Artificial intelligence is being heralded as one of the most transformative technologies of all time, with the potential to radically improve productivity, reduce costs, and drive economic growth. But as the AI revolution unfolds, a paradox is emerging: AI has deep deflationary potential, yet its explosive demand for electricity and infrastructure introduces inflationary pressures. Understanding these contradictory forces is essential to understanding how Artificial Intelligence could shape macroeconomic trends in the coming decade. The Deflationary Power of AI AI’s primary deflationary force lies in its ability to automate tasks across every sector of the economy — from legal document … [Read more...]
June Inflation Up Again
The U.S. Bureau of Labor Statistics released its June 2025 Inflation report on July 15th, 2025. The report showed that Annual Inflation was up from 2.4% in May to 2.7% in June. Calculated to two digits, it was really 2.35% in May and 2.67% in June. Economists were predicting higher inflation, of 2.6% while our MIP was projecting an "Extreme High" of 2.63%. The NYSE responded by falling about 1% on the day, on fears that this might postpone the FED's rate cuts even further. June's Inflation Prediction: At 2.67%, June's inflation numbers came in slightly above last month's "extreme high" projection. … [Read more...]
FED’s Semiannual Monetary Policy Report
Federal Reserve Chairman Jerome Powell delivered his semiannual Monetary Policy Report to Congress on June 24th and to the Senate Banking Committee on June 25th. Powell noted that U.S. real GDP expanded roughly 2.5% over the past year, supported by resilient consumer spending and a still-solid labor market. Payroll growth averaged about 124,000 jobs per month in the first five months of 2025—slower than the pace seen during the post-pandemic boom but still consistent with a gradually cooling economy. Inflation, however, remains somewhat above target. The Fed’s preferred gauge, core PCE inflation, is running near 2.6%, with overall personal consumption expenditures (PCE) around 2.3%, … [Read more...]
What Is the Trimmed Mean CPI and What Is It Good For?
Inflation is one of the most important indicators that economists, policymakers, and financial markets monitor to understand the health of the economy. However, inflation data can often be "noisy", with prices for some goods and services swinging wildly from month to month. This can be due to supply shocks, seasonal changes, or temporary anomalies. For instance, a frost in California can drive up the price of Orange Juice, a war in the Middle East can spike the price of oil, or rumors of a new tariff can affect the cost of electronics from China. To address this issue and get a clearer picture of underlying inflation trends, economists have developed alternative measures that strip out this … [Read more...]
May 2025 Inflation Up Slightly
The U.S. Bureau of Labor Statistics released its May 2025 Inflation report on June 11th, 2025. The report showed that Annual Inflation was up from 2.3% in April to 2.4% in May. Calculated to two digits, it was really 2.31% in April, and 2.35% in May (not even 1/10th% up). And still below the 2.39% in March. Economists were predicting higher inflation, so the slight increase was basically a non-event. Economists were predicting higher inflation, so the slight increase was basically a non-event. May's Inflation Prediction: At 2.35%, May inflation numbers came in at last month's "extreme low" projection, indicating that inflation could have been worse. … [Read more...]
The Truth About Why Gold Is Surging
For thousands of years, gold (and to a lesser extent silver) have been mediums of exchange and methods of preserving wealth over time. Throughout 2024 and 2025, gold prices have been surging, driven by a combination of central bank buying, shifts away from U.S. dollar dominance, and a fear of financial exclusion, i.e., “debanking”. Let's examine why gold is surging, the evolving narrative surrounding gold, Central Banks, and cryptocurrencies. Record-Breaking Price Momentum According to the World Gold Council, during the first quarter of 2025, the London PM price of gold averaged US$ $2,860 per ounce, representing a 38 percent annual increase and setting new quarterly records. On May … [Read more...]
April Inflation Down Slightly
The U.S. Bureau of Labor Statistics released its April 2025 Inflation report on May 13th, 2025. The report showed that Annual Inflation was down from 2.4% in March to to 2.3% in April. Calculated to two digits, it was 2.39% in March and 2.31% in April. Although this month's numbers look good, there is a distinct possibility that low inflation won't last. (See this month's MIP). April's Inflation Prediction: At 2.31%, April inflation numbers came in between last month's "likely low" and "extreme low" projections. … [Read more...]
FED Holds Steady at May Meeting
On May 7, 2025, the Federal Open Market Committee held the FED funds target rate at 4.25% to 4.50%, a level unchanged since December 2024. In his statement, Chairman Jerome Powell said that, while economic growth remains solid, uncertainty has risen markedly amid evolving trade policies and global supply-chain strains saying, “If the large increases in tariffs that have been announced are sustained, they’re likely to generate a rise in inflation, a slowdown in economic growth and an increase in unemployment.” Chair Jerome Powell underscored at the post-meeting press conference that the current policy stance is “in a good place” but that the Fed will “await further clarity” before altering … [Read more...]
How To Recalculate Retirement for Today’s Economy
Today’s economy looks different than when many pre-retirees first built their plans. Inflation has eased from its 2022 peaks but is still running above the Fed’s 2% goal – i.e., about 2.4% year-over-year according to the Bureau of Labor Statistics as of March 2025. At the same time, interest rates are much higher than several years ago. Many people approaching retirement today remember the 1980s when inflation was in the double digits. The Federal Reserve is currently keeping its benchmark interest rate at 4.25–4.50% (after cutting from over 5% in late 2024). Stock markets have fallen and then rallied slightly recently, so volatility and global risks persist. In practice, this means bond … [Read more...]
March Inflation Down Significantly, But Will it Last?
The U.S. Bureau of Labor Statistics released its March 2025 Inflation report on April 10th, 2025. The report showed that Annual Inflation was down from 2.8% in February to 2.4% in March. Calculated to two digits, it was 2.82% in February and 2.39% in March. Although this month's numbers look very good there is a surprise hidden in the monthly numbers. (See this month's MIP). Inflation Prediction: This is the second month in a row that actual inflation came in slightly below our "extreme low" projection. We had projected an "extreme low" of 2.42% for March, but it came in at 2.39%. Of course, had we been rounding to one digit as the BLS does, it would have been right on the nose of … [Read more...]