The Fed will have a tough go of things if there is lack of progress on the cost of shelter.
The BLS reports the Consumer Price Index rose 0.2 percent in October.
CPI Month-Over-Month Details
- The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.2 percent on a seasonally adjusted basis.
- The index for shelter rose 0.4 percent. Rent of primary residence rose 0.3 percent and owners’ equivalent rent was up 0.4 percent.
- The food at home index increased 0.1 percent and the food away from home index rose 0.2 percent over the month.
- The index for all items less food and energy rose 0.3 percent.
- The energy index was flat. Gasoline was down 0.9 percent.
- Medical care commodities fell 0.2 percent and medical care services rose 0.4 percent. This is another bit of bad news because services have a much bigger weight than commodities, 6.5 percent vs 1.5 percent.
CPI Month-Over-Month Rent and OER
Shelter is 36.5 percent of the CPI. The increase in shelter was half of the overall increase.
CPI and PCE Year-Over-Year Percent Change
Year-Over-Year Details
- CPI: 2.6 percent
- CPI Excluding Food and Energy: 3.3 percent
- Rent: 4.6 percent
- Shelter: 4.9 percent
- Food and Beverages: 2.1 percent
That’s roughly how the average economist views things. The next chart is how the average person views things.
CPI Indexes
Renters are primarily young voters, Blacks, and Hispanics.
My thesis all year was that Trump was likely to gain in those groups and if so, he would win the election.
It was an accurate call.
Why Trump Won the Election in One Clear Picture
Please consider Why Trump Won the Election in One Clear Picture
There is massive Democrat soul searching today. Hardly anyone will get it right. This is despite huge evidence all year long.
And they didn’t get it right.
November 8: Harvard Professor Says People Are Better Off Than They Think, Blames Media for Harris Loss
Jason Furman, a Harvard professor and Chair of Obama’s CEA lectures people on how well off they are.
November 11: Allan Lichtman Blames Elon Musk “Director of Misinformation” for Huge Democrat Loss
This is my Hoot of the Day, candidate for Hoot of the Year.
Now What?
I am fearful of 60 percent tariffs and mass deportations.
No economist that I am aware of has crunched any numbers of what mass deportations might do. So I did.
Here are my thoughts: The Economic Foolishness of “Deport All the Illegal Immigrants” In Three Pictures
And what about the deficit? Here’s my question: Can Republicans Pass Key Legislation With a Miniscule House Majority?
The stock market may like Trump, but he does not inherit a very good economy for the renters and non asset holders.
In a democracy where public benefits are expected, yet tax hikes are politically impossible, few options are open. One is inflation, one is more deficits and debt, and one is tariffs. Oh yes, there is increased productivity, but that is the hard path, and this is not a society to take the hard path, at least in significant part. A critical mass of folks want to take the least resistance on offer, and hand the long term dinner check to someone else. Also, as the economy continues to drift toward becoming a sideshow to big tech oligarchy and a digital-attention-as-worth star system, there is the argument (I don’t necessarily agree with) that the average human cannot contribute as much economic value as relatively in the past, so must be of less economic worth (net worth, real wealth, which those types equate to human worth fundamentally). Yet, they still demand those benefits, no? The numbers game thus comes out where it is. The politically horn-blowing is mostly just amusing to me, as it is not changing those dynamics all that much. These tails are wagging whichever dog is on stage. There is not an easy path from here, under any flag or slogan.
Lol the fbi raided the head of polymarket today. Still sore about predicting the election correctly. Can’t have that info out there.
My understanding from a couple web sources is that they allowed US citizens to illegally participate. Another flaw in the system, if there is a law promulgated by the feds, then the feds should enforce it, not a company or private citizen. If they can’t enforce the law than the law should not be on the books.
Since Oct 2020 rent (yellow) is up from 343 to 425, or 23%. That’s too low.
Breaking news: Repubs take house. Now Trump/GOP have 100% control of three branches of government. I can’t wait for all the amazing things they promised to come true. Absolutely no excuses now.
A few political hacks here and there…
and three branches become a…
sTump.
All for one & one for one.
