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Move the Inflation Goal Post to +4.7% Avg - Yellen
"ECONOMY. Soft-landing or hard-landing/recession? The economic data are pointing to SLOWDOWN – home sales, household savings, PMI, jobless claims, Atlanta Fed GDPNow, business inventories, layoffs, consumer confidence, rents/owners’-rent-equivalents. Rising fed fund RATES and QT combo will result in strong monetary tightening. A way out may be for the FED to just move its average inflation target from +2% to, say, +4%, so say several strategists and economists (YARDENI, own firm; ROMER, NYU; El-Erian, Allianz). Fed’s favorite inflation indicator PCE already lags others, and it is down to +4.9%, not far from +4%."
Maybe extremely red hot summer
Maybe rate hikes hold after august
Sounds to me like Mr. Market is not ready to have his punch bowl taken away. It must sound easy to live with inflation running around 4.5% if you've never actually experienced it.
Well, everybody knows what the medicine is for inflation. But know one wants to take it right away. The longer the delay, the worse it gets. Think our society is showing some strains now? Wait til inflation is the new normal.
Of course, what the Treasury predicts, or expects, doesn't mean much since the Federal Reserve is an independent body. The same goes for Wall Street wizards.
The team needs to go. They are failures. They've failed in their management of the economy.
The Fed's mandate is price stability. Constant 2% is not price stability, rather its price erosion.
Target 0%. -- In fact, target the general price level circa 2010.
Between Jan 2010 - May 2022, the price level has increased 35%. Since Jan 2000, a 73% increase in the price level.- That is using the CPI, which severely undercounts real changes in cost of living. - The source of that stat is from bls.gov's CPI price calculator.
A 35% debasement of buying power over 12 years is not "price stability"
These jokers have failed. The institutions have failed -- They have a "mandate" then they construct policies with the predictable result of avoiding the mandate.
Enjoy your Sunday, Derf
While I haven’t yet read it, Barron’s this week has an article about plummeting lumber prices. Go figure!
COMMODITIES. That is the sound of falling LUMBER (recently $580 per 1,000/bd-ft; peak $1,711 in 05/2021) from weakening housing demand, rising mortgage rates and lumber mills running at full capacity. New home inventories are now at 9 months vs only 4.7 months a year ago. There is more downside to $300-400. May short futures or ETF WOOD.
I don’t think Paul Volker ever set an “inflation target” either. What he did was jack up overnight lending rates to around 20%. That in conjunction with Regan’s war on PATCO (the opening salvo in a long running war on labor unions / diminishing pay and benefits for union members) threw the country into the worst economic morass since the Great Depression with unemployment remaining near 10% for two years. (Akin to swatting a fly with a ball bat.)
The Regan Recession
Inflation will vary year-to-year and region to region. CHART In 1990 it was running between 5,5 and 6% in the U.S. In Sweden it was 11%. In Japan about 4%.. And 7.5% in Great Britain.
@hank- No, no... you've got it all wrong. None of that stuff is important... it's all the fault of Paulson and Yellen. Let's keep this simple.
- Anticipate the Russian invasion of Ukraine and its effects on gas prices?
- Prevent supply chain disruptions, which were caused by the pandemic and corporations faulty decisions to cut back too much on production?
- Labor shortages and resulting cost increases caused by the pandemic and years of corporations skimping on wages?
Too many people blame government leaders for problems outside of their control and often caused or made worse by poor corporate decisions.