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...]
BLS: February 2025- Inflation Down
The U.S. Bureau of Labor Statistics released its February 2025 Inflation report on Wednesday, March 12th, 2025. The report showed that Annual Inflation was down from 3.0% in January to 2.8% in February. Calculated to two digits, it was 3.00% in January, and 2.82% in February. On a non-seasonally adjusted basis, monthly inflation was 0.65% in January 2025, and 0.44% in February. This was down from 0.62% in February 2024. Inflation Prediction: As you can see from our MIP projection from last month, February's Annual inflation at 2.82% is just below our predicted Extreme Low of 2.88%. … [Read more...]
Which is Worse, Inflation or Deflation?
It all depends on the type of Deflation. There are actually two types. The deflation that most people are familiar with is the result of a market collapse such as we saw in 2008. Prices of assets (like stocks) fall because of some sort of “accident,” such as the mispricing of mortgage-backed securities and derivatives. When assets lose value quickly, panic sets in, leverage must be liquidated, causing other assets to be sold, creating a "snowball effect" causing a "risk-off" mindset. Consumers cut back on unnecessary purchases, businesses lay-off workers, unemployment skyrockets, and the economy stagnates, etc. But looking even deeper, we find that the “mispricing’ was caused by too much … [Read more...]
Which Debts To Pay Off First When Inflation Hits
Inflation does more than push up prices at the store — it also makes borrowing more expensive because banks need to raise interest rates to cover the loss of purchasing power of the money they are loaning out, since they are getting repaid with "cheaper dollars". When prices rise faster than wages, household money shortages lead to mounting debt. And, unless you have a fixed interest rate lown, your monthly payments on loans and credit cards will climb higher each month. With these rising costs, you need a clear plan for tackling debt. The Impact of Inflation on Debt When inflation rises, it affects your debts in two different ways. Rising prices change how much your debt really costs. … [Read more...]
Would DOGE Dividend Checks Stoke Inflation?
With all the potential savings DOGE is uncovering some people are suggesting that some of those saving be rebated to taxpayers. Others are saying that doing that would be inflationary in the same way that Biden's stimulus checks were. In this video, Bob Murphy, Senior Fellow of the Mises Institute looks at the implications of this possible rebate. https://youtu.be/NltFVYom1lc?si=knQzinKc45MuuWv4&t=101 Rothbard's Making Economic Sense Bob's Understanding Money Mechanics … [Read more...]
BLS January 2025 Inflation Report
The U.S. Bureau of Labor Statistics released its January 2025 Inflation report on Wednesday February 12th 2025, showing Annual Inflation was up from 2.9% in December to 3.0% in January. This looks like a 0.1% increase. (But since we calculate it to two digits, it was 2.89% in December and 3.00% in January, which means the actual increase was 0.11%.) On a non-seasonally adjusted basis, monthly inflation was 0.04% in December and a whopping 0.65% in January 2025 this was up from 0.54% in January 2024. Inflation Prediction: As you can see from our MIP projection from last month, January's Annual inflation at 3.00% is just above our predicted Extreme High. … [Read more...]
The Correlation Between Job Market Turnover and Inflation
Inflation, the rate at which the general level of prices for goods and services rises, erodes purchasing power and poses significant challenges for economies. During periods of high inflation, individuals face increased living costs, prompting many to reassess their employment situations. Further, inflation influences job market turnover rates, as workers seek better opportunities to maintain their financial stability. We will explore the correlation between rising prices and employee mobility, the psychological factors driving job changes during inflationary periods, and the implications for employers navigating this turbulent landscape. By understanding these dynamics, we can gain … [Read more...]
