According to the Bureau of Labor Statistics CPI report released on November 14th, Annual Inflation was down to 3.2% in October. (but since we calculate it to two digits, it was actually down to 3.24%.) Monthly inflation was 0.44% in August, 0.25% in September, and -0.04% in October. So it certainly looks like inflation is falling. The stock market took this as a "positive surprise" and went on to rally. We had been projecting this decrease due to numerical anomalies for several months. Typically the 4th quarter has low or negative monthly numbers but October 2022 was very high thus the "surprise" as the new numbers were normal (i.e. much lower). Unfortunately, December holds the … [Read more...]
August 2023 Inflation Up Sharply
According to the Bureau of Labor Statistics CPI report released on September 13th, Annual Inflation increased from 3.2% in July to 3.7% in August. (but more precisely, it was from 3.18% to 3.67%.) Monthly inflation went from 0.19% in July to 0.44% in August. August 2023 Inflation Summary: Annual Inflation rose from 3.18% to 3.67% CPI Index rose from 305.691 to 307.026 Monthly Inflation for August was 0.44%, July was 0.19% and June was 0.32%. Next release October … [Read more...]
Can the FED Engineer a “Soft Landing”?
The ultimate dream of the Federal Reserve and those who believe in the FED's omniscience is for them to engineer a soft landing, i.e., curbing inflation without sending the economy into a deep recession. The idea is that if they raise rates just enough, but not too much, they can find the "Goldilocks" middle ground that will magically cool inflation just enough. In today's article, Mihai Macovei explains why that is more of a fairytale than Goldilocks herself. ~Tim McMahon, editor. There Is No Fed Magic Trick to Achieve a Soft Landing Economic growth in the United States accelerated to a 2.4 percent annualized rate in the second quarter of 2023, picking up from 2.0 percent in the first … [Read more...]
When Can We Expect Lower FED Rates?
Why Has The FED Been Raising Interest Rates? The Federal Reserve (Fed) started raising interest rates in March 2022 in an effort to combat inflation. As of the end of July 2023, the Fed's target rate limit is 5.5%, the highest level in 15 years. There are a few reasons why the Fed is raising interest rates so aggressively. First, inflation was at a 40-year high. In June 2022, the Consumer Price Index (CPI) rose 9.06% year-over-year, the fastest pace since December 1981. This means that the cost of goods and services was rising rapidly, which was eroding the purchasing power of consumers and businesses. Second, the economy is still strong. The unemployment rate posted a 50-year … [Read more...]
July Annual Inflation- Up Slightly
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...]
No Surprise… FED Raised Rate by 1/4%
The market was predicting a 1/4% raise in the FED Funds rate with 99% certainty and that is exactly what they got. We were wondering if because of last month's drop in annual inflation (due primarily to a mathematical anomaly) the FED would not raise rates this month. But apparently their previous pause was sufficient under the circumstances. By applying the slight rate increase at this point, it should present the impression to the general public that they are on top of things, when the 1/3% rebound in inflation that we expect for July shows up. FED Chairman, Jerome Powell has left the door open for further increases (or not) with his comment, “Looking ahead, we will continue to take … [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...]
Radical Decentralization: the Key to Wealth and Freedom
By Ryan McMaken It is not uncommon to encounter political theorists and pundits who insist that political centralization is a boon to economic growth. In both cases, it is claimed the presence of a unifying central regime—whether in Brussels or in Washington, DC, for example—is essential in ensuring the efficient and free flow of goods throughout a large jurisdiction. This, we are told, will greatly accelerate economic growth. In many ways, the model is the United States, inside of which there are virtually no barriers to trade or migration at all between member states. In the EU, barriers have been falling in recent decades. The historical evidence, however, suggests that … [Read more...]
The Effects of Raising the Debt Ceiling
In this article, Professor Daniel Lacalle examines the relationship between Federal debt and crony capitalism. ~Tim McMahon, editor. Key Facts: Congress has raised the debt ceiling 78 times since 1960 US debt to GDP is 123.4% 8% of the budget goes to pay interest Discretionary spending is around 30% of the budget Fiscal year 2023 outlays = $5.9 trillion The United States budget is unsustainable More Federal Debt Means More Taxes, Less Growth, and Weaker Real Wages By Professor Daniel Lacalle Since 1960, Congress has raised the debt ceiling 78 times, according to Bloomberg. The process of increasing the debt limit has become so regular that markets barely worry … [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...]