Let’s tune into a White House Statement on inflation to discuss what’s real and what is imaginary.
Statement from President Joe Biden
Please consider a Statement from President Joe Biden on the December Consumer Price Index
Today’s report shows that we ended 2023 with inflation down nearly two-thirds from its peak and core inflation at its lowest level since May 2021. We saw prices go down over the course of the year for goods and services that are important for American households like a gallon of gas, a gallon of milk, a dozen eggs, toys, appliances, car rentals, and airline fares. Despite what many forecasters were predicting a year ago, inflation is down while growth and the job market have remained strong. The economy has created more than 14 million jobs since I took office, and wealth, wages, and employment are higher now than under my predecessor.
Consumer Price Index Change Since January 2020 Key Items
- Home Prices (Through October): +45 Percent
- CPI: +19 Percent
- CPI Excluding Food and Energy: +18 Percent
- Rent of Primary Residence: +21 Percent
- Food: +25 Percent
Inflation is not down. The CPI is not down. Some cherry-picked items are down from cherry-picked highs.
Consumer Price Index Biden Mentioned Items
Consumer Price Index Change Since January 2020 Biden Mentioned Items
- Energy: +28 percent
- Meat, Fish, Poultry, Eggs: +27 Percent
- Dairy: +21 percent
- Airline Fares: -5 Percent, Hooray!
If you cherry pick a top the declines look better, especially energy.
A comment on Twitter inspired this post.
Word Police
The Tweets generated a whole slew of comments. But conflating year-over-year change with actual price levels (purposely as team Biden does), or accidentally by others, is a major mistake.
Words matter.
Hotter Than Expected CPI Led by Rent, Up Another 0.4 Percent
For well over two years, economists and analysts said rent was declining or soon would be. But for the 28th consecutive month rent and OER were up at least 0.4 percent.
For discussion, please see Hotter Than Expected CPI Led by Rent, Up Another 0.4 Percent
I repeat my core key theme for over two years now. People keep telling me rents are falling, I keep saying they aren’t. I thought this may finally be the month the rent trend breaks but it wasn’t.
Rent of primary residence, the cost that best equates to the rent people pay, jumped another 0.5 percent in December. Rent of primary residence has gone up at least 0.4 percent for 28 consecutive months! [Note: somewhere along the way I got off by a month. Last month I said 28 months but it is 28 months this month].
The Housing Elephant Matters
Lost in the debate over the CPI index itself vs rate of change of the index and year-over-year changes is the housing elephant.
The price of a house is up a whopping 45 percent and rising. Rent is up 21 percent.
The 36 percent of the people who do rent have been royally screwed by Fed policy that inflated assets, especially home prices, in turn causing rents to soar.
The price of a house is not in the CPI. Instead, Owner’s Equivalent Rent (OER) is in the CPI.
The CPI is totally screwed up as a measure of inflation. Removing OER from the CPI does not address the issue, it understates inflation even more.
Inflation Matters, Not Just Consumer Inflation
Ignoring housing prices is what got the Fed into trouble in 2006 and again recently.
The price of eggs and airline tickets are down. La-de-da. How does that feel to someone renting and wanting to buy a home?
I can tell you by looking at polls.
Why Are Americans in Such a Rotten Mood?
Those who do rent, especially the lower economic groups, have been royally screwed by the combination of Fed policy and Bidenomics.
This idea addresses the question Why Are Americans in Such a Rotten Mood? Biden Blames the Media
People can cut back on some things but rent and food are not in that list.
For the 36 percent of the nation that rents, Bidenomics on top of Fed asset bubbles boosting home prices and rent has been a complete disaster.
It should be no wonder that people say they were better off economically under Trump.
Inflation Is Transitory to What?
The extra money home owners have in their pockets thanks to refinancing at 3 percent, coupled with Biden’s regulations, the end of just-in-time manufacturing, and totally inane energy policy all suggest the current easing of inflation is transitory.
My transitory position on inflation may be wrong. It’s just an opinion. There is a legitimate inflation/deflation debate, depending on what happens to asset prices and debt. I can argue both sides of that topic easily.
However, the CPI is up, inflation is up, and inflation is up even more if we properly account for asset bubbles. That’s not an opinion, it’s a fact.
The extra trillion they called the inflation reduction act looks to have gone straight into asset bubbles. That won’t go unpunished. Neither will these wars that are starting to rage. The idiot drained the petroleum reserve while sparking wars?
Who do you trust today, and why do you trust them?
