Some prices change frequently, notably gasoline. However, over 70 percent of the CPI changes infrequently. This post discusses the Atlanta Fed Sticky price project.
The Sticky-Price CPI from the Atlanta Fed was published today as was the BLS CPI report.
The Sticky CPI and Core Sticky CPI are nearly identical. This makes sense given the respective weights are 70.1 and 63.6.
Sticky CPI excluding shelter has been tracking closely to the overall CPI but that is not always the case.
Flexible and Sticky Prices in the CPI Basket
Are Some Prices in the CPI More Forward Looking than Others?
The Atlanta Fed asks Are Some Prices in the CPI More Forward Looking than Others? We Think So.
As for what makes prices sticky, think 12 month leases.
For over two years people have been expecting rent to fall and it hasn’t. However, the price of new leases as opposed to renewals are showing price pressures especially in overbuilt markets like Austin, Texas.
Home and auto Insurance are also sticky.
Flexible Price CPI
Items that change frequently include gasoline and food at home. These items make up 29.7 percent of the CPI but can have a big impact on the BLS CPI measure because the amplitude of price changes swing wildly, especially energy.
Rent and Owner’s Equivalent Rent
OER is the single largest component of the CPI with a weight of 26.766 percent as of February 2024. Rent of Primary Residence is 7.655 percent. The pair account for 34.4 percent of the CPI.
The Atlanta Fed weighs the combined Rent and OER categories as 30.4 percent of the Sticky CPI.
BLS CPI
Last month I noted Another Hotter Than Expected CPI Led by Shelter, Up Another 0.6 Percent
Today, I reported CPI Hot Again, Rent Up at Least 0.4 Percent for 30 Straight Months
Biden’s regulations, big union wage increases, and student debt cancellation are all inflationary.
Big Explosion of Government and Social Assistance Jobs
President Biden is bragging about job growth. But he doesn’t say where those jobs are.
On March 8, I noted a Huge Percentage of Job Gains are Related to Taking Care of Immigrants
The surge in government jobs and social assistance jobs is soaring to handle the massive influx of immigrants.
Health care jobs are rising for the same reason but also because of demographics. Aging boomers need more assistance.
The stick-price CPI is up 4.4 percent from a year ago. The BLS CPI is up 3.2 percent from a year ago.
Even the latter is a mile away from the Fed’s target of 2.0 percent.
And everything this president does adds to inflation. Don’t expect that to change.
Is Biden to blame? Yes, this is happening on his watch, particular two proxy wars.
If anyone thinks Trump would’ve done a better job is sorely lacking in understanding how inflation works.It is simply too much money chasing too few goods.
The persons accountable for this are the FED, the banks, the government, and the supply side of the economy, i.e., oligopolies, rentiers, et al.
Soweto MTA (NYC subway) capillaries are defective.
And bird dog crew chief banana Philadelphia
Mish, it seems to me, that this uncovers a far bigger problem. How to solve the spiral downward forthcoming, as described in the article. Let’s forget the cost of immigrants for now, as Citizens are already having a hard enough time, and will need much help soon themselves. They certainly, in mass, will be looking for help, but extremely scantly handing it out. Time to pull back, look within, stay in your own lane, help yourself get caught up, and then ahead, before assisting any others, or you will be nearly certain of joining them yourself (think airline mask over who’s head first and why).
It seems that most of the Categories mentioned in your analysis, seem to be in the way of, one could state, necessities:
Gasoline, Food, Energy, Rent/Lease, Insurance, Personal Care, Care Services, Care Products, Auto Maintenance, Auto Servicing, Recreation (Eat Out, Alcohol, Events, Travel, Lodging, etc.), Health Services, Gyms, Sports, Equipment, Etc.
These are not at all discarded on a whim. For many, this is their way of Life. You disrupt it in any major way, and all hell will break loose. Many are teetering now, and just a small snafu that alters reality for a month, could be overly devastating.
This is my fear for the economy, as this sort of unhinged atmosphere can lead to major disruptions, and alter people lives, virtually without notice, and in a major way.
These events also tend to have massive domino effects. As quickly altered circumstances, usually disrupt others along the way, and so on. Think babysitter, hairdresser, restaurants, contractors, hotels, and so on, as they in turn, will have to do the same to who they were visiting with and why.
I honestly don’t see a lot, that will have a meaningful difference at this point. There is so much pain to come, and it seems nearly impossible to stop or slow down at this point. So much is owed, and how is that to be paid back? Not on the backs of Americans, not on the Rich, not with Treasury, not with Bonds, not written down, without massive bankruptcies.
A can of worms has been opened, but yet to be addressed. Can it be? Will it be in time? Do they care? Does anybody care at this point? I do, but I hope a heck of a lot of others, are also with me…
Fortunately the US has more privately owned firearms than anywhere else on earth.
After many decades of trying there may not be any other way to change.
Sad.
My car insurance jumped $150 for the coming insurance year and my car is nowhere near new and I haven’t had an auto insurance claim that was my fault in decades!
The military industrial complex’s test run of a worlwide rollout of medical countermeasures, i.e., the COVID pandemic transfection reagents, did a remarkable job of controlling information in an attempt to gain maximum participation. Even blogsters like Mish were swept up in the hysteria witnessed by his post recommending second-class medical treatment of the unvaccinated. As our nation is run by morons, inflation causing spending programs were rolled out in response – the $2.2 trillion CARES Act, the Consolidated Appropriations Act – $900 billion, and the American Rescue Pan Act of 2021, $1.9 trillion. The MIC’s test run resulted in compensatory massive stimulus contributing tp the mess we are now in.
The inflation and the depression it causes are both full speed ahead.
