inflation for the year of 2022 was 6.5%
eased way down in second half of the year when fed tightened.
Allan
And here is the historic view of inflation including all items (even food and gas)
Let me know if you detect a pattern.
we will revisit this in the june-july timeframe
time will tell who is right in this case.
Allan
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Sounds good. I guesstimate a full 12 months before the economy is back to “normal.”
(and btw I blame the Fed, not Biden, but discussion here usually turns to Biden and I’m okay with that.)
Isn’t the answer to everything pretty much tax the rich and deficit spend? Although the new formula also involves flooding the nation with millions of the world’s impoverished citizens!
stagflation is stagnant economy plus high inflation
the last GDP number was a 3.2% increase (q3). Q4 estimates are for around a 2.5% growth rate
at the same time inflation over the last 6 months has come down dramatically
now if growth were to fall off a cliff AND inflation were to pick up again we might have stagflation in 2023 but right now the numbers dont support that
month over month cpi changes.
LOL yeah sorta.
The answer I was looking for was “Last time this happened we handled it by raising interest rates to a point > inflation.”
(There are a dozen interest rates and several ways to measure inflation but the most standard is the “Fed Funds Rate,” and the annualized “Consumer Price Index.” so that I what I have illustrated below.)
It is a truism of economics that (except for exceedingly rare cases)
- when FFR > CPI, inflation goes down, and
- when the opposite is true, the opposite happens,
The red line needs to go above the blue line
(just like it normally is.)
Wrong? About what?
There was a recession during the Trump administration. February to April of 2020. Declared so by NBER.
Right now, there is a lot of money in money market accounts
(like CDs.) It is unlikely we will keep that much money in money market accounts,
more likely we will deplete it by
- buying stuff (inflation)
- buying speculative investments (speculation bubble, etc,)
That is what has been going on.
But it is far from over.
We may be at the beginning of the end, but we are not at the end.
I’ve been putting more money into CD’s myself. The first 3-4 months of this year are going to be interesting as there have been many Americans who have been depleting their savings as well as expanding their credit card debt. Now that the holidays are over one would expect those individuals pulling back on their spending over the next few months. As you’ve noted inflation isn’t going away anytime soon and more specifically it’s still really bad in things we all need:
What we haven’t seen yet is the pull back in hiring, which is why the first quarter of 2023 will be very interesting. Furthermore, regarding the jobs being added (which I haven’t looked at) how many are fulltime good paying jobs? There’s been a number of Wall Street companies who are either putting a hold on hiring and/or laying off, which tend to be good paying jobs. The earning reports are also starting to come in so that will also be interesting to watch. Personally, I’m not very bullish on the economy or the Market as at some point we will absolutely come to a point where one can’t just keep growing exponentially.
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of course you havent looked at it.
11,000,000 jobs added to the economy in the past two year.
Allan
average wage way up.
Allan
Look at how frothing mad the chicken little libs are now that a recession is finally happening like they once wanted, but under the wrong administration.
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C’mon Al,
Two years?
You mean you chose the pandemic shut down as the baseline?
Wow. I know a whole group of 18 year olds who got 1 million percent pay raises in the past 18 years, plus heir jobless rate has declined 100%.
We could also compare the number of black people employed beginning and end of any GOP presidency and declare it the greatest single period of racial advancement in human history.
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You continuously choose which metrics to go by when adding to these threads. You choose to either take a narrow or a broad view to support your hypothesis
Like this thread about stagflation for example
Strange take on somebody choosing a different metric from yours.
Choosing the pandemic bottom is a pretty silly baseline.
You don’t agree?
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Only if that fact isn’t clear. Which it is. There were zero guarantees that all the jobs lost during the pandemic would return.
When people discuss job creation post recession, the total jobs lost during that recession is assumed and rarely mentioned.
Obviously 11m is a silly number given the jobs lost but it’s still 11m which was never a guarantee.
Truth
More black babies died under Joe Biden’s two-year presidency than at any other point in human history. There was no guarantee that would happen.
Also truth:
If I expect that quoting that fact will persuade you Joe Biden is a baby killer you would rightfully take that as an insult. ("He’s so dumb he might fall for that." sorta thing.)
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He didn’t call Joe Biden a job creator.
Back to it
Current deposits in money market accounts
are far above the midline and
the midline is far above any sort of long term norm.
It is very unlikely America will continue keeping that much money in money market accounts. There is zero data, zero historical evidence to suggest we will. (Like a science experiment repeated hundreds of times.)
Ultimately as that money flows back into other things, (like stocks and/or consumer items) the demand for those things rises. That is inflation. That is how it happens.
I cannot see money market balances staying these levels. Inflation is sticky.
