Posted on 09/28/2022 2:45:01 PM PDT by Jacquerie
Fastest in 40 years! Stagflation! A 1970s redux! Inflation has dominated headlines all year, majorly contributing to 2022’s unusual, sentiment-driven bear market. The fear is understandable. Fast-rising prices pressure people’s budgets and cause disruption.
Rightly or wrongly, inflation stokes FED hikes fears and weighs on economic expectations. Theories abound on its causes, ranging from COVID lockdown-related disruptions, big government spending, vast money supply increases, war, tight labor markets and more. But, no matter which theories you champion, signs are emerging inflation may have crested. If so, that would be a major relief—a fillip for stocks’ recovery. Here I offer you a comprehensive look. Then draw your own conclusions where prices are heading.
Before continuing, two things: One, set politics aside. Inflation is politicized, but my aim is solely market-oriented. Two, to be clear, this year’s inflation has lasted longer than I anticipated. That makes it increasingly likely some of my views are wrong. It is a multifaceted issue in a world desperately seeking simple answers. Regardless, signs of easing price pressures are evident on many fronts.
Take energy, a chief inflation driver earlier: Now cooling energy prices are showing in US inflation data. They underpinned the July US Consumer Price Index’s slowing to 8.5% y/y from June’s 9.1%. How? Oil is down -34.1% from March 8’s high. The national average regular gasoline price is off -45.7% since early June. It likely doesn’t show in CPI data yet, but US natural gas prices are down -20% from August 22’s year-to-date high.
Wheat prices peaked May 17, tumbling -34.3% since. Corn prices are still down -14.2% since mid-May’s highs. Beef and hogs are down -8.7% and -15.5% since highs on March 31 and August 10, respectively. Eggs and milk are down -35.9% and -19.5% since their respective 2022 highs. To sum it all up globally: The UN’s Index of World Food Prices has fallen in five straight months, currently sitting -13.6% below March’s high.
(Much More)
It has crested about as much as it did when Jimmy Carter wore his sweater.
During Carter’s time I remember our house went from an assessed value of $125,000 to $55,000. I think I’ll wait.
Nothing is safe with libtards in power
Take it to the bank
Inflation will only “crest” when the economy’s productivity catches up to all the money we have printed. I don’t think we are there yet.
Inflation may have ‘crested’ but it’s about to hit Socialist Democrats in the form of a Red Tsunami! :)
Who is this person trying to sell us on cresting inflation? Oil is the main cause and that’s a fact. Oil effects every segment of our economy. Prices are artificially down for 2 main reasons. States have temporarily lifted state gas taxes. And, Joe is pulling from our strategic oil reserve to add more gas to the market -you see that’s how to lower gas prices by increasing “supply”. But, that’s not what the reserve is for and puts America at risk by not being able to fight a war(s).
Gas prices were blunted due to the unprecedented release of our strategic reserves. That will slow down after the election and is already receding. Prices are creeping back up in California and other states. Also, huge pay increases like the newly signed rail workers 25% raises will further feed inflation, particularly as workers at other places demand equal raises. Lastly, Fed ex just raised 2023 shipping rates the highest ever, over 6%, which will also feed inflation pressure as others raise as well. The only hope we have is for the Fed to continue raising rates, for republicans to win the house and senate in November, and (this is a biggie) for those republicans to stop spending like RINOS to reign in the Government growth. These RINOs haven’t been fiscally restrained for years.
He says everything is down. I totally disagree. Everything is up a lot, not just a little.
Exactly. With draining the SPR ending in October and continued upward pressure on food prices coupled with collapsing home prices, we could have a second wave of inflation.
Foreign matters may also influence things.
Stupid ‘excrement’ shilling for Democrats. We will go through cycles of inflation, recession and coming very soon, massive unemployment. There are multiple structural problems in the world and domestic economies.
Take a look at historical inflation and GDP numbers from the 70’s through the mid 80’s. We are at the beginning of that, not the end. Inflation will go down, and then go back up. It’s not a simple line with a negative slope. Congress and Biden have done zero to fix the structural problems. In fact, they make it continually worse through spending, regulations and taxes. What makes today worse than the 70’s is America is so connected to the global economy. There will be more supply chain problems that originate in other countries which will cause shortages and in turn increase inflation. China and Europe are both in hideous shape. Bloomberg recently reported that 50% of factories in Britain are one the verge of shuttering. China is going through it’s equivalent of 2008 right now. EU countries are royally screwed this winter due to inadequate energy. All of that affects imports and exports. We just don’t have enough things made in America anymore to work out of a global recession on our own.
fuel went up 20cents over night...haven’t been in town for a couple of days so I imagine its even higher....at this one station its gone up about 50 cents total/gal since early Sept.
What a pantload
There is no pathway for the productivity of the US economy to catch up with the excess amount of money in circulation, so long as the taxation rates and regulatory restrictions remain at their current high levels. And there is little chance that either the taxation rates or the burden of regulations will in any way be reduced so long as the current regime remains in office, and if by the Congress being swept to Republican control, the current regime now squatting in the Oval Office will use the veto power to the extent they may exercise it.
As a side diversion, there may be an effort to replace the fiat paper money we now have, and replace it with a form of digital currency, still having the same nominal valuation, but subject to cancellation or seizure if the individual should choose to spend that medium of exchange in a “socially unacceptable” way, like purchase of personal firearms and ammunition, or opting to purchase an internal-combustion-engine powered vehicle, rather than the “politically correct” battery-driven electric vehicle, or by traveling to “undesirable” localities. Or even purchase the “wrong kind” of food.
Imagine your life savings drained with the command from a computer network.
These actions do not cause or feed inflation. They are a response to inflation by groups who have enough clout to resist.
Real inflation, which includes things like food, medicine, heating, cooling, and transportation costs is a lot closer to 20% than the official claim of 8%. And those railroad workers who get 25% increases are going to get reamed by income taxes. Just about everybody is falling behind, no matter what they do.
Inflation is now caused primarily by bank lending to the government (Treasury bonds) to fund spending in excess of incoming tax revenue. This is equivalent to printing money without the cost of printing. The funds are conjured out of absolutely nothing by the magic of fractional reserve banking and debt-based economy.
Unless there are substantial productivity gains, the new currency bids up prices for goods and services. The winners are the governments who have more funds to claim against the economy and the first-tier central bankers, who rake off a percentage of each new issue.
The losers are the producers, and anyone saving cash. But they never seem to catch on, so the game continues.
Preach, son-Joshua
The WEF seems to have us over a barrel
The only thing that is going to kill inflation is demand destruction. We aren’t even close to that yet.
I’ll consider it “crested” when we all get our WIN buttons again.
Oil prices contribute to inflation but not really the main reason. The main reason is all the fiat money cursing through the economy.
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