The BLS CPI report shows an event that is quote infrequent. A negative Core CPI.
- The Consumer Price Index for All Urban Consumers (CPI-U) declined 0.4 percent in March on a seasonally adjusted basis, the largest monthly decline since January 2015.
- The index for all items less food and energy fell 0.1 percent in March, its first monthly decline since January 2010.
- The energy index fell 5.8 percent as the gasoline index decreased 10.5 percent. The food index rose in March, increasing 0.3 percent as the food at home index rose 0.5 percent.
- The indexes for airline fares, lodging away from home, and apparel, the index for new vehicles declined in March.
- The index for shelter was unchanged, with increases in the indexes for rent and for owners’ equivalent rent offsetting the decline in the index for lodging away from home.
- Indexes that increased in March include medical care, used cars and trucks, motor vehicle insurance, and education.
- The index for all items less food and energy rose 2.1 percent over the last 12 months. The food index rose 1.9 percent over the last 12 months, while the energy index declined 5.7 percent.
CPI Month-Over-Month and Year-Over-Year
April rates to be very interesting.
I expect big declines in many categories.
Consumers welcome these lower prices. The fools at the Fed don’t, which is why we have huge bubbles that just burst.
Mike “Mish” Shedlock
“The food index rose 1.9 percent over the last 12 months”.
Expect this to continue to increase, but hei as long as we have indexes that exclude food, we’ll be fine.
US is completely insolvent,trillion dollar monthly deficits are here which means (like Zimbabwe) thousand,hundred thousand and million dollar bank notes will replace 1’s.5’s,10’s,20’s,50’s,100 dollar notes by Q1 2021!
Haha.
You are in for a big surprise.
2021 is too early. We still have to lose a war first or something along that.
It’s certain that the petrodollar foundation is shaking though. Our wonderful government recently threatened to abandon the Saudi Government if the later will not consent to cutting their oil output. With thuggish diplomacy like this, the world sooner or later will find all sorts of ways to abandon the US Dollar.
“I expect big declines in many categories.”
…
DEFLATION on tap.
Job cuts / hours cut / pay cuts are / will rule.
Watching ESPN the other night and bottom scroll had Big 12 Conference administrators taking 10% salary cut. This will play out everywhere in the coming months (especially after realization that economy will not bounce back as soon as DJT / governors “open up” economy).
Those calling for hyperinflation DEAD WRONG.
I wandered in yesterday to a local warehouse that sells high performance gaming gear nationally through their own website and through Amazon. The head guy was about the only one there since everyone was working from home. He said I couldn’t buy in person, but we had a nice chat. I told him I guessed their sales were through the roof, and he said that they have so many orders right now that they can’t keep up. Worse, they can’t get new computers. The new 2020 models have been announced, but aren’t being shipped yet due to production and supply issues. He’s worried about what he will sell when his stock is gone.
Florida Gov. DeSantis mulls reopening schools: Coronavirus ‘doesn’t seem to threaten’ kids link to thehill.com
Kids would never spread it to their parents and grandparents. Jesus won’t allow it.
In Spain they are soon allowing more than essential work to continue. They will provide disposable masks to anyone, 100 million (correction – ten million) they say with 4hr use limit. They look like surgical masks but different materials
has pdf link of design and spec., and that pdf has a link to another on testing. The standard they use is different to n95 I think
They use 1 micron bacteria in 3 micron aerosol for the norm. they chose. Sarscov2 is 0.1 micron, n95 tests are 0.3 micron I think ( which is size hardest to filter).
The masks look like surgical masks. Much better than no mask but I still wonder what size sarscov2 is being transmitted at.
I think the only prices the BLS ever cares about when it comes to inflation calcs are gasoline pump prices. They are ubiquitous (everywhere), very public, easy to collect, believable and, unlike many parts of the economy these days … REAL. I dont think they take seriously any other prices they collect or manufacture.
That deflation is coming from the massive money and demand destruction seems obvious. What is not as obvious is how this plays out over the next year or two, with the money printing orgy. George Gammon makes the most cogent case for inflation that I have seen (in this video):
These are odd times, and odd things may happen. I expect deflation for a bit, followed by sudden inflation. Thanks to the covid relief bill, massive dollars will be flowing the consumers, either in pay, or unemployement benefits. For now, they aren’t spending because they have to stay home, so prices will fall. Yet, for now they are doing something unusual – saving.
Once restrictions loosen up, they will want to go spend all that cash they aren’t used to having, but, since production has been dramatically reduced, there will be a shortage of goods. Too much money chasing too few goods is usually a recipe for inflation. So, we could see deflation for awhile, then a sudden, sharp flip to inflation.
I think prices will not fall as much as thought. This isnt a 2009 event. Much of it will depend on how long economic activity stays low.
“I think prices will not fall as much as thought.”
…
Most think there will be no deflation. Not sure how much you expect prices to fall. What is your consensus?
There will be “sharp flip to inflation” until – and not before – massive debt overhang dealt with.
When people are behind on debt payments for car loans, rent/mortgages, credit card bills what free cash are you referring to? Those payments are now being delayed and fill not be forgiven.
Mish, I appreciate your summary of Economic indicators, but at this point- way. We now effectively living in a police state. The initial justification for this has proofed to be utterly wrong. It my county alone, 8 people died out of 1.2 million people. All the deaths are related to outbreaks at nursing homes not in the general community. One of the deaths was an individual actually listed was in hospice. Regards,
Sounds like a nice place Tony, let’s lift the quarantine and me and all my infected friends will come visit!
“It my county alone, 8 people died out of 1.2 million people.”
The fatality rate is the number who died divided by the number infected, the latter of which is still unknown although estimates are coming in. There appear to be a lot more infected which means a lower fatality rate.
What is different about this new virus is that it is extremely contagious, exacerbated by the fact that people can have it without symptoms but still spread it. We are all probably going to get it sooner or later. Even cats are getting it from humans.
It might actually be better, for everyone who can easily survive it, to get the virus as soon as possible. Once the herd immunity is there, people can go back to work if they still have a job, or find another one. Many industries, however, will not return for a long time, if ever.
Was your county in California one of the ones that was part of the first wave to close – one of the 6 Bay Area counties?
If so, maybe it is the early action that is keeping the numbers down.
Our local Winn-Dixie supermarket.
Most people here are of modest means and that is a “luxury” item that they can not even consider buying.
My wife bought beef tenderloin (aka filet mignon) today for $7.99 a pound.
That is a price not seen since the 1990’s.
Draw your own conclusions.
“My wife bought beef tenderloin (aka filet mignon) today for $7.99 a pound.”
Where?