November CPI

What are some of the reasons you think that Diamond Joe was so successful in bringing down inflation?

 

A reminder that while 2% is the goal, 3% is the average inflation rate we've been living with since the end of WWII. While we would want these numbers lower, they aren't a cause for panic.

As for why the FED would do a rate cut now, it's probably because the upcoming potential for Trump inflation to be out of control. 88% of the fresh produce we import comes from either Mexico or Canada, and if Trump fulfils his promise, all this food is going to be 25% more expensive. Domestic fresh food, while immune to tariffs, aren't going to be immune to inflation if Trump carries through with his mass deportation plans.

So, what's the FED to do? Take advantage of average numbers to make small changes now, because if Trump fills his campaign promises, inflation could be out of control.

 

No real trends going on right now. Small but steady GDP growth, small inflation levels, unemployment hovering at target. After the post covid crazy trends these seem so moderate.

 

Way to go Joe or Donald…wait, is this good news or bad news. Want to make sure I attribute this to the correct person

 

As always, the devil is in the details. 2.7% is the annualized rate, but November CPI was 0.3% which annualizes to 3.6%. Core CPI was the same 0.3% in November, annualizing at 3.6%. The food index rose 0.4% in November, which annualizes at 4.8%. Not really what you want to see.

As we can see in the month-over-month CPI numbers, inflation is slowly picking back up:



https://www.bls.gov/news.release/pdf/cpi.pdf

 

That line of thinking really doesnt make sense.

If the Fed really thought inflation was about to rage they wouldn't cut rates.

Then again they underestimated the effect of Gov spending on post covid inflation when thought it was transitory so who knows.

 

When the post COVID inflation period hit, rates were very low. The raises ended up putting rates at near historic norms. Painful, but something we could adjust to. What happens if/when the FED needs to raise rates again to battle inflation, but the current rates are already at historic norms? We'll end up with potentially double digit rates, which will be much more painful and much harder to adjust to.

To put it another way, which is more painful to the consumer. A 4 point rate hike over months that moves the interest rate from 2.5% to 6.5%? Or a 3 point rate hike over months that moves interest rates from 6% to 9%? Where you start is important, is it not?

 

For a while there, it felt like some people here were confusing monthly inflation rates with annualized... hoping for the better number.

 

Then get ready for reaccelerating inflation, because “the king of debt” is absolutely going to brow beat the Fed into more rate cuts like he did in 2019….

 

Oh it is very important.

The Fed is in a bit of a box right now, they want to normalize rates so they have dry powder (as you note).

Trouble is parts of the PPI came in hot also. Is it a blip or a part of a trend time will tell. I don’t envy J powell.
Plus other Central Banks are cutting now. Will that fuel inflation?

CBNC had a deep discussion this am about all that. Some were arguing the US can boost oil production to help drive down the cost of energy and help with potential inflation. I’m not sure that is really very feasible as I was under the impression we were close to max production(at least from a transportation of crude/scale standpoint).

 

Oh, come on now. The "Biden is sharper than ever" crowd would never attempt to massage inflation statistics, Rick.

 

Bullshit.

Americans’ Wages Are Higher Than They Have Ever Been, and Employment Is Near Its All-Time High - Center for American Progress

 

90% of people are always broke. They will be more broke under Trump, just like last time. My bonuses the last 3 years have been records, and if the corporate tax is cut to 15% plus he cuts the top tier back for personal income I will be very grateful to the working-class folks that made it happen.

 

Well that was awkward.

 

We steadily grew oil production under Biden but it seems to have hit a wall around 13,200 barrels a day. We’d never produced more than 13,000 barrels a day until August of 2023 but we’ve been above every month since then but one. Production has been hovering mostly between 13,000 and 13,200 bpd. I’m not sure what’s causing this barrier, whether market driven, feasibility or something else.

 

Usually the answer is that there is no money in it. OPEC could crank up 4M more barrels a day overnight if it wants and prices are already low per barrel right now. Very risky to invest in producing more would be my guess.