0.1% inflation for March

Nobody has ever said rates are surgical. Not even the fed.

 

Seems like a lot of whining about corporate profits causing inflation and then the same people say inflation is now fixed.

 

Nobody said the fed or you said rates are surgical. It is a reminder not a revelation. Thanks for playing the nuance game.

 

Whining. yea. Pointing out facts isnt whining. You know what is whining? This:

 

I get eggs from a friend of a friend so they are cage free healthy eggs. I paid 10 for 2 dozen around Xmas time. I paid 5 for two dozen yesterday plus I was given another half dozen because she had more eggs than she needs.

 

Winner winner chicken dinner. Oil companies aren’t paying more foils oil. The profit on refining oil has tripled. Horizontal and vertical monopolies are the issue here. Break them all up. Or maybe have Walmart refine oil on its own.

 

Even Powell and the likes of Larry Summers have referred to raising rates as a blunt instrument but nonetheless it has to be done. The fed or even the government does not have a scalpel.

Ultimately inflation is a mismatch of supply and demand. Raising interest rates addresses that, and also addresses corporate profits which you clearly hate.

 

Interesting data point

Earlier today we were on the subject of corporations raising their prices and profits far beyond anything justified by inflation. So I thought you might be interested in a different way of looking at this for the economy as a whole.

Roughly speaking, this chart shows how much profit corporations make for each dollar of value they add to their products:

This measure bounces up and down over time, but as you can see there's a dramatic increase right around the start of the pandemic. For several years profits had hovered around 16¢ per dollar, but by 2021 profits were around 21¢—an increase of 30% in only a year. And this was well before inflation started to kick in.

So yes, corporate profits are up thanks to widespread price markups. The pandemic may have been bad for you and me, but all those shortages and supply chain problems were a godsend for C-suite managers trying to hit their bonus targets.
Corporate price markups surged during the pandemic - Kevin Drum

 

Also

On the one hand, it's true that personal spending, even adjusted for inflation, has increased a lot since the start of the pandemic. Spending today is $2,500 higher than it was at the start of 2020.

On the other hand, there's nothing unusual about this. Spending has just followed its usual trendline.

But trendline or no, this suggests that Beckworth is on to something. It's one thing to wantonly raise prices above the level of inflation in search of windfall profits, but you can only do it if consumers don't push back—and if they don't push back then you might as well charge all that the market can bear. And right now it looks like people are spending money freely enough that the market can bear quite a bit.
Companies are raising prices because consumers are letting them - Kevin Drum

 

Macy's and Costco sound a warning about the economy | CNN Business

 

Hmm. Maybe Macy's and Costco should consider reducing prices if demand for what they sell is going down.

 

I like Polo casual button shirts/dress shirts… just a good fit for me and they have a good selection of boring guy colors (dark blue, light blue, medium blue, black). They are ridiculously priced right now. $100? Please. I usually don’t wait for a sale but… I am waiting.

 

Yeah, it's just kind of funny because exactly what is supposed to happen is happening (if we want to get inflation back down to the 2% range). Hopefully, given their sales are down, they can't continue to increase prices under the guise of inflation.

 

From Kevin Drum today. Hope the Fed does not push us into an unnecessary recession

Here's a couple of interesting inflation data points. Two different groups at the New York Fed have constructed measures of underlying inflation, one called the Underlying Inflation Gauge and the other a more recent measurement called the Multivariate Core Trend. Both are based on similar models that deconstruct the price data, remove the pieces due to transitory shocks, and keep only the persistent common components. Naturally, both claim to be more accurate at predicting inflation trends than common measures like CPI or core PCE.

What's interesting about them is that both recorded large revisions last month that substantially reduced their current measures of underlying inflation. Both now estimate that underlying inflation in April was only 3.4%:

Is inflation already down to 3%? - Kevin Drum

 

Check out Marshall’s and Bealls often they are $25 each.

 

Damn that’s crazy, don’t think I’ve ever paid more than $30-40 for an RL polo. Last time I bought was probably pre-pandemic. I usually just wear the black, dark grey, and dark blue ones and I still have a bunch of different shades when they rotate colors. They fit and definitely last better than cheap polos.

For awhile I have had way more polos than I could ever need because Brooks Brothers had some weird glitch, and made theirs like $11 through their app. So I took advantage and bought like 15 of them in different colors. If I’d known polo shirts would eventually be $100 i would have bought about 50 of those cheap suckers lol.

 

Market is happy today too.

 

What does 0.1% annualize to exactly? Such a sharp decrease month over month. So problem solved, right?