Inflation Lowest In Two Years, Probably Bad News For Biden
Inflation Lowest In Two Years, Probably Bad News For Biden
This is great, oh no!
June's inflation report from the Labor Department shows that the Consumer Price Index (CPI) is the lowest since March 2021. Prices rose just two-tenths of a percent since May, for an annual inflation rate of three percent. The increase was a little bit lower than anticipated by Dow Jones estimates. So now we all put on our WIN buttons and, in honor of Gerald Ford, fall down a flight of stairs.
True Fact I learned from the Source of All Knowledge just now: Alan Greenspan, Ford's top economic advisor, went along with the "Whip Inflation Now" campaign, but only reluctantly; he later wrote he thought "this is incredibly stupid" when it was proposed.
What, you don't have a WIN button? Guess you were one of the uncool kids who never had an Edwin Newman lunch box, either.
The Federal Reserve may or may not decide to raise interest rates another quarter of a percent when it meets later this month, in an attempt to cool off inflation even further; inflation is now way down from its high point of nine percent around this time last year, when it was absolutely certain that inflation would mean a Red Wave of Republicans would ride high gas prices into a 3,000-seat majority in Congress in the 2022 midterms.
The last time inflation had been that high was in November 1981, before Ronald Reagan looked inflation in the eye and told it to go down, and it DID! OK, fine, maybe then-Fed chair Paul Volcker's decision to crank up interest rates and cause a recession had something to do with it, but America was BACK, baby, and the bombing started in five minutes. I paid for this microphone. Mistakes were made.
What we're saying here is that a stream of consciousness visit to my memories of my first year in college is more fun than economic data. For me, at least. Even if the economic numbers are pretty good for the economy. Let's all quietly chant "SOFT LANDING" to cheer on the economy, OK?
And also read this Heather Cox Richardson reminder that the economy is doing pretty damn well, with all the green investment and industrial policy and revived manufacturing base.
Here is your obligatory CNBC rotating corporate economist take:
“There has been significant progress made on the inflation front, and today’s report confirmed that while most of the country is dealing with hotter temperatures outside, inflation is finally cooling,” said George Mateyo, chief investment officer at Key Private Bank. “The Fed will embrace this report as validation that their policies are having the desired effect – inflation has fallen while growth has not yet stalled.”
In another encouraging but worrisome sign, the cost of housing appeared to be easing at the beginning of this CNBC paragraph but remained stubbornly high by the end:
Fed officials expect the inflation rate to continue falling, particularly as costs ease for shelter, which makes up about one-third of the weighting in the CPI. However, the shelter index rose 0.4% last month and was up 7.8% on an annual basis. That monthly gain accounted for about 70% of the increase in headline CPI, the Bureau of Labor Statistics said.
What a sneaky economy! We also checked on inflation at the New York Times which at least waited until its mandatory economist quote before saying the good news might not be so good after all.
[The CPI] catches big declines in gas prices and a few other products that could prove ephemeral, which is why policymakers closely watch a different measure: the change in prices after stripping out food and fuel costs. That measure, known as the core index, offered news that was even better than what economists had expected, sending stocks higher as investors bet that the news would allow the Fed to raise interest rates by less than they otherwise might have.
The core index climbed 4.8 percent compared with the previous year, down from 5.3 percent in the year through May. Economists had forecast a 5 percent increase. And on a monthly basis, the core index climbed at the slowest pace since August 2021.
“This is very promising news,” said Laura Rosner-Warburton, senior economist and founding partner at MacroPolicy Perspectives. “The pieces of the puzzle are starting to come together. But it’s just one report, and the Fed has been burned by inflation before.”
The point here is that we've almost whipped inflation, whipped it good. Go forward! Move ahead! Try to detect it! It's not too late.
Just to be on the safe side, the Wonkette Office of Monetary Policy (say it twice!) recommends that you give your money to us for "safe keeping," so we can keep bringing you all the economic news you need, and who'd have even guessed that probably-authentic WIN buttons go for around five bucks on eBay?
[ Labor Department / CNBC / Letters from an American ]
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