from Bloomberg Television
What to Expect from the Next CPI Report
by Simon Moore
Forbes
The next Consumer Price Index release for April 2024 is expected to continue the pattern of relatively higher inflation as seen so far this year. If so, it’s likely to provide support for the Federal Reserve holding back on interest rate cuts until July or later.
Release Timing
On May 15 the U.S. Bureau of Labor Statistics will release CPI data for the month of April at 8:30 a.m. ET. This will be the first of two CPI releases before the next Federal Open Market Committee meeting on June 12. However, that subsequent CPI release will come on the morning of the FOMC’s decision day. Due to lack of progress on disinflation so far in 2024, the FOMC isn’t expected to cut interest rates until July at the earliest, and quite possibly later.
Fed’s Kashkari Cites High Risk Inflation is “Settling”
by Reuters
Kitco
WASHINGTON, May 7 (Reuters) – The strength of the U.S. housing market and potentially stalled progress on inflation means monetary policy may not be as tight as Federal Reserve officials think it is, Minneapolis Federal Reserve President Neel Kashkari said in a new essay, opens new tabon Tuesday that raises the possibility price pressures are “settling” to a level above the Fed’s 2% target.
Wrongly estimating how current policy is affecting the economy “could explain the constellation of data we are observing,” particularly in housing but more broadly in ongoing economic growth, Kashkari wrote. Housing in particular is “proving more resilient to…tight policy than it generally has in the past,” depriving the Fed of what is typically a key channel for the impact of high interest rates to be felt.
Trump Tariffs Drive Inflation? Big Short’s Steve Eisman Says That’s ‘Ridiculous’
by John Carney
Breitbart.com
Steve Eisman, best known for his “Big Short” bet against subprime mortgages, said that the idea tariffs imposed by Donald Trump will drive up inflation is “ridiculous.”
The Neuberger Berman Group portfolio manager said in a Bloomberg TV interview on Tuesday that he expects that if Donald Trump is re-elected as president, he will impose tariffs on goods from China. But he does not believe that higher import duties will increase inflation.
“Do I think that Donald Trump will increase tariffs on China? Sure. Do I think that would have a massively inflationary impact on the U.S.? I think that’s ridiculous,” Eisman said.
President Donald Trump has said he is considering tariffs on almost all imported goods. He has also said he plans to raise the tariffs he imposed on Chinese goods. Critics charge that these would moves would raise consumer prices, although recent history shows that the earlier round of tariffs did not raise consumer prices.
Get Ready for Weaker Growth and Higher Inflation. The Consensus Was Wrong.
by Daniel Lacalle
Mises.org
The weak GDP figure for the first quarter came with a double negative: poor consumer spending and exports, plus a rise in core inflation. The US administration’s enormous fiscal stimulus underscores the importance of considering the weaker-than-expected data.
A deceleration in consumer spending, a decline in the personal savings ratio to 3.6%, and poor exports added to a set of figures for investment that were also negative when we looked at the details.
The gross domestic product is much weaker than the headlines suggest. If we look at consumption, both durable and non-durable goods were flat or down, while the only item that increased modestly was the services factor. Residential and intellectual property boosted investment, while equipment remained weak in the past two quarters. The slump in export growth coincided with a significant increase in imports, which weakened the trade deficit. Government spending continues to rise, albeit at a slower pace, and becomes the main factor to disguise what is evidently a concerning level of growth for a leading economy with enormous potential.
Can You Guess What it Costs to Live “the American Dream” After Three Years of Inflation Under Joe Biden?
by Michael Snyder
End of the American Dream
If you are like most Americans, the cost of living has been going up much faster than your income has been. Right now, millions of Americans that were once prospering are now deeply struggling. When I was growing up, most of the population could afford to live “the American Dream”, but now that is no longer true. At this point, the basics of a middle class lifestyle are out of reach for most Americans. Poverty and homelessness are steadily rising, and the economy has become the number one issue during this election cycle. Most of us just want things to go back to the way that they once were, but thanks to the very foolish decisions of our leaders that simply is not possible.