Pick a name: Joe Biden, Lloyd Austin, Kamala Harris, Antony Blinken, Jake Sullivan, Victoria Nuland, Janet Yellen, Merrick Garland, Christopher Wray, William Burns (CIA), Alejandro Majorkas, CJCS General C. Brown (USAF), Pete Buttigieg, Jennifer Granholm, Karene Jean Pierre, John Kirby, the American MSM, the Silicon Valley Oligarch Class, Wall Street, the MIC, Hollywood actors, writers, & directors, Javier Becerra (HHS), and SCOTUS Justice Katangi (I’m not a biologist) Brown Jackson.
Indeed, just who do you trust today?
My observation, we are in the early stages of the 4th Reich
Biden==Baloney
I forgot another driver of inflation – ILLEGAL immigration. Handing millions of illegals $2,000 per month and giving them free services certainly does not reduce inflation. The Left likes to blame gentrification on the wealthy, but it can also occur when Illegals reduce the supply of affordable housing, and crowd out students and hospital patients.
Your transitory position on inflation is not wrong because you once again forgot a huge driver of inflation – WAR, which is being manufactured by the Neocons and Mother WEFers.
Inflation has upset the average American, because prices spiraled up for a year before workers were able to use core inflation readings as a claim to a substantial pay increase. Household incomes are always a year behind higher cost of living expenses.
In late 60s and early 70s, the government enacted wage freezes to prevent inflationary spirals. The unpopularity of fixed incomes and inflated prices would cast out the incumbent party. The reason the liberal Fed, with the BLS, manipulates a 2 percent inflation. At 2 percent inflation, wage increases are held to 3 percent per year. Not enough to contribute to an inflation spiral. A stealth wage freeze.
Inflation in minimum wage salaries became a problem in 2023. The negotiated increases in union wages will be a large factor of price hikes in 2024.
= prices , inflation down
This type of macroeconomic idi111ocy and gaslighting from goverment must stop!
Prices mean nothing. Its relation to income (aka purchasing power) is important.
Even if the price of a new Ferrari drops in half tomorrow, most people will still be unable to afford one. The same is true for a private jetting.
why? Those are far too pricey for average Joe.
On the other hand, if the price of a bead doubles, it won’t matter much because bread is cheap relative to income.
alx
There is little downward price flexibility, sticky wages, etc. The only way to reverse asset prices is to produce high real rates of interest and follow a tight money policy. That means driving the banks out of the savings business (which doesn’t reduce the size of the payment’s system).
Mish:
Thanks for all your great reporting. I appreciate all your charts and analysis.
Do you have an estimate of the overall inflation counting everything (i.e. food, rent, housing, health insurance, property taxes, property insurance, energy/utilities, cars, etc.)
Absolutely Not!
In fact inflation has been rising still or staying flat, but not coming down at all. Sure the Government can spin the numbers, which they do, and make inflation appear to be subsiding. The real numbers speak for themselves, and you can’t hide that. Look at housing as a prime example of that.
For inflation to actually come down, we would need to raise interest rates much higher and much faster. I don’t see the powers to be allowing for that. More importantly we would have to stop printing money, and I definitely don’t see the powers to be stopping that.
So No, it’s not coming down. No, it’s only going to look like it’s coming down, when they get the right numbers to use to say so. The con, mirage, make believe, lies, or whatever you wish to call it, will show what they want it to show. Everybody knows this, with any intelligence, by just looking around and putting some common sense to what you see occurring.
Mish,
It would be interesting an article about how to invest in the coming inflation. As things become problematic, it’s highly likely the entire green energy project will fade away. It was always a government mandated boondoggle and highly inflationary. Thus, commodity investments in battery metals and copper will not be as profitable as many think. I suspect gas and oil will be great investments and perhaps nuclear. Gold and gold miners should be a no brainer, except for jurisdictional considerations. It would be great to hear your insights on this topic.
TIPS for you. But in case you are a billionaire, speculating in the commodity markets is a great way to become a millionaire.
“Words matter.”
“This is not a word police matter.”
“One Adam-12, respond code 3.” 🙂
The inflation/deflation debate is transitory. Governments are the ones who decide this debate and they always choose inflation in the end. To do otherwise is to lose power. A bankrupt government that doesn’t have the ability to pay anyone to enforce its edicts is a chimera. It’s a carnival barker shouting into the wind.
After the Hooties launched 21 drones and missiles at the coalition fleet, which failed, Biden retaliated. US & UK sausage drones factories, radar stations and Sana’a airport. Blinken and Jake Sullivan were against expanding the war. Biden crossed Blinken/ sullivan’s red line. In election year Biden cannot hide in the basement and show weakness. Iran will have to decide what to do next. Biden didn’t cave in as expected : on hold until Israel/ Hamas ceasefire, expand Israel/Lebanon, or expand to a major regional war.
MLK big 3 days weekend : Taiwan election, Hooties response and the Dow [1W] SOT.
