The Bureau of Labor Statistics (BLS) released the August inflation numbers today and for the third straight month inflation is lower. The annual inflation rate for the 12 months ending in May was 2.13%. The June inflation numbers were 2.07%. In July inflation fell to 1.99% and in August it was down to 1.70%. As the inflation rate falls this is "disinflation" on an annual basis although July and August were "deflationary" on a monthly basis, i.e. each monthly number was below zero at -0.04% and -0.17% respectively. Our Moore Inflation Predictor (MIP) is generally quite accurate. Last month the MIP forecast a slight decrease in inflation for August but we actually got a bit larger 14.5% … [Read more...]
Where is Gold Headed?
To get the true measure of anything it is important that you use a standardized measurement. This of course is why a "foot" or "inch" eventually became exactly a certain length and didn't vary based on each particular person doing the measuring. And more recently it is why Celsius measurement relates to the exact freezing and boiling points of water at an exact atmospheric pressure. It is also why, when we measure a commodity like Gold or the stock market we need to use a scale that doesn't change. Unfortunately, the typical measurement i.e. the U.S. dollar is always changing in value. That is the dollar depreciates due to inflation thus changing the measurement on a daily (or at least … [Read more...]
Economy vs. Fed Rate Hikes
Confusion Continues The bad news is markets tend to get jittery when the Fed is preparing for a new interest rate cycle. The good news is the primary reason the Fed is contemplating raising interest rates is a strengthening U.S. economy. The question in the short run is: Will the economy be strong enough to offset the negative impact of higher rates? The odds of the answer being “yes” increased Thursday. From Reuters: Gross domestic product expanded at a 4.2 percent annual rate instead of the previously reported 4.0 percent pace, the Commerce Department said on Thursday. Both business spending and exports were revised higher, while a buildup in business inventories was smaller than … [Read more...]
Gasoline Taxes by State
Yesterday we looked at the BLS' release of the July Inflation numbers and that lead to a discussion of gasoline prices and the correlation between high gas prices and politics. The first thing we looked at was the graphic of gasoline prices by state. And then we looked at the political landscape based on the percentage of the state that voted Democrat or Republican. We looked at the following graphic and noted that "the more blue the more Democrat and the more red the more Republican (which by the way is backwards compared to the rest of the world) and incidentally almost exactly backwards for the gasoline chart as well. There appears to be a very high correlation between high gas … [Read more...]
BLS Releases July Inflation Numbers
The U.S. Bureau of Labor Statistics released their inflation numbers for July on August 19th. The basic summary they emailed read as follows: CPI for all items rises 0.1% in July as food prices rise but energy prices decline 08/19/2014 On a seasonally adjusted basis, the Consumer Price Index for All Urban Consumers increased 0.1 percent in July after rising 0.3 percent in June. The index for all items less food and energy rose 0.1 percent in July, the same increase as in June. If you just read that what impression would you get? Maybe that inflation is UP? At least that is what the headline implies. But then it says, energy prices are down. And it also implies … [Read more...]
Inflation Flat in June 2014
The Bureau of Labor Statistics released their Consumer Price Index (CPI) for June of 2014 on July 22nd. Based on the rounded numbers this would result in an Annual Inflation Rate of 2.1% the same as last month (May). But here at Inflation Data we look at it to two decimal places and based on that we can see that in May the rate was actually 2.13% and in June it fell ever-so-slightly to 2.07%. Many will say that it isn't statistically significant and it quite possibly isn't but it is quite possible that inflation is heading down again. Time will tell. I find it interesting that both the WSJ and Reuters top articles on inflation today say inflation is "Up" WSJ:Spike in Gas Costs Pushes Up … [Read more...]
Poverty Matters for Capitalists
Having taken Thomas Piketty to the cleaners a few weeks back (see “Gave & Gave … and Hay”), Charles Gave now redresses the balance with regard to the issue of economic inequality in today’s Outside the Box. He makes a forceful case that “poverty matters for capitalists”: Every US recession that I can recall was preceded by a fall in long rates, and I doubt the next will be much different. As such, do not expect the next US downturn to arise from the Federal Reserve pushing rates higher, an overvalued dollar or even mal-investments. Expect it to result from a decline in the income of the working poor. Early warning signs are likely to show up in the shopping aisles of stores such as … [Read more...]
Japanese Inflation Higher than U.S- First Time Since 1978
Core inflation in Japan was 3.4% in May while U.S. inflation was officially, only 2.13%. This was the fastest rise in Japanese prices since April 1982. In the 1970's inflation was bad in the U.S., but it was much worse in Japan. Every rise in U.S. inflation was multiplied in Japan, for instance, the average annual U.S. inflation rate, in 1974, was 11.04% while in Japan it was more than twice as high at 23.10%. But in 1978 a strange thing happened, Japan got its inflation under control and Japanese inflation dropped down to 4.2% while U.S. inflation remained at 7.59%. And by1979, Japanese inflation had fallen to 3.8% while U.S. inflation climbed to 11.35%. In 1980, although Japan had a … [Read more...]
US Consumer Prices Rose 0.4% in May to 2.13%
The U.S. Bureau of Labor Statistics released the Consumer Price Index (CPI) for the month of May today, at 237.900 it was up sharply from April's 237.072. This resulted in monthly inflation increasing 0.35% from April to May. Thus the annual inflation rate jumped from 1.95% in April to 2.13% in May. Key gainers on a monthly basis were fruits and vegetables which gained 1.4% over the month and account for 1.352% of the total CPI index . Airfares were up a whopping 7.4% as the summer season got under way which accounts for 0.77% of the total CPI. The other major gainer was electricity which increased 4.1% and accounts for 2.832% of the index. Meats, poultry, fish, and eggs were also up … [Read more...]
How Low Inflation in Europe Could Affect Your Investments in the U.S.
Last December, we explained why central bankers are terrified of economies that slip into a very difficult to stop deflationary spiral. European policymakers are not yet terrified, but it is fair to say they are concerned about what has been persistent low inflation. From Reuters: Euro zone price inflation fell unexpectedly in May, increasing the risks of deflation in the currency area and all-but sealing the case for the European Central Bank to act this week. Annual consumer inflation in the 18 countries sharing the euro fell to 0.5 percent in May from 0.7 percent in April, the EU’s statistics office Eurostat said on Tuesday. Fed Casts A Wider Economic Net Unlike the … [Read more...]