interesting)
As I have heard it described the Fed shoots for 2-3% because in the case of if they overshoot they are trying to avoid deflation. In reality they know the ideal number is 0 but they prioritizie the stability of a small but predictable inflation rate.
Now whether this is methodology is beneficial or correct? I have heard compelling arguments on both direction, that a small amount of deflation is not that worrisome to some that describe it as very worrisome. Economics is a "soft" science for a reason.
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There is a 12 to 18-month lag between changing interest rates and the effect on the economy. So it isn't the "facts on the ground" today that matter, but what those facts will be a year from now.
The Fed is trying to steer the economy while only seeing the rearview mirror. I don't envy them.
This.
That there was going to be inflation after coming out of Covid times was inevitable. Given the resulting shortages of things like fuel, it was simply going to happen.
As well, that time lag has some interesting aspects. The seeds of the present inflation were planted during the Trump administration.
Doing some financial history, and when problems happen, and the lag effect, one can come up with surprising causes that to not fit one's narrative.
I'm not certain how many people noticed, but we c
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That there was going to be inflation after coming out of Covid times was inevitable. Given the resulting shortages of things like fuel, it was simply going to happen.
Yes, and the Ukraine War was a black swan event that nobody expected 18 months ago, and very few were expecting even 12 months ago.
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Yes, and the Ukraine War was a black swan event that nobody expected 18 months ago, and very few were expecting even 12 months ago.
I saw the pictures of troop concentrations and heard the warnings, I just didn't believe Putin would be dumb enough to go through with it.
What it really shows is that Putin was surprisingly unaware how the world would perceive his actions. He may not understand how they perceive him today.
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I'm sure some things take 12 to 18 months to respond, but real estate has been faster than that. Mortgage rates started climbing a few months before the Fed actually raised rates. Anecdotally, prices seem to be falling in my area and in the area I recently moved from.
Of course, falling real estate prices, but dramatically higher financing prices won't lead to lower rents or lower mortgage payments and thus might not affect CPI.
Re: Poor prediction of inflation last time around (Score:1)
Thatâ(TM)s BS. You raise the rates today and tomorrow your mortgage for that house you wanted will go up significantly. The impacts on the market are immediate and one of the reasons the fed should really stay out of setting rates altogether.
The government just did a 1.7 trillion dollar spending package which will cost nearly 5 trillion over the next decade, the only reason the Fed doesnâ(TM)t want to raise rates is to pretend that spending has no impact on inflation. If they were truly honest, th
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Money printing and inflation were necessary during COVID to prevent societal collapse as well as economic. It started under Trump and continued under Biden because it was the best option available.
But it is a blunt instrument that put even heavier strain on supply chains. Every manufacturer and retailer in the world, it seems, had moved to just-in-time inventory that relied on a perfectly functioning supply chain. It will take years to dig out of that and the only fix is to slow the entire economy to try
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Do people think the Federal Reserve can let its guard down?
tl;dr answer: No.
The Fed report released numbers that were expected by economists, so the markets are generally happy about that; no surprises.
Yes, the report does show that inflation appears to be slowing (month-on-month), but the unemployment rate is not slowing.
That means there is a risk of a "wage-price spiral" where wages chase prices and prices chase wages. Breaking that spiral can be very ugly in economic terms and very difficult for the Fed to accomplish.
As long as the inflation rate is higher than
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Obligatory Youtube clip
https://www.youtube.com/watch?... [youtube.com]
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In June, when the annual inflation rate is negative, I imagine they're going to be thinking differently. 33% of the visible CPI is shelter, a lagging indicator that is serving only to make things look worse than they already
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That means there is a risk of a "wage-price spiral" where wages chase prices and prices chase wages. Breaking that spiral can be very ugly in economic terms and very difficult for the Fed to accomplish.
Egads! What do those employers and workers think this is? A free market economy or something!
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Except reality has shown nothing of the sort even remotely in play. Wage growth has been declining for 9 months straight: https://www.usatoday.com/story... [usatoday.com]
On top of that, consumer inflation expectations (which tend to drive wage expectations) have been tracking downward since June: https://tradingeconomics.com/u... [tradingeconomics.com]
The Fed is flat out ignoring all these facts with their eyes staring blankly at the rear vie
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Re:Poor prediction of inflation last time around (Score:5, Interesting)
Inflation is normally fought by the Fed because it's normally caused by the economy being "too good", and people arbitrarily raising prices because others can afford it. Right now though it's being caused by shortages.
False, to an extent (see below for the exceptions). Companies are raising prices far beyond the added costs of inflation because they can [forbes.com]. Their logic is they can raise prices by claiming inflation AND because they've raised wages (they really havent, but that's another story). If people are making more money then they can afford to pay more.