President Walter Mitty has no idea what inflation is, but neither do most people.
Is inflation down? Ask the guy who has been priced out of the housing market. Mortgage payments are at least 50% higher than they were a few years ago. This amounts to an additional $10,000 per year on a typical mortgage. Not to mention saving enough money for a down payment.
I know that top economists have been predicting for rents to go down. Which only goes to show, yet again, the bankruptcy of their profession. When did ANY landlord, at ANY time, ever lower ANY rent to ANYBODY?
How will rents go down when there is continuing scarcity caused by excessive illegal mass immigration? I guess one way is like commerciial rents retreating as nobody needs it so much.
By that illogic, rents must really have gone up from “continuing scarcity” back when all those Euros starting flooding into the US. Driving up Tepee rents……..
And, since all these illegals are wearing shoes: Are shoe prices also doomed to similarly go up from “continuing scarcity?”
You are confused. The economists are talking about rent inflation.
Its an election year … what do you expect …
In 2015 the Hooties took over western Yemen, while we sacked ISIS. Iran loaded the Hooties with anti-ship missiles. In 2016 the Hooties attacked UAE ships and USS Mason. USS Nietze attacked radars sites. The o/n market choked. US was dragged to the Saudi/Yemen war. Iran exported their threats to the Red sea and the Arabian sea. They loaded the Hooties with drones, anti-ship missiles and long range missiles. The Hooties failed to penetrate Israel’s thick defense system. Under the banner of Israel they attacked soft targets near Bab el Mandeb. The o/n market is running out of oxygen. Tonight the US and UK retaliated. The o/n market might bonk,
short of good collateral.
US has been actively bombing yemen regularly and on a pure war footing since Obama in 2009
US attacked ISIS, creating a vacuum in Yemen and Iraq.
He also said the RUS economy would be turned to rubble.
https://www.politico.com/news/2022/03/31/ruble-recovery-russia-biden-sanctions-00021850
Biden Mitty is turning is the Cramer of politics.
Social Security uses the unadjusted CPI-W (1984) figures to determine COLAs.
The last 5 readings are: 301.551, 302.257, 302.071, 301.224, 300.728.
Per the BLS, prices are lower today than they were 5 months ago. That’s deflation.
And that was after Janet Yellen proofread the draft of his statements.
So how do we fix this?
“We” cannot fix this.
“You” cannot fix this.
“I” cannot fix this.
All “we” can do is look after ourselves.
While I disagree with Papa on some things. His statment above is 100% correct in my view.
If you aren’t looking out for yourself and your family who is? The elites sure as hell aren’t.
There will always be a hierarchy. It’s just how humans are wired. So you can attempt to get into the top layers of the hierarchy (which is generally reserved for socio/psychopaths in my view) or you can figure out a way to maximize your wealth and happiness in the lower tiers. This isn’t a defeatist attitude its simply acknowledging reality.
Whatever happens is gonna happen. There is virtually nothing you can do to stop it, but you can prepare and maneuver accordingly.
You could invade Ukraine or bomb Gaza.
Typically reserved for upper tiers.
Cuts to public services and reduction of the size of the state, to pay the debt down.
It’s going to happen anyway, but of course, they will try and soft default through the general population through rising prices and wage suppression – further accelerating the inevitable reduction in the size of the state and welfare in all developed countries.
Breaking the financial system is the alternative, but if they did that, their wealth would evaporate as meaningless, and anarchic gangs and warlords would replace the state.
One can always come to an agreement with a warlord.
That is often not possible with a state.
FJB! That’s what I say.
From 2020 – 2023 inflation is up 18.64%. or for every $100 spent in 2020, one needs an additional $18.64 in 2023. 2020-2024 one needs an additional $22.36. Inflation & its impact is not going away & never will
Compound inflation is terrible. Thanks for the figures
2007-2024 one needs an additional $49.56 to buy what $100 bought in 2007
…which is more than 18.64%; it;s more like double that… QED
It’s more like double that, actually.
Help me out here. Inflation is a measure of the rate of change, right? So when prices increase more slowly inflation can be described as “down.” It’s an awkward adjective in this case but common. More precisely, inflation has slowed.
The CPI is a statement about the cost of a basket of consumer goods and services and the rate of increase in the price of those goods and services has slowed. Some of those prices have even fallen i.e. gas is cheaper (here at least) and eggs have returned to normal (adjusted for inflation).
So, while price increases continue at a slower rate and that increase is on top of post pandemic spikes it remains to be fair to say that Joe Bidens policies have benefitted the American consumer.
It should be noted that the rest of the world is taking a beating economically and I don’t think Mr. Biden has much to do with that.
The RATE of inflation slowed.
Inflation is NOT down
To say Biden’s policies benefitted anyone on inflation is totally idiotic.