The sticky positively biased CPI disinflate since 2022. The flexible CPI counter trend (blue) is a thud. The Flexible core CPI failed to rise. The Weimar hyper flexible CPI and the hyper flexible core CPI dropped below 2019 high.
S&P closed at record highs. I am ashamed to admit I bought AAPL and sold calls for Friday (buy/write) in my Roth account, why not juice my tax free account? There is just too much money to be made with all the crazy markets.
Choo! Choo! There are money trains leaving the station everywhere!
SPX [1W] : if Fri closes < Mar 4 high, SPX [1M] might close < Feb high. It might happen later. If not [1M] Apr might be an UT.
SPX [1W] Lazer : Jan 16 to Feb 20 lows. Parallel : Feb 5 high. In the last 3 weeks SPX is moving sideways. SPX might reach the resistance line, or lurch down. The market will do what it wants to do.
QQQ [1W] : in order to move higher QQQ must close > Mar 4 high.
QQQ backbone : Feb 12 high/ Feb 20 low.
Hyper inflation is treasonous and treason is a capitol offense. Public hangings are appropriate.
Is that you, Karl Denninger?
the fed needs to abandon the meaningless 2% target. we need to stop tracking and reporting inflation. instead we should target a 2x-10x increase of the s&p 500 every year.
LOL
Question…Why is there a difference in ‘relative importance’ between OER Northeast. OER Midwest, OER South, and OER West? Is it because net migration is higher into the south and the west?
We truly have a Fed/government created everything bubble: stocks, bonds, housing, energy, food, healthcare,.. Congratulation central planners! You may have screwed the American people but you made a few filthy rich and Israel get to murder with impunity on the American dime. What an achievement!
Our experts are, unfortunately, radicalizing the people. They, and we, may not be able to retain what we have gained in the future. I sense that trouble is brewing in the futureless youth. With nothing to lose and much to gain for them through upheaval, we will live in interesting times.
so the illegals are good for the economy they are a net spending positive for America. /s
Excellent video on inflation, social security and fertility rates by Republican Rep. David Schweikert (AZ). He shows how it’s all tied together. Worth a watch, especially for anyone on social security.
https://www.youtube.com/watch?v=R8yKgOzpi54
Social security recipients will take a $17,400 cut in 2034 even with caps lifted.
I was jubilant that Trump said he would be willing to cut entitlements a yesterday. If I didn’t know it was a 100% lie like ‘building the wall’ I might vote for him but I don’t think I’ll be voting this election cycle.
I wasn’t impressed by the blow hard congressman. No shit, ponzi schemes don’t work. They require infinite growth. The planet is finite. QED. Also dumb solutions like the SSI trust fund didn’t work because it just gave the government a pot of money to raid for its profligate spending. Now the money that was set aside for the trust fund is yone and that money is coming out of general revues.
“Now the money that was set aside for the trust fund is [gone]”
Out of curiosity, where should the money set aside been put? There is no point in stashing huge stacks of bills.
Marketable T-Bills? That wouldn’t be any different than what they did.
Gold? Despite claims to the contrary, that is far from stable. No other commodity is any better.
Land? The government already owns too much of the country and they extremely reluctant to sell.
The stock market? Pelosi and Romney would be even richer and the bubble would be even bigger, well, until about now. Thirty years of selling pressure would make the haircut a lot bigger than 25%.
No, they should have never increased the SSI tax rate until it was needed ( around 2014) then they would have a more accurate accounting of the debt and perhaps it might have put some pressure on reducing the spending
Actually the 2014 date is when a further increase was needed. But if SSI taxes increased with the cost what a great feedback mechanism for finding a real solution. I.e. get rid of it.
I recently downloaded my SS data to a spreadsheet, figured my AIME, applied bend points and reductions for taking SS at 66,65…62. It’s pretty sobering. Had I had the vehicle and wherewithal to invest that money myself, I’m not certain I could match what the “fund” is going to pay me.
I would like to see mandatory curriculum in H.S. that objectively explores the math of social security and Medicare. It might actually encourage personal responsibility at a younger age.
Canada pretty much same demographics as US. It was known 25 plus years ago that both CPP (Canada Pension Plan) and OAS were unsustainable in their present forms. CPP reformed I believe in 1998 and is solvent for the next 75 years. OAS is insolvent in 10 or less years.
OAS is much more generous than CPP. For example when I retire I will be getting roughly $1300 CPP whereas if I were an American, It would be triple that. If OAS payments were reflected to pay CPP amounts, pretty much every American would be getting a haircut ranging up to 50% plus for higher income Americans over their career.
Canadians also receive OAS in addition to CPP which is roughly $700/month. There is a clawback depending on income starting at 90,000ish and full clawback at 145,000ish meaning if you have a $145,000 income, all your OAS is clawed back.
CPP just this year instituted CPP2 to raise income levels for future years.
Simply put, OAS was known unsustainable 30+ years ago but no changes were implemented to make it so.
OAS is financed from budget, while CPP is an investment fund. OAS is about as sustainable as the Canadian fiscal situation.
“OAS is financed from budget, while CPP is an investment fund. OAS is about as sustainable as the Canadian fiscal situation.”
When CPP2 was announced and introduced with increased benefit payouts, the first thing that came to my mind was OAS clawback. CPP2 wont affect me much as Im retiring within the next few years. CPP2 although increasing payouts will actually decrease OAS payments for many as CPP2 pushes citizens higher in the clawback territory.
The irony is higher CPP payments in the future but reduced OAS payments for a segment of the population.
“Sticky” bills still have to be paid. The inflation indices are total jokes and so divorced from reality that it isn’t worth the argument.
Agreed. Everyone who went on strike last year got 5-45% increases. Meanwhile Social Security finagled just a measly 3.2%.