According to the Bureau of Labor Statistics CPI report released on August 10th, Annual Inflation increased from 3% in June to 3.2% in July. (but more precisely, it was from 2.97% to 3.18%.) Monthly inflation was 0.25% for May 2023, 0.32% in June, and 0.19% in July. July 2023 Inflation Summary: Annual Inflation rose from 2.97% to 3.18% CPI Index rose from 305.109 to 305.691 Monthly Inflation for July was 0.19%, down from 0.32% in June Next release is September … [Read more...]
How Inflation Impacts Merchants
Just like the old joke, "How do you eat an elephant? ...one bite at a time", inflation is constantly "eating" away at your purchasing power. Some years your purchasing power might decline by 1%, and other years, it might decline by 5% or even 10%. As we can see from the chart above, back in 1980, purchasing power declined by an average of 13.55% over the whole year. But from April 1979 to April 1980, prices increased (and thus purchasing power declined) by a whopping 14.76%. And that was on top of 10.09% from April 1978 to April 1979. So, in just two years, from April 1978 to April 1980, prices increased significantly. How much? Well, due to compounding, you can't simply add 14.76% and … [Read more...]
June 2023- Inflation Falls to 3%
According to the Bureau of Labor Statistics CPI report released on June 13th, Annual Inflation declined from 4.0% in May to 3% in June. (but more precisely, it was from 4.05% to 2.97%.) Monthly inflation was 0.25% for May 2023, and 0.32% in June. June 2023 Inflation Summary: Annual Inflation fell from 4.05% to 2.97% CPI Index rose from 304.127 to 305.109 Monthly Inflation for June was 0.32% Next release August 10th 2023 Jan Feb Mar Apr May June July Aug Sep Oct Nov Dec 2022 7.48% 7.87% 8.54% 8.26% 8.58% 9.06% 8.52% 8.26% 8.20% 7.75% 7.11% 6.45% 2023 6.41% 6.04% 4.98% 4.93% 4.05% 2.97% What … [Read more...]
May Inflation Falls to 4%
According to the Bureau of Labor Statistics CPI report released on June 13th, Annual Inflation declined from 4.9% in April to 4.0% in May. (but according to our calculations, it was from 4.93% to 4.05%.) Monthly inflation was 0.25% for May 2023, compared to 1.10% in May 2022. May 2023 Inflation Summary: Annual Inflation fell from 4.93% to 4.05% CPI Index rose from 303.363 to 304.127 Monthly Inflation for April was 0.25% Next release July … [Read more...]
Default by Inflation
As long as I can remember, the "boogeyman" of government debt has always been default. This is not an insignificant concern. Over the years, governments HAVE defaulted on their sovereign debt. In the 1700s, corporate debt was seen as more likely to be repaid than government debt. As recently as a year ago, Russia was facing the prospect of default on Eurobonds maturing in 2023 and 2043. According to the following chart by Reuters, 34 governments have defaulted on at least some of their sovereign debt since 1989. The largest defaults were Congo in 2012 and Ukraine in 2015, but there was also Ecuador, Nicaragua, Argentina, Venezuela, Russia, and Pakistan, along with many others. But … [Read more...]
Annual Inflation Virtually Unchanged in April
According to the Bureau of Labor Statistics CPI report released on May 10th, Annual Inflation declined by 0.1%... but according to our calculations, it was even less than that. The BLS reported a decline from 5% to 4.9%, but when carried to two decimals, it was virtually a rounding error difference. Monthly inflation was 0.51% for April 2023, compared to 0.56% in April 2022. April 2023 Inflation Summary: Annual Inflation fell from 4.98% to 4.93% CPI Index rose from 301.836 to 303.363 Monthly Inflation for April was 0.51% Next release June … [Read more...]
Stock Market Ignores Lower Inflation in February
The Bureau of Labor Statistics reported that Annual Inflation fell from 6.41% in January to 6.04% in February Monthly inflation was 0.56% for February 2023, compared to 0.91% in 2022. Despite the significant drop in inflation the market was more concerned with bank failures so, there was no inflation rally. February Inflation Summary: Annual Inflation fell from 6.41% to 6.04% CPI Index rose from 299.170 to 300.840 Monthly Inflation for February was 0.56% Next release April … [Read more...]
Falling Inflation is Good for Stocks
Historically, Stocks tend to soar in years when inflation is falling. But typically, inflation doesn't fall until the fed-funds rate rises above the current inflation rate... The last data we have as of this writing is that inflation was 6.45% in December, and the FED funds rate was 4.1%. That is still a significant gap. But inflation is already falling. Monthly inflation began a dramatic slowdown last July. Monthly inflation has fallen by 80% over that timeframe (bringing annual inflation down by 33%). At this point, the majority of our annual inflation occurred during the first six months of 2022. January through June of 2022 had an average of 1.02% inflation per month. The second … [Read more...]
Why the Fed Is Bankrupt and Why That Means More Inflation
In 2011, the Federal Reserve invented new accounting methods for itself so that it could never legally go bankrupt. As explained by Robert Murphy, the Federal Reserve redefined its losses so as to ensure its balance sheet never shows insolvency. As Bank of America’s Priya Misra put it at the time: As a result, any future losses the Fed may incur will now show up as a negative liability (negative interest due to Treasury) as opposed to a reduction in Fed capital, thereby making a negative capital situation technically impossible. That was twelve years ago, and it was all academic at the time. But in 2023, the Fed really is insolvent, although its fake post-2011 account doesn’t show this. … [Read more...]
Inflation Falls Again in December
The Bureau of Labor Statistics reported that Annual Inflation fell from 7.11% in November to 6.45% in December 2022. This was down from a peak of 9.06% in June 2022. Monthly inflation was negative (Disinflation) for November at -0.10% and December at -0.31%. This is fairly typical for the fourth quarter, which is traditionally negative. Monthly inflation for 2022 was lower than in November 2021, so December Annual inflation fell. It is important to remember that although the inflation RATE is falling... prices are still going up, i.e., prices are still 6.5% higher than they were a year ago. A decline from 7.5% to 6.5% is similar to a car going from 75 mph to 65 mph... it is still … [Read more...]