There's a reason corporate profits are the highest they've been [npr.org] in 70 years.
How does raising interest rates deal with shortages? It doesn't. It exacerbates the issue. It causes businesses who should be investing in dealing with those shortages to underinvest or even contract.
Explain how farmers and egg producers can invest in more animals, particularly chickens which were killed by the millions [marketwatch.com] because of avian flu.
This is the exact same situation pork producers were in when they killed millions of hogs during covid thinking people wouldn't be buying meat. The same for cattle. They simply killed their inventory because the government would use taxpayer money to prop them up, rather than sending the animals to be butchered and bought on the open market. One can't magically produce animals. That takes time.
As been said before, the Fed is raising rates in an effort to stop rising wages and kick people out of work. The Fed does not work for the people, only a small slice of people.
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I was just reading earlier that there's now an expectation that profits will fall.
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And we know what's going on, we know the entire supply system is disrupted right now. We know the vast majority of massive, noticeable, price increases over the last year or two have been because of that disruption.
That's an excuse. If you're telling me private industry can't get its act together after two years to unblock what did exist, then they are miserable failures. I use this exact term every time I go into a grocery store and see the cat food shelves being empty. There is zero excuse for that to
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Yes, especially when the dog food shelves are full. If they can get dog food to the markets, why can't they get cat food as well? Maybe they think that the cats can just go outside and catch mice and birds, but what about all of the indoor cats that are never allowed outside?
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Where is it you are seeing bare shelves, or anything less than full shelves in stores in the
Re: Poor prediction of inflation last time around (Score:1)
Itâ(TM)s a rich person thing. Our âoegoodâ grocery stores are decently stocked and the price increases arenâ(TM)t that great. Walmart/Aldi and other budget stores are a different thing completely.
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False, to an extent (see below for the exceptions). Companies are raising prices far beyond the added costs of inflation because they can [forbes.com]. Their logic is they can raise prices by claiming inflation AND because they've raised wages (they really havent, but that's another story). If people are making more money then they can afford to pay more.
There's a reason corporate profits are the highest they've been [npr.org] in 70 years.
Where does this "added cost of inflation" come in? Just like an extra itemized checkbox on the bill? Why was it there in the first place?
This is simply ignorant of what inflation is. The companies raising prices is the inflation, not some extra thing that is happening on top of it.
Imagine you went into a shop with $20 in your pocket and decide you really want a collectible - price unmarked - but are debating because you still want to have some money leftover for a snack. You discuss with the shopkeeper, wh
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Prices are not shooting down.
A reduction in the rate of inflation is just a reduction in the slope of the line of prices. It just means that they're accelerating by less than previously.
It doesn't mean that either. It is a measure of year over year inflation, so the number staying the same or less than last month simply means inflation has not increased. Inflation has been effectively 0% since June if you look at the monthly inflation rates over the last few years.
If inflation continues to stay constant, we would expect the inflation rate to drop to roughly 6% in January (since Jan '22 inflation was 0.5% higher than Dec '21 inflation).
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Yes, they are: https://www.cargurus.com/Cars/... [cargurus.com]
Or just look at the CPI chart: https://www.bls.gov/news.relea... [bls.gov]
Any negative number in the month columns is a decrease, not just less acceleration. You'll see many of them in the Sept-Dec timeframe, particularly in energy, fuel, vehicles, and commodities less food and energy. The average of CPI readings for the past 6 months is already below 2%. And that will only accelerate. That 6.5% annual rate they're throwing around is
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I don't think covid is really that much of a factor anymore.
The current variants just aren't deadly to most people and therefore, not much of a threat.
Of course this is anecdotal....but I've known several people that have had it, all ages, and body types (fat, skinny)...and the effect has been from nothing more than a ru
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Inflation is not the only reason to raise the rates. It's the best excuse, but there are other things that the dollar specifically win by doing it.
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If, on the other hand, the President decides to **poof** some more money into existence then inflation is going to be with us a while.
Note that prices are NEVER going back down to where they were before the President created $2.2T out of thin air. Mostly because, while inflation is bad, deflation is
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Re:What a BS spin! (Score:5, Funny)
Really? Could you please send me all your money then seeing as it is worthless to you?
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Although in the last month, actual prices also went down (-0.1%).
Normally actual price decreases are harmful since it encourages waiting for price drops and so reducing economic activity. But with the huge runups in staples - food, housing, energy - I wonder if we don't have room for deflation this time, since these are largely compulsory purchases anyways. (Same reason nobody worries about a deflationary spiral when gas prices go down
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inflation - is a rate - the actual rate did go down. Prices have not gone down. The rate of inflation is still well above the target rate between 2-3%.