I suggest you review David Stockman’s Substack article on economic “success” of 21st presidencies. The short version is Trump inherited a “good” economy, handed to Biden a worst economy and inherited from Biden a “better” economy than what Biden inherited in 2021.
Well it’s just gonna get 1000% better from here. If I were a Trumper I would take 100% of my money and invest it in the stock market right now, can’t lose! lol!
Says the guy with fdr as his tagline.
And your inane point is?
What does the FDR pseudonym and the David Stockman Substack article have to do with the accuracy what Stockman wrote and my referencing it?
You obviously didn’t read the Stockman article otherwise you wouldn’t have responded with an a priori response.
Wall Street analyst Ed Dowd said the other day that Trump is inheriting a poor economy from Biden. “When I was asked prior to the election who do you think will win the election, I said Trump has already won, according to the economic statistics. That’s why he won.”
I didn’t expect Trump to fix the economy – although if he does, great. I just want it F’d up more slowly – without pretending we can run it on windmills. Also to stop the invasion over the southern border and reverse the cultural insanity of those who say “birthing persons”.
So the Donald with no concrete plan that will increase productivity, no plan to stop the flow of illegal immigration due to bad economies in those migrating nations largely due US foreign and trade policies is going to slow down the deceleration of Main Street?
Neither candidate’s plans were going to assist in fixing the economy nor reduce illegal immigration.
And still they lower rates, because they are an unelected banking cartel that sets the price of “money”. Let them eat cake!
Interest is the price of credit. The price of money is the reciprocal of the price level. So, the FED can still lower interest rates while tightening liquidity. The problem is the dismal performance of the FED’s reserve balances:
9/1/2021 4193.2
2/1/2023 3021.8
2/1/2024 3567.7
9/1/2024 3236.8
That’s stop-go monetary mismanagement.
Hey, it’s an American tradition since 2008.
Medicare part B premiums going up 5.9% next year. The part B deductible is going up 7%. The 2.5% COLA is therefore a 1.9% COLA for the average retiree.
Meanwhile. health care premiums for federal workers are going up double digits, which will basically wipe away the 2% proposed raises for 2025.
No country for old men
Home insurance – https://data.bls.gov/dataViewer/view/timeseries/CXU220121LB1702M
Motor vehicle insurance – https://data.bls.gov/timeseries/CUUR0000SETE?output_view=data
And health insurance is up about 7%
How about summing up all these cost increase percentages.
Then subtracting them from the wage increase percentages.
Then coming up with a “quality of life” deflation index that shows a percent that we are losing every quarter.
Quarter after quarter.
and much higher medical costs for private sector. We all wish are benefits were that good at that cost
You mean to say that dumping 10 to 15 million illegals into health care system without contributing anything has a price?
Here here, media says they are contributors to lower inflation. Why even economic analysts are making that claim. Must be some mistake.
Are we in another housing bubble? Or have housing prices gone up, never to come down again?
Asking for a friend.
Look at housing price charts for the last 30 years for every major western country (u.s., canada, uk, australia). Just when you think they can’t go any higher, they do.
The U.S. already had a housing crash in 2022 and it’s been upward ever since.
Look at the alternatives: complete financial meltdown. Which would you choose if your head depended on it. /s
The FED would have to discontinue the manipulation of interest rates.
I figure for every 1% increase in the 30 Yr mortgage rate, there should be a drop of 10% in prices. So just on that, prices should be 40% below there early 2022 levels.
Factoring in that household income has risen about 20% since early 2022, then home prices should be about 20 to 25% below early 2022 levels.
Shelter costs won’t go down unless insurance, property taxes and maintenance costs go down. Landlords aren’t going to eat these costs to help renters save money, not gonna happen. There is a huge build up of foreclosures and evictions coming though once Trump takes office so who knows what will happen then.
Speaking of insurance, I came across a great article on a lurking “Lehman 2” monster sitting in the credit default swap insurance markets and why Buffett has possibly selling equities and raising cash.
https://valueinvesting.substack.com/p/lehman2
This wasn’t the sole reason but I liquidated out of all my insurance holdings, some were up 70% since I bought them and a good time to cash out. Bitcoin rockets higher. ……$…….$……..$
30% over the target still. Total failure of policy and this administration.