Key Fed inflation measure rose 0.6% in January, more than expected (cnbc.com)

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A measure the Federal Reserve watches closely to gauge inflation rose more than expected in January, indicating the central bank has more work to do to bring down prices.

The personal consumption expenditures price index excluding food and energy increased 0.6% for the month, and was up 4.7% from a year ago, the Commerce Department reported Friday. Wall Street had been expecting respective readings of 0.5% and 4.4%.

Including the volatile food and energy components, headline inflation increased 0.6% and 5.4% respectively.

Markets fell following the report, with futures tied to the Dow Jones Industrial Average off more than 300 points.

Consumer spending also rose more than expected as prices increased, jumping 1.8% for the month vs. the estimate for 1.4%. Personal income increased 1.4%, higher than the 1.2% estimate. The personal saving rate also was up, rising to 4.7%.

All of the numbers suggest inflation accelerated to start the new year, putting the Fed in a position where it likely will continue to raise interest rates. The central bank has pushed benchmark rates up by 4.5 percentage points since March 2022 as inflation hit its highest level in some 41 years.

The Fed follows the PCE measures more closely than it does some of the other inflation metrics because the index adjusts for consumer spending habits, such as substituting lower-priced goods for more expensive ones. That provides a more accurate view of the cost of living.

Policymakers tend to focus more on core inflation as they believe it provides a better long-run view of inflation, though the Fed officially tracks headline PCE.

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Just checking in how our 'transitory' inflation is going? I thought Modern Monetary Theory was going to save us all. I guess we should spend more, since we've been assured that it has no bearing on inflation.

Fed can't tame inflation without 'significantly' more hikes that will cause a recession
FRI, FEB 24 202310:16 AM ESTUPDATED 46 MIN AGO

The Federal Reserve is unlikely to be able to bring down inflation without having to raise interest rates considerably higher, causing a recession

according to a research paper released Friday.

Former Fed Governor Frederic Mishkin is among the authors of the white paper that examines the history of central bank efforts to create disinflation.

Despite the sentiments of many current Fed officials that they can manage a "soft landing" while tackling high prices, the paper says that is unlikely to be the case.

I'm old enough at 52

to remember when Joe Biden and Janet Yellen told me inflation was "transitory"

Dow Jones 5 days ago: 33,826
Dow Jones today: 32,733

Fed can't tame inflation without 'significantly' more hikes that will cause a recession

https://www.cnbc.com/2023/02/24/the-fed-cant-tame-inflation-without-more-hikes-paper-says.html

I'm sticking to my guess that we're going to tread water and it'll be 2025 before we know it... the market will still be within single digits of ATH. Which if you think about 4 years of ~5-6% average (20%+...wow, what a kick to the nuts that is normally spread out over a decade.

Then again, I also didn't think Buzz would take us to the tourney this year. I have to eat crow on that one.

It's been awhile since this thread was bumped.

I think the OP had a name change.

BigRobSA said:

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fka ftc said:

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I think the OP had a name change.

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There should be a tag, of some sort, that follows handle changes showing the dip****tery of previous handles.

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So when you change your name to GiantMexiHonky, we will still not its BigRobSA?

I remember being in CA four years ago, shocked to see 3.50 per gallon (gasoline for vehicles).

And now, in TX?

fka ftc said:

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BigRobSA said:

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fka ftc said:

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I think the OP had a name change.

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There should be a tag, of some sort, that follows handle changes showing the dip****tery of previous handles.

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So when you change your name to GiantMexiHonky, we will still not its BigRobSA?

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Why would I change my handle? I've never understood that action. But, yes, all of my conservative dip****tery would be tied to the new name.

Redstone said:

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I remember being in CA four years ago, shocked to see 3.50 per gallon (gasoline for vehicles).

And now, in TX?

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It's now $6.15 or so and they're screeching on reddit.
But will still vote blue.

What is more rational than believing that inflation is transitory?

Believing in Bigfoot riding the Loch Ness Monster while Martians, under the control of the preserved head of Elvis in a Mayan space exploration capsule, drop unicorn kill-bots on Earth.

Redstone said:

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What is more rational than believing that inflation is transitory?

Believing in Bigfoot riding the Loch Ness Monster while Martians, under the control of the preserved head of Elvis in a Mayan space exploration capsule, drop unicorn kill-bots on Earth.

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He won't answer but I'd bet money that Wizard of smart OP can't explain the real reason why bond yields are increasing even though the Fed has all but admitted that they have only 1-2 25 basis point increases left. Here's a hint Mr. Wizard, it's not due to inflation.

ProgN said:

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Redstone said:

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What is more rational than believing that inflation is transitory?

Believing in Bigfoot riding the Loch Ness Monster while Martians, under the control of the preserved head of Elvis in a Mayan space exploration capsule, drop unicorn kill-bots on Earth.

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He won't answer but I'd bet money that Wizard of smart OP can't explain the real reason why bond yields are increasing even though the Fed has all but admitted that they have only 1-2 25 basis point increases left. Here's a hint Mr. Wizard, it's not due to inflation.

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It's mainly because the Fed isn't going to lower the interest rates anytime soon, and there still could be yet another increase later this year. Consumers are still spending so the economy is still doing quite well, despite the rate increases.

Opalka said:

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ProgN said:

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Redstone said:

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What is more rational than believing that inflation is transitory?

