At its June 15th meeting, the FED announced that it will be raising rates by ¾%. Up until last week, this would have been a big shock to the market. But despite the imposed FED silent period leading up to their Wednesday meeting "somehow" journalists from all the major financial publications published remarkably similar articles predicting a 0.75% increase in the FED funds rate. Prior to this leaked guidance, the consensus was that the FED would increase rates by ½% but last week's higher-than-expected inflation report threw a wrench into the works. Everyone is making a big deal out of the fact that this is the first raise of that magnitude since 1994. And that it will double the FED … [Read more...]
April Inflation Down, But…
The Bureau of Labor Statistics reported that in April 2022, Inflation fell to 8.3% Inflation Summary: Annual Inflation Declined from 8.54% in March to 8.26% in April CPI Index rose from 287.504 to 289.109 Monthly Inflation for April was 0.56%, down from 1.34% in March The next release is on June 10th April 2022 Annual Inflation was 8.26%. Jan. 2021 -- 1.40% ** Jan. 2022 -- 7.48% ** Feb. 2022 -- 7.87% ** March 8.54% Gasoline prices were artificially lower due to a massive release from the Strategic Petroleum Reserves (SPR), which temporarily pushed inflation down in April. The International Energy Agency was not happy that the Biden administration didn't warn them that it … [Read more...]
Spoiler: The FED Guaranteed To Fight Inflation… Sooner Or Later
News from the FED’s December 2021 FOMC Meeting For nine months now, here at InflationData, we’ve been saying that inflation was becoming a problem. We’ve said this even though the FED denied it and initially said the problem was only “transitory”. The FED continued to massively increase the money supply via “Quantitative Easing” (QE) during that period. In our article Why Quantitative Easing is Inflationary… Sometimes, we showed that QE is inflationary when there aren’t counteractive deflationary forces. We also noted that QE had resulted in a massive increase in the money supply this time around. In his strangely named book Picnics on Vesuvius, former Financial Times Editor William … [Read more...]
Why Quantitative Easing is Inflationary… Sometimes
Quantitative Easing was initially considered inflationary but after its first usage, it didn't appear to be. Is this always the case? Is Quantitative Easing really inflationary? Will the Quantitative Easing of 2020-2021 result in more inflation? That is what we are going to look at here. ~Tim McMahon, editor At the height of the 2008 mortgage crisis the FED came up with a revolutionary idea to handle the crisis and that was called "Quantitative Easing (QE)". But before we delve into that let's look at what brought us to that point. Before Quantitative Easing Prior to the 2008 crisis, the housing market was on a tear (much like it is today). The banks were lending at a furious pace and … [Read more...]
Millennials Have Never Seen Inflation This High
The Bureau of Labor Statistics reported that the Annual Inflation Rate rose again in November. Inflation Summary: Annual Inflation highest since May 1982. CPI Index rose from 276.589 to 277.948. Monthly Inflation for November was 0.49% Next release January 12, 2022 Inflation for the 12 months ending in November was Up again from October. October 6.22% -- November 6.81% The earliest millennials were born somewhere between 1980-1985 (depending on which definition of millennial you use), just as we were coming off one of the highest Inflation spikes the U.S. has seen since they began tracking the CPI in 1913. In March of 1980, Inflation topped at 14.76%. By May of 1982, … [Read more...]
September Inflation Rebounds
The Annual Inflation Rate rebounded in September, according to the Bureau of Labor Statistics report. Inflation Summary: Annual inflation was 5.39% in September, 5.25% in August, 5.37% in July, and 5.39% in June. CPI Index rose from 273.567 in August to 274.310 in September. Monthly Inflation for September was 0.27%, August was 0.21%, and July was 0.48%. Next release November 10th Inflation for the 12 months ending in September was Up from August. Since the BLS rounds to 1 decimal place, they reported June and July as 5.4% and August as 5.3%. So September is once again at June levels. The last time inflation was this high was the 5.60% of July 2008. Before that, we … [Read more...]
Why is a Little Bit of Inflation Considered Good for the Economy?
The short answer is because the U.S. Federal Reserve Board, i.e., the “FED,” says it is. The longer answer is much more complicated. To determine whether 2% is really best for you, we will have to look at a variety of different factors. First of all, it might surprise you to know that it wasn’t always that way. It wasn’t until January 25th, 2012, that U.S. Federal Reserve Chairman Ben Bernanke set a 2% target inflation rate. Before that, the FED didn’t have a specific inflation target but instead regularly set a target range. This range was often between 1.7% and 2%. But even that range is relatively new, and some economists still believe that Zero percent inflation is optimal. Prior … [Read more...]
FED Issues September 2021 Statement
On September 22, 2021, the Federal Reserve reported its current policy position. Currently, the FED is creating liquidity (i.e., printing money) through its Quantitative Easing (QE) program at the rate of $120 billion per month. The market has been fearing that the FED would begin tapering, i.e., cutting back on its liquidity creation. Rumor was that the FED would start reducing their QE by $10-$15 billion per month due to inflation concerns. The last time the FED embarked on a tapering plan back in 2017, they used a two-prong approach of raising the FED Funds rate and reducing the monthly printing by $10 Billion every three months (i.e., roughly $3.3 billion per month). The result of … [Read more...]
August 2021 Inflation Down Slightly
On September 14th, 2021, the Bureau of Labor Statistics said that in August 2021, the Annual Inflation Rate was down. Inflation Summary: Annual Inflation was 5.25% in August, 5.37% in July, and 5.39% in June. CPI Index rose from 273.003 in July to 273.567 in August. Monthly Inflation for July was 0.48% and 0.21% for August. Next release October 13th Inflation for the 12 months ending in August was down 0.12% from July. Since the BLS rounds to 1 decimal place, they reported June and July as 5.4% and August as 5.3%. The last time inflation was this high was the 5.6% of July 2008. Prior to that, we have to go all the way back to the 6.29% of October 1990 to find a higher … [Read more...]
BLS says July Inflation Holds Steady at 5.4%
The U.S. Bureau of Labor Statistics released their Consumer Price Index News Release for the month of July on August 11th, 2021. Inflation Summary: Annual Inflation 5.37% virtually identical to June's 5.39% CPI Index rose from 271.696 in June to 273.003 in July. Monthly Inflation for June was 0.93% and July was 0.48%. Next release September 14th Inflation for the 12 months ending in July was 5.37% identical to August 2008, July 2008 was the previous Peak at 5.60% Last month's 5.39% was the largest increase since August 2008's 5.37%. (Since the BLS rounds to 1 decimal place they reported last month, this month, and August 2008 as 5.4%). If inflation tops the 5.6% of July … [Read more...]