His energy policies are inflationary. The inflation reduction act added to inflation. Eviction moratoriums added to inflation. Tariffs add to inflation.
The massive fiscal stimulus, totally unwarranted kicked things off.
Sheeesh!!!
Semantics. I guess.
Technically, the inflation rate is “down” from over 8% to under 4%. Yes, still some inflation, but less of it.
For prices to be down overall, that would be “deflation”, not “inflation” to the average consumer.
Some prices have come down this year. Gasoline, eggs, dairy, fresh vegetables, seafood, pork,etc. But those are exceptions.
Most asset prices are up: housing, stocks, bitcoin.
Of course, rather than focusing too much on prices and inflation, I prefer to focus on growing my wealth to the point where I don’t worry much about prices.
Setting aside that PRICE RISES ARE NOT INFLATION, for a moment, you can look at where China is in its development s-curve to see that long-term the “deflationary” aspect of China in the world economy is a spent force; however, the implication of that is that CCPs continuing indulgence in bubble-souffle-forming debt froth is imploding, there is likel to be a dip in these “nonflation” numbers for the next couple of years.
That being said, the implication is of increasing SCARCITY, as China’s deflationary impact recedes and there’s not much to replace it. Hence, the deflation that is actually happening will likely continue to be masked by price rises caused by increase SCARCITY, misdescribed as “inflation”.
Thanks. But the “average consumer” doesn’t care about definitions. They care about prices.
I always reference “the average consumer” when I talk about inflation.
Regardless of what economic or textbook definition of inflation you prefer to use, to the average consumer, inflation means rising prices.
Which is what I was talking about.
“to the average consumer, inflation means rising prices.”
As measured in take-home, post rrent/mortgage, post “mandates”/insurance…… income.
Economics is explicit about dealing with revealed preferences, as opposed to stated ones, for that reason. Sufficientoly heavy indoctrination may well cause some less-tran-reflective sap to believe “prices” are falling simply becasuse he is being told some made-up “metric” says so. Heck, he may even believe mindlessly regurgitating said made up “metric” ad nauseum makes him appear more edumecated.
But his actual spending will still reflect that his after-above-mandates-rents-and-shakedown-outlays, no longer affords him the opportunity to consume half as much as even the average Yemeni. And that’s what’s important. Not the “sentiments” that innumerates like to pretend are somehow “important.”
Price rises are not inflation – why is that so difficult to understand?!
Inflation is the excessive expansion of money supply beyond what actual growth can justify. Geopolitics an ideologically-driven scarcity pushed prices up, but not inflation – or “real real inflation”. All these rates and acronyms are meaningless drivel. Global trade is contracting, as are loans = no inflation.
Yes, things can be “inflationary”, but from a deflation substrate, still negative.
I’m not an economist, so…
The eviction moratorium was inflationary, but people stayed in their homes.
The unfortunately named Inflation Reduction Act is building and repairing infrastructure and providing for good union jobs.
The fiscal stimulus fed millions of children.
Tariffs, as I remember, were a Trump initiative.
The rate of inflation is down from 9% to a little unde r4%.
I count these as benefits.
Off topic: Hey Mish how do you like Truthseeker the preacher?
Inflation is shorthand for the rate of increase in the CPI. Using that definition, the CPI is up, inflation is down, at least year over year.
But it’s the wrong definition. The correct definition is money supply/credit creation outpacing real growth.
Not correct! M x V = P x Y. P only moves with M given Y if V is constant. Sometimes V is quite predictable. But there is a reason why all monetarists are dead by now.
“When Trump won in 2016, Democracy suddenly became evil “populism” for how dare the people try to vote career politicians out of power. They began the hate campaign against Trump because they could not allow an outsider to upset their feeding trough.”
https://www.armstrongeconomics.com/international-news/politics/elections-are-now-the-threat-to-democracy/?
“Reporting” on dementia Joe on anything at this point is elder abuse. The guy is gone. Was always dumber than a box of rocks. Now its just sad. Same with what they did to Feinstein and now Pelosi and ol “pants pulled to the tits” Jerry Nadler.
Well, age shows, especially around 80. But at least Joe Biden still knows when he makes a mistake; Donald Trump is so dumb he doesn’t even realize it anymore when he says something especially dumb (which he does a lot). Solution for the presidency: 35/75 limits.
I agree on the limits, right after the next election.
It’s not age. It competence and mental acuity which Joe is surely lacking.
Given the choice, I take Joe at any point. Trump is a walking confirmation of the Dunning-Kruger effect: some people are so dumb they will never realize that they are dumb.
Not too many dumb billionaires.
Is he a billionaire? We will find out when he has to cough up the $250 million in NY.