Wholesale prices up 0.4% for month, 8.5% for year

Not good news for Americans

 

Not good as the Fed rates keep going up. 2023 might be historically bad.

 

And the last fed chairman that screwed us just won a nobel prize, so powell's probably not letting up.

 

I'm not referring to political perceptions, which are a different matter. But there's still plenty of evidence that inflation is greatly slowing and coming under control. Kevin Drum has the goods today, looking at measures that the Fed likely reviews as leading indicators. Admittedly, I was wrong on what I thought would happen a year ago, and this latest round of inflation has defied expectations. Just pointing out this number

Core PPI remains low in September - Kevin Drum


Overall PPI growth returned to positive territory in September while core PPI was basically flat. On a trended, annualized basis, PPI was around 2% and core PPI was around 3%.

In theory, PPI is forward looking: the numbers we see today feed into consumer prices a few months down the road. So if PPI is trending down today, CPI will keep trending down through the end of the year. We'll se

 

I'd say not good worldwide.

 

We shall see. I think by next year the cpi will be down to an annualized rate between 2 and 3 my fear is they overreact and get us into a deflationary spiral.

 

Unfortunately I don't think he has much choice at this point. The government spent way too much money during COVID without tangible products or services. They started rate hikes too late but I still don't think it matters since the reactions were global. The end result is a significant global recession or depression.

 

I agree with everything except your last clause. It's still very possible will have a significant recession but I don't think it's by any means inevitable. And I have read very persuasive pieces on both sides about whether the Fed needs to continue to stay aggressive. Obviously I'm not pretending I have personal expertise that I usually feel like I have a position after I read enough other smart people but I don't this time. But I do think it's not inevitable that we will have a deep long recession

 

I disagree, we need a recession to balance the books so to speak. The Fed has been tip toeing around and is making the situation worse. Regardless of COVID or not, this was going to happen imo when the massive boomer generation, which has the majority of wealth, retired. All those retirees that are out of the production and services line are now wanting products,. services and healthcare and have tons of cash. That is another reason we are seeing a lot of inflation, as the younger generations can't keep up.

 

Right. As bad as it will likely be for us in 2023, it's better than the alternative, which is having inflation for the next 7 or 8 years. Folks should remember these key tenets of our economy:

- the economy has and always will cycle from growth to contraction and vice versa
- typically, each cycle on average plays out every 7 years
- from 2010 until early 2020, we had an expansion... so 10+ years of expansion without a recession
- we had a recession in 2020, but it was only due to Covid shutdowns, not because of any pre-existing market conditions
- so the economy never had a normal contraction
- went spent and printed our way out of that recession very quickly (ie the Covid recession was NOT allowed to cycle naturally)
- hence, we are still way overdue for a recession and now we have the added bonus of an inflation problem to go with it
- central banks are tightening at unprecedented paces. Liquidity is already very constrained and only getting worse as time passes. Median home values are at or near peak price to earnings ratios (median home price over average median household income)
- these types of situations typically don't end well

 

You make a lot of sense and I respect your position. Just saying that I've read enough to persuade me that is not inevitable. Your point about the generational disparity in wealth is a relic very solid point and has significant policy implications outside of whether it causes an immediate recession and/or depression

I will try to do my part if I am ever able to retire by not being overly consumptive ;>

 

Well i dont think we will have to wait too long to find out either way. I am not in the habit of rooting for a recession to happen by any means, but in this case I think not having one would be alot worse for everyone.

 

In case the discussion had been too high minded

 

So up 0.4% for the month reflects around a 5% inflation rate annualized. Certainly not great, but not terrible either.

The 8.5% rate still is just looking at last Sept. to this Sept.

 

Isn't CPI coming out tomorrow? I think something like 0.6% is the Wall Street Consensus, which wouldn't be good and will probably force the Fed to keep raising rates. But it's been 0.0%, 0.1%, and then maybe 0.6% ... that's about 0.7% for the quarter ... which is approximately 2.8% for the year if you extrapolate... Still think the fed freaks out and takes it too far if it's 0.6%, though.....

 

So the Fed is in a major battle against inflation and they receive a 0.6% month over reading tomorrow, which annualizes to 7.2% (higher than the current annualized rate of CPI) and you expect them to just ignore that, because we stalled out the two months prior? Man, that is just not going to happen. If nothing else, the Fed will see it as confirmation that the last two months were a temporary pause. I'm just as upset as you are about the pace at which they are hiking, but at the same time fully recognize they've dug themselves a hole they have to get out of. Like I've been saying, if inflation takes hold for years on end, it will cost us way more than a recession will.

Here's something I haven't seen discussed here: the national debt. This is one way inflation is a backbreaker for the US. To a much larger extent than even the late 1970s/early 1980s. The debt to GDP ratio is way higher now and when the Federal Reserve lifts rates, the servicing of that debt becomes exponentially more costly. Raising rates is the only way to fight inflation, so they don't want to mess around with inflation, because the more the problem becomes entrenched, the larger extremes and measures the Fed will have to take to root it out and those larger extremes and measures will make our national debt ungodly expensive. It already is, but if rates go much higher, the interest payback on our debt is going to be catastrophic, which could in turn lead to more.......inflation. Now perhaps you understand why the Fed is "freaking out" about inflation.

 

I could just as easily ask ‘why ignore the last two 0% and 0.1% and only care about the 0.6%’?

also, You can’t compare this to the 70s and 80s because we have extremely low unemployment along with wage growth. Part of “Stagflation” is high unemployment … which we don’t have… but is a stated goal of the fed. Sorry, but that is just stupid… why does the fed want to purposely recreate the 70s?

You also seem to be missing the part where paying back debt is LESS costly in high inflation times… I.e., for every $10,000 I owed a year ago, I’d now owe the equivalent of about $9000 in adjusted dollars. Very true for my mortgage and car payment… that’s why bond ETFs are falling even though interest rates are going up…. Doesn’t make sense on surface, right? But they hold bonds that are years old and losing value because the payback amount isn’t worth the price the bond was issued at originally. Cant be all that bad for the Federal government….

 

Not good for the universe.

 

He must have taken my 12 year old. Kid thinks Taco Bell is Ruth's Chris.