Believing in Bigfoot riding the Loch Ness Monster while Martians, under the control of the preserved head of Elvis in a Mayan space exploration capsule, drop unicorn kill-bots on Earth.

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He won't answer but I'd bet money that Wizard of smart OP can't explain the real reason why bond yields are increasing even though the Fed has all but admitted that they have only 1-2 25 basis point increases left. Here's a hint Mr. Wizard, it's not due to inflation.

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It's mainly because the Fed isn't going to lower the interest rates anytime soon, and there still could be yet another increase later this year. Consumers are still spending so the economy is still doing quite well, despite the rate increases.

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That's an insignificant part of the reason. The main reason is that no one is buying our debt. Central banks are actually selling our debt. The bond market is an auction market and since buyers are drying up, then rates have to go higher to entice buyers to fund our deficit spending. Until they stop f'ing spending it's only going to get worse, and since they won't stop spending we better get ready to stop our grinning and drop our linens.

Opalka said:

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ProgN said:

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Redstone said:

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What is more rational than believing that inflation is transitory?

Believing in Bigfoot riding the Loch Ness Monster while Martians, under the control of the preserved head of Elvis in a Mayan space exploration capsule, drop unicorn kill-bots on Earth.

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He won't answer but I'd bet money that Wizard of smart OP can't explain the real reason why bond yields are increasing even though the Fed has all but admitted that they have only 1-2 25 basis point increases left. Here's a hint Mr. Wizard, it's not due to inflation.

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It's mainly because the Fed isn't going to lower the interest rates anytime soon, and there still could be yet another increase later this year. Consumers are still spending so the economy is still doing quite well, despite the rate increases.

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Consumer spending is out of control because we now live in a society that does not value or encourage self control or discipline, or saving and going without.

Total household credit card debt is out of control and looks far worse than the previous spending that foretold the 2008 recession. People are cashing out 401k's to continue purchasing. Home purchases, and subsequently home prices, are falling, even in Denver where real estate was red hot. I regularly see $400K homes dropping $25k to $50k now.

You are a fool if you think our economy is doing quite well. It's propped like a house of cards and will come crashing when banks crash and foreclosures / repossessions start flooding the market.

I'm an engineer with 20 years experience working in commercial space industry. It was red hot with hiring, but has also cooled and there are few new positions open. I make $155K while living in a lower-cost apartment without any new car payments. I'm struggling to save $3k / month for a house in this economy, and wondered why until I compared my expenses from 10 years ago to today. My habits haven't changed, but cost of living has almost doubled in 10 years for food, gas and rent.

The #1 career that Gen Z thinks is viable and desirable is "influencer".

Keep leaving in a dream world. This will come crashing down hard. It's just a matter of time.

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The bond market is an auction market and since buyers are drying up, then rates have to go higher to entice buyers to fund our deficit spending. Until they stop f'ing spending it's only going to get worse, and since they won't stop spending we better get ready to stop our grinning and drop our linens.

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But, but, but -- if only the rich would pay 'their fair share' the deficit would magically disappear.

-- This message presented to you today on behalf of your federal government, your state government, your county government, your school district, your community college district, your city government, your MUD, and your drainage district. {apologies if I left someone out]

Oldag2020 said:

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Demand is temporarily outpacing our production(supply). Due to covid shut downs and supply chain disruptions. Ex. Lumber prices were inflated, now they are correcting themselves.

Once our supply chains are back up to full capacity, the added demand created by the stimulus will not cause long lasting inflation.

Our productive capacity is so high, in fact, I believe our biggest fear should be deflation, not inflation. Our productivity growth is not disappearing any time soon. The inputs to production are 1. Technological advancements and 2. Increase in labor force. Our computing power doubles every 18 months. Clearly this growth will not disappear.

It's no accident that we have continued to spend more and more throughout the last several decades with little to zero long term negative consequences.

In fact, the fed has struggled the last decade to maintain their inflation level goal of 2%. This even Despite massive spending in 2008 and artificially low interest rates.


Another reason we should not be concerned by the massive spending is that $1 in government spending = greater than $1 in gdp growth.
Gdp growth = 1/ the propensity to save
The propensity to save is currently ~ 20%
Therefore every dollar spent today grows our gdp tomorrow by $5

This $5 of gdp growth then increases tax revenue by $5.
This increase in tax revenue is used to service the debt.

Basically, we can spend as much as we want with little to zero negative consequences. Long term inflation is not on the way.

Be sure to allocate portfolios accordingly.

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If this poster was actually in the Old Ags organization, my how far that club has fallen.

Is this person qualified to flip a burger patty?

Bump

https://www.cnbc.com/amp/2023/12/13/fed-lowers-inflation-forecast-for-2024-seeing-core-pce-falling-to-2point4percent.html

it was always foolish to doubt the grit, determination, and resourcefulness of the american people

ac04 said:

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so prices are still rising, just at a slower rate

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yes this was always the goal

First of all, LOLOL at trusting government forecasts. And yes, the fed is government. Second, all the points about a slower rate of inflation are correct. But, I will go one step further and make a longer term prediction as I did when OP originally penned this infamous thread. The inflation rate may pull back a bit in the short term, but it will once again ratchet up much higher as we approach the longer term. The government is stuck with only two options: cut spending and let it all come down, or fire up the printing presses in an attempt to keep it all up. It's obvious which one they will choose. Unless we get some MAJOR cuts and changes, double-digit inflation will be the normal. And it won't be long after that before that will be referred to as "the good 'ol' days."