We are talking about the derivative of price changes or if you want to say inflation went up or down the second derivative of price changes. Its correct say there was less price growth than over the period of the previous report, but there is still much higher price growth than is considered desirable by anyone with sense.
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That doesn't mean prices fell over the previous 12 months of course.
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Inflation has stayed constant or slightly reduced since June. It still represents more inflation than we had last December, but not more inflation than we have already been feeling since this summer.
Pissing on your leg, saying it's just rain (Score:5, Interesting)
"Excluding two of the biggest expenses the bottom 98% of society have, inflation didn't grow much."
Why not just throw in housing while we're at it? I bet that would drive inflation down to 0.1%
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Which is where we should turn our heads from monetary policy and start looking at fiscal, social, and foriegn policy.
Food and energy get excluded from the measures the monetary policy guys use because they are often volatile and would mask other trends.
Here we see the trend "inflation" is 6.5% well above the target AND we have an enviornment were food and engery are also seeing explosive price growth. We look at what our policy makers are doing - and rather than "promoting the general welfare...to o
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I will tell you more, they are not even counting real increases in housing prices, they use the so called 'owners equivalent rent', which doesn't measure anything but an imaginary number.
Actually all of their numbers are imaginary, if the public was allowed to see real numbers it would become obvious that the government has failed.
Re:Pissing on your leg, saying it's just rain (Score:4, Informative)
Food and energy are often excluded in analyses of inflation because they are historically very volatile even during "normal" times, making comparisons difficult. Multiple metrics are published, including those that include food & energy for those who wish to study them. Thus, I doubt this was done to hoodwink the audience; it's just a common economist practice in action.
I'm more interested in the PPI (Score:3)
That's impossible (Score:2)
Seriously Google the phrase "Jerome Powell causes layoffs". He's openly said the goal is to cause layoffs. Which is to say he's trying to get you fired. The theory is you'll spend less and take a lower paying job and work unpaid overtime and then the magnanimous corporations will pass the savings on to you.
Another fun thing to Google is "fire one million". That one w
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Good news tovarish! Once we fix those pesky Kulaks then the 5 year plans shall bring forth a great leap forward, what could possibly go wrong?
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The economy is tradeoff. Maybe someday we'll find a way to optimize all factors and make everybody happy, but until that breakthrough, we have to use the tools we have.
Inflation Is Really Much Lower Than 6.5% (Score:4, Interesting)
So if you look at last 12 months you can calculate it via:
2021 Dec - 278.802
2022 Dec - 296.797
12-month inflation rate = (296.797 / 278.802) - 1) * 100 = 6.45%
But most of this inflation occurred in the first part of 2022. If you look at the last 6 months you instead get this:
2022 June - 296.311
6-month inflation rate = (296.797 / 296.311) - 1) * 100 = 0.16%
Which essentially points to an almost 0% inflation rate if it continues for the next 6 months. Given this I am questioning how many more (if any) interest rate hikes the Federal Reserve should really do.
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I think projecting the next six months inflation using the last six months is unlikely to be accurate. The reason that they usually compare year-over-year is to minimize seasonal variation.
The June-December inflation rate varied from -1.5% to +2.6% over the last decade, with an average of almost zero (0.2%). On the other hand, the Dec-June inflation rate ranged from +0.3% to 6.3% over the last decade. The +0.3% is a low outlier and occurred in the first half 2020 during initial COVID shutdowns, by the wa
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But even if it doesn't - say inflation spikes again and we average 4% annualized over the next 6 months, that brings us to 2.2% annual percent in June. Say 6% and that brings us to only over 3.2% annual in June.
What is the thing that will make inflation go higher again in the next six months? Gas prices have fallen. A lot of the supply side issues are going away. For example shipping costs are back to normal after going nuts
Slow news day non-tech content as usual (Score:2)
Anyone who cares knows where to look for financial info. Turning Slashdot into Yahoo is idiotic.
excluding... (Score:3)
So, a dude starts beating his wife... (Score:1)
and breaks ten of her bones in December, then in January he only breaks eight more of her bones... thus the abuse has cooled a bit, and the thug has "dramatically improved" the situation. He should obviously get some sort of reward and lots of good press coverage, right?
right?
It's stories like this one that tell you the "free press" is nothing of the sort; it's totally partisan and in the tank. It's taking bad news (highest inflation in decades) and spinning it as a positive achievement. This article would
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If the one detail that makes the difference in inflation rate is our President, why is inflation up all over the world?
Why is it, mostly, better here than elsewhere?