Jan PPI 0.7%! .... That's 14% annualized AND a giant gobsmacking miss vs the disinflationary estimate

I suppose it was inevitable.
In 2022, family incomes vs inflation a bigger hit than it died in any calendar-year during the housing crisis, the 70s etc…

Given that GDP was a hair positive during that same time mathematically one of two things were bound to happen. Either

  • a.) record business profits would occur, or
  • b.) the harsh, worst-since-the-Great-Depression news that was already hitting families would start to hit businesses.

Not surprisingly the economy is on path “b” not path “a.”

From the article

Inflation rebounded in January at the wholesale level, as producer prices rose more than expected to start the year, the Labor Department reported Thursday.

The producer price index, a measure of what raw goods fetch on the open market, rose 0.7% for the month. Economists surveyed by Dow Jones had been looking for an increase of 0.4%

Almost double the estimate, eh? :thinking:



I certainly do not expect 12 consecutive months of this.
IOW I do NOT expect we will finish the year with 14% producer inflation.

As you point out the big story is that the “estimates” were such a hopium-filled pie-in-the-sky miss.

The Wall St earnings & inflation estimates of today
are looking more and more like bond-rating estimates that led to the last financial crisis.

They are a bunch of overly optimistic crap.


This reminds me of that one scene in Home Alone 2:

“What kind of idiots do you have working here?”



LOL exactly.

Point is there is plenty of room for libs to climb on board here
(plenty of room to blame Wall St, banks etc…)

The same folks who mis-estimated mortgage bonds and hand a hand in the housing crash, are the same people currently mis-estimating earnings and inflation.
Okay, that was 25 years ago so, some of them have retired, but you get the picture.

1 Like

The mortgage bond rating agencies were flat out on the take. So it’s a little different.

Wall Street isn’t to blame here imo. Consumer demand still extremely high. It’s that simple.

What I can tell you for certain is that for the past 14+ months Wall street consensus estimates have consistently* predicted
– earnings will be higher than they actually are
– inflation will lower than it actually is
– stock prices will be higher than they actually are

I am not talking about one guy or one firm, but a consensus of many working independently.

I am not talking about one time or two times but dozens of times in a repeated pattern.

Most importantly, if these missed estimates were truly random (not caused by bad education or deliberate ignorance etc.) then half the estimates/estimators would be too negative and half would be too positive.

It is statistically improbable that random happenstance causes the “miss” to almost always be on the same side. Should be half on one side. half on the other, and yet, the “misses” are almost always on the same side.

Gosh, Dem leadership is making people poorer. Gee, that never happens, right? Let’s print more money!..weeeeeeeeee!

You must not listen to Fox or Fox Business. they are all gloom, all the time.

But in general, ratings driving analysts like to be positive. Better for ratings.

Actually my constant fair is Bloomberg and CNBC.
They are constantly parading a train of guests who overly-optimistic Wall Streeters.

Here is a chart of recent Wall St earnings estimates, their revisions, and the revised revisions. Chart is made by a statistics group that every quarter, dutifully gathers up all the different estimates from the past 3 months and charts them.


  1. Each of the new estiomates, 1,2, 3 and 4 were lower than the previous one. Each time the consensus was for nice big earning. Eac thie the consensus estimates were too rosey, too happy, too optimistic, and
  2. Despite revising downward and revising downward again and revising downward again the charts all end
  • at or above the 2017
  • AND heading upward

After multiple downward revisions, they STILL think we will return to the 2017 "norm."
We won’t. We will not return to “the 2017 norm” and I will show that momentarily.
Waiting for your thoughts on this first.

Yeah, thee guys are ratings whores. Bad news doesn’t sell.

You mentioned the 08 crash, and I thought you were refering to the ratings agencies - who IMO were fraudulent and should be in jail…

But remember in the weeks and months before the crash, all these on air yo-yos were preaching how good things were, and how much higher it would go…


Although they are paid to be honest, the corporate culture is
they work for companies that sell stocks for a living.

Hypothetically they sell both stocks and bonds and don’t care, but given

  • If salesman “a” tells you “buy Amazon its gonna go up 15%-85%”
  • salesman “b” tells you “buy a 5% bond because markets are gonna tank and that includes Amazon stock”
    Salesman “A” is gonna make a lot of money.

“Get rich quick” sells easier than “get rich slow.”

This video illustrates the culture in which the analysts work pretty well.

That was absolutely funny! He couldn’t explain what the ■■■■■■■ company even did but was recommending it!

1 Like

Yes and he is still a CNBC analyst.
They keep inviting him back.
as @tnt put it those guys are ratings whores
in the financial community bad news doesn’t sell.

Look at the above chart. Notice that after revising down several times, the Wall St analysts are now begrudgingly saying “Corporate earnings will return to the 2017 boom, and move upward from there.”

That is crazy-optimistic.

Here is what earnings actually do in actual recessions.

And the Fed has (for different reasons) been making the same whorish forecasts.
Since Oct 22 four months ago

  • The Fed has “revised” inflation 3 times, each time saying in effect “Whoops we were too dovish. We gave a scenario that was too rosey. We were not concerned enough about inflation.”
  • The Fed ahs “revised” its interest rate scenario 3 times, each time sayin in effect “Whoops we were too optimistic. We said a low interest rate would fix the problem but it won’t we are going to need a higher rate.”

Every single time it erred on the same same (the Keynesian side)
every single time it had to move in the classical/austrian/free-market direction.

If it were just random half the errors would be on one side,
half the errors would be on the other. But that is not what happened.
Not a coincidence.