The Wall Street Journal reports There Are Signs Inflation May Have Peaked, but Can It Come Down Fast Enough?
Growing signs that price pressures are easing suggest that June’s distressingly high 9.1% increase in consumer prices will probably be the peak. But even if inflation indeed comes down, economists see a slow pace of decline.
Ed Hyman, chairman of Evercore ISI, pointed to many indicators that 9.1% might have been the top. Gasoline prices have fallen around 10% from their mid-June high point of $5.02 a gallon, according to AAA. Wheat futures prices have fallen by 37% since mid-May and corn futures prices are down 27% from mid-June. The cost of shipping goods from East Asia to the U.S. West Coast is 11.4% lower than a month ago, according to Xeneta, a Norway-based transportation-data and procurement firm.
Aichi Amemiya, U.S. economist at Nomura, said that though it is too early to call it, his forecast sees June as the peak for the annual measure of overall inflation. However, the month-over-month change in core CPI will be key to watch in coming months, he said. If it slows from June’s pace of 0.7% to 0.3% on a sustained basis by year-end, he expects the Fed to start planning to ease up on rate increases. That, however, will be hard to achieve, said Mr. Amemiya, “which means the Fed will likely continue tightening even after the economy enters a recession.”
“MoM change in core CPI will be key. If it slows from June’s 0.7% to 0.3% on sustained basis by YE, he expects Fed to plan to ease up. That will be hard to achieve ‘which means Fed will likely continue tightening even after economy enters recession.’”
Lumber Futures
Lumber Declines
- Lumber futures are down 65 percent from the May 3, 2021 peak.
- Lumber futures are down 59 percent from the secondary spike to 1441 in February of 2022.
The Fed does not directly count home prices as inflation, but housing has slowed dramatically and with it the demand for lumber.
Wheat Futures
Food For Thought
Wheat futures have declined about 36 percent from the May 9, 2022 peak.
Although there are significant declines in nearly every commodity, prices of energy, lumber, and wheat still remain elevated to historical norms.
Moreover, raw commodity prices are just one factor in overall pricing. Labor costs are a key component of finished goods, and labor costs are still rising.
Paul Krugman “I Was Wrong”
About Supply Chains
Paul Krugman vs Nassim Taleb
What About Wages
Nationally, Rent is Still Rising, Compounding the Fed’s Recession Woes
Year-Over-Year Inflation has likely peaked. And given the steep plunge in gasoline prices, the CPI for July may be negative.
But rent makes up over 31 percent of the CPI and rent is still going up.
For discussion, please Nationally, Rent is Still Rising, Compounding the Fed’s Recession Woes
It may be a few more months before rent peaks. I will have an update on rent next week.
This post originated at MishTalk.Com.
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Mish
role of money in the economy. To coverup his ruse Powell
has destroyed deposit classifications. Powell eliminated the 6 withdrawal
restrictions on savings accounts, which isolated money intended for spending,
from the money held as savings.
J. Swartz (“Money and Business Cycles”), monetary lags are not “long &
variable” (A Monetary History of the United States, 1867–1960, published in
1963). The lags for monetary flows, M*Vt, i.e., the proxies for (1) real-growth,
& for (2) inflation indices (for > 100 years), are historically,
mathematical constants
This how I denigrated Nassim Nicholas Taleb’s “Black Swan”
theory (unforeseeaable event), 6 months in advance and within one day:
– forecast:
Friedman, monetary lags are not “long & variable”. The lags for monetary
flows (MVt), i.e., the proxies for (1) real-growth, and for (2) inflation
indices, are historically, always, fixed in length.
real-output falls from (9) to (1) from Apr to May. Recent history indicates
that this will be a marked, short, one month drop, in rate-of-change for
real-output (-8). So stocks follow the economy down.
I.e., the May 6th “flash crash”, viz., the second-largest
intraday point swing (difference between intraday high and intraday low) up to
that point, at 1,010.14 points.
ill-informed nuclear proponents or deceived by nuclear advocates who
trivialise the biggest, and increasing problem. https://changediscussion.com/nuclear-waste-problem/
We should put the waste in the holes we dug the uranium out of.
Inflation has peaked. I expect a slow decline to 3-5% next year. Led by continuing high prices for food and energy.
Inflation will also stay high because it takes a year for most commodities to get from the mine or field to the end consumers home. Your plumber doesn’t care that Dr Copper is down these past few months when he is buying the pipes from the wholesaler who purchased his pipes from the pipe factory who purchased copper ingots from the refinery who purchased concentrate from the mine. Time lag on everything and the retail price will be the last to drop.
That is all true. Which is why it will be a slow decline over the next year to the 3-5% range. It takes time for the drop in prices to filter through.