According to a brand new report that was just released, it now takes over $100,000 a year for the typical family to live “the American Dream” in all 50 states, and in 29 of those states it actually takes over $150,000 a year…
Why Fast-Food Price Increases Have Surpassed Overall Inflation
by Ryan Baker
CNBC.com
Fast food has become increasingly expensive — and some consumers are changing their spending habits because of it.
Fast-food chains such as Chick-Fil-A and Taco Bell are included in the limited-service meals and snacks category in the consumer price index report, which shows prices are up nearly 28% from 2019 to 2023. The full-service meals and snacks category, which covers sit-down restaurants with servers, meanwhile, has increased about 24% and overall CPI was up by about 19% in the same time period.
“There were increased commodity costs. We’ve seen those start to normalize,” said Stephens analyst Jim Salera. “But what continues to be ahead of historical averages is the increase in labor costs that restaurants are seeing.”
Fed Official Urges Patience On Inflation
Get caught up.
by David Rovella
Bloomberg.com
Wait for it. That’s the message from Federal Reserve Bank of Richmond President Thomas Barkin, who said he expects high interest rates to eventually cool US inflation to the central bank’s 2% target. Barkin said Monday the strength of the labor market offers the Fed time to gain confidence that inflation is moving sustainably lower before cutting borrowing costs. But he cautioned that there still is risk that continued housing and services inflation will keep price gains elevated. Sellers are still trying to raise prices, he warned, and they will do so until customers push back strongly. “The risk is that, as we get less help from the goods sector, continued shelter and services inflation will leave the overall index higher than our target,” Barkin said.
Here are today’s top stories
Fixed income is living up to its name. And it shouldn’t be a surprise given US benchmark rates jumped from 0% to more than 5% in the span of just two years.
Visualizing Global Inflation Forecasts (2024-2026)
by Jeff Desjardinson
Visual Capitalist
Visualizing Global Inflation Forecasts (2024-2026)
Global inflation rates are gradually descending, but progress has been slow.
Today, the big question is if inflation will decline far enough to trigger easing monetary policy. So far, the Federal Reserve has held rates for nine months amid stronger than expected core inflation, which excludes volatile energy and food prices.
Yet looking further ahead, inflation forecasts from the International Monetary Fund (IMF) suggest that inflation will decline as price pressures ease, but the path of disinflation is not without its unknown risks.
Buy Stocks in May Because Inflation is Set to Plunge Through the Rest of 2024, Fundstrat’s Tom Lee Says
The stock market presents a buying opportunity this month, according to Fundstrat’s Tom Lee.
by Jennifer Sor
Yahoo! Finance, Canada
Speaking to CNBC on Monday, Lee pointed to March inflation numbers, with prices clocking in hotter-than-expected for the third month straight in March.
But elevated inflation readings have been largely due to lags in the official statistics, Lee argued. Real-time home and rent prices, for instance, are “stabilizing,” though shelter inflation rose 5.7% year-per-year in the official March report, he noted.
Fast Food Chains Are Getting the Message About Soaring Prices
Diners are “price weary” and eating out less often, restaurant executives told investors last week.
by Grace Dean
Business Insider
Many consumers are thinking carefully about how they spend every dollar, with some cutting back on visits to quick-service restaurants, executives told investors on a series of earnings calls last week. To win penny-pinching customers back, some say they’re planning smaller price increases for the rest of the year.
Many fast-food chains described a gloomy outlook. Wendy’s CFO Gunther Plosch told investors on Thursday that consumers are “still under pressure” — especially those with household incomes under $75,000. “They are reducing frequency, so visitation is down.”
Chains raised prices drastically during the pandemic to offset rising labor and food costs, and it’s coming back to bite them. Some diners are cutting back, saying that fast food is just too expensive and no longer represents good value.