What About This Inflation Thing?

I have heard much ‘good’ news about the economy lately….but unfortunately the real facts say different….

Investors were fully expecting good news from the new monthly inflation report out Tuesday. But instead of declining, prices actually rose in August. Which means the Federal Reserve is all but certain to forge ahead with an aggressive rate hike at its Sept. 20-21 meeting. Details:

  • Monthly rise: Prices rose 0.1% in August from July, according to the Consumer Price Index, reports CNBC. Most analysts had forecast a decline of 0.1%. Investors were hoping for a sign that inflation had peaked.
  • Yearly increase: Compared to a year earlier, prices in August were up 8.3%, which is extremely high by historical standards, though below the annual figures of 8.5% in July and 9.1% in June, per the Wall Street Journal.
  • Market flips: Dow futures were up about 200 points before the report came out, with investors hoping an inflation cool-down would convince the Fed to temper its interest-rate hikes. But as soon as the report came out, Dow futures were down by 300 points, per CNBC.
  • The Fed: The new report is all but certain to keep the Fed “firmly in inflation-fighting mode,” per the New York Times. Most observers expect another hike of three-quarters of a percentage point. “Inflation is far too high, and it is too soon to say whether inflation is moving meaningfully and persistently downward,” Christopher Waller, one of the Fed’s governors, said last week. “This is a fight we cannot, and will not, walk away from.”

So the news is not so good and Wall Street reacting as could be predicted…..

The stock market fell the most since June 2020 following Wall Street’s humbling realization Tuesday that inflation is not slowing as much as hoped. The S&P 500 fell 177.72 points, or 4.3%, to 3,932.69. The Dow Jones Industrial Average fell 1,276.37 points, or 3.9%, to 31,104.97. The Nasdaq fell 632.84 points, or 5.2%, to 11,633,57. A hotter-than-expected report on inflation has traders bracing for the Federal Reserve to ultimately raise interest rates even higher than expected, with all the risks for the economy that entails. Bond prices also tumbled, sending yields sharply higher, after the government reported inflation decelerated last month by less than economists forecast.

Investments seen as the most expensive or the riskiest are the ones hardest hit by higher rates. Bitcoin tumbled 7.1%. In the stock market, all but four of the stocks in the S&P 500 fell. Technology and other high-growth companies fell more than the rest of the market because they’re seen as most at risk from higher rates, the AP reports. Apple, Microsoft, and Amazon all fell more than 4% and were the heaviest weights on the market. The communication services sector, which includes Google’s parent company and other internet and media companies, sank 4.8% for the largest loss out of the 11 sectors that make up the S&P 500 index.

Most of Wall Street came into the day thinking the Fed would hike its key short-term rate by a hefty three-quarters of a percentage point at its meeting next week. But the hope was that inflation was in the midst of quickly falling back to more normal levels after peaking in June at 9.1%. The thinking was that such a slowdown would let the Fed downshift the size of its rate hikes through the end of this year and then potentially hold steady through early 2023. Tuesday’s report dashed some of those hopes. “Right now, it’s not the journey that’s a worry so much as the destination,” says Brian Jacobsen at Allspring Global Investments. “If the Fed wants to hike and hold, the big question is at what level.”

Not to worry they will manipulate the economy to make everything look okay for us mere peasants…..but if you have to earn a living you know it is not ‘healthy’ by any stretch of the imagination.

But go ahead bury your head and plug along barely making it….or do something about it.

I Read, I Write, You Know

“lego ergo scribo”

18 thoughts on “What About This Inflation Thing?

  1. I came back from holiday to find that petrol/diesel prices had fallen a little, so inflation was considered to be slightly down. However, food prices are very much up, and our weekly shop has increased by over £10 in one week. So I don’t see how they can say inflation is ‘decreasing’.
    Best wishes, Pete.

  2. Inflation is here to stay until consumers rebel. Greedy purveyors of goods and services will always test what the markets can bear and will continue to screw people until the people learn to screw back.

  3. Do what? Elect more Liberal Democrats? Price controls?

    There are three major problems:. 1. Our government spends too much money and taxes us too much. Instead of just protecting our rights (from each other and foreign governments), our government wants to fix everything under the sun. Read ECCLESIASTES.

    When government tries to fix everything under the sun, government doesn’t fix anything. Government just infringes upon our rights — trying to fix us — and diverts resources from the private sector and makes us poorer.

    The bottom line is that we have to stop demanding that the government fix everything and elect serious leaders with more modest objectives. The whole idea that the clowns we elect can fix everything under the sun just absurd, and that should be self-evident.

    1. 2. Our government is wrecking the economy in pursuit of a ridiculous global warming agenda. Supposedly, there is some kind of scientific consensus that the globe is warming because of carbon emissions. True? Anything is possible, but the policies our government is pursuing will just enrich our enemies at our expense. They don’t even come close to solving the problem. Instead, we are more likely to create real pollution by producing windmills, solar panels, and batteries that require some truly nasty minerals in their production.

      3. We are electing leaders who are determined to implement Socialism. Socialism does not work. It is a dumb economic theory that is primarily attractive to ignorant people who envy the “rich” and egotistical academics who envision themselves as being members of the vanguard of the proletariat. Socialism is equivalent to throwing our nation down into a sewer. Socialist leaders have no purpose in life except retaining power. As a practical matter, Socialism is indistinguishable from Feudalism.

      1. Stop with the socialism BS….the fearmonger has run its course for most people. Spending more money on wasteful wars is doing more damage than the pittance it spends on protecting the planet. chuq

      2. Social Security and Medicare make up more than half the Federal Budget. Protecting the planet carbon dioxide is just another excuse to expand government power.

        Look around. The most polluted places on the planet have the most authoritarian/totalitarian governments. Socialism puts our leaders in the role of regulating themselves. It works better when our leaders protect us from those who would abuse the freedoms provided by free enterprise.

        Socialism does not work. The BS is saying it does.

      3. First there is NOTHING about Dems programs that is socialistic…only in small minds…..Social Security is not a freebie…..the reason we have budgetary problems is they idiots cut revenue…..stop that and problems will be solved. chuq

      4. There is a certain point where raising the rate of taxation becomes pointless. Instead getting more money for the treasury, revenues begin to decrease.

        I doubt you would consider a 100 percent tax rate Socialism but consider the problem. What if the government takes everything we have? Then we cannot feed cloth and shelter ourselves. Even if we want to continue working, we cannot.

        Right now taxes are just about high enough that private enterprise has trouble growing. Even if we still have enough money left to invest, who wants to invest in an economy the government is trying to destroy with taxes?

        The Inflation (or Infrastructure) Reduction Act with the crazy environmental agenda will just make things much worst. We still don’t have the technology to make solar panels and windmills work. We will however, send more jobs to China.

        We are walking off the proverbial cliff. All we can hope is that before we take that last step the sight of that huge cliff will restore some sanity.

      5. Crazy agenda? Constant wars is the only cliff we are walking off…..Letting runaway profits that go away to the Caymans is not going to solve any problems. If corporations are citizens then they should pay the same rate as you (if you pay taxes)…..chuq

      6. The bigger the company the more difficult it is to run. However, the bigger the company is the easier it is for it to buy political influence. Therefore, the easiest way to keep corporations from abusing us is to limit the number of favors available from politicians. That is one of the main reasons for limited government.

        Observe. Trump? Four years of relative calm. Biden? With promises of government solutions for everything? Well, don’t expect four years of relative peace. Those people are too busy robbing us to care.

      1. The power of the government dwarfs that of any corporation..

        We call it crony capitalism because politicians and capitalists work in concert to rob from the public.

        The electorate is not without fault. We sell our votes to politicians who buy our votes by promising us other people’s things. We are all sinners. When we in our pride refuse to accept that fact, we rationalize our own behavior. Our usual excuse is that we just want the government to fix something, like ending poverty, especially our own.

      2. That is the definition of government…but I agree ignorance and stupidity is what makes the government as worthless as it is today. chuq

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