from MHFIN
Biden Stokes Inflation by Encouraging More Trump Retail Tariffs
by Rick Helfenbein
Forbes
There is nothing normal or good about tariffs.
The simple fact is – tariffs don’t work.
Retailers are asking if some Biden administration democrats are picking up cues from where Trump republicans left their mark – given President Biden’s recent comments about placing additional tariffs on Chinese steel and aluminum.
Is it possible that former President Trump’s advisors have been floating new ideas about devaluing the U.S. dollar (to boost exports) and that has sparked Team Biden to throw out their latest mantra: ‘Stop the steel?’
Fed’s Preferred Inflation Gauge Shows Price Pressures Stayed Elevated Last Month
A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed’s reluctance to cut interest rates anytime soon and underscoring a burden for President Joe Biden’s re-election bid
by Christopher Rugaber
ABC News
WASHINGTON — A measure of inflation closely tracked by the Federal Reserve remained uncomfortably high in March, likely reinforcing the Fed’s reluctance to cut interest rates anytime soon and underscoring a burden for President Joe Biden’s re-election bid.
Friday’s report from the government showed that prices rose 0.3% from February to March, the same as in the previous month. It was the third straight month that the index has run at a pace faster than is consistent with the Fed’s 2% inflation target. Measured from a year earlier, prices were up 2.7% in March, up from a 2.5% annual rise in February.
After peaking at 7.1% in 2022, the Fed’s favored inflation index steadily cooled for most of 2023. Yet so far this year, the index has remained stuck above the central bank’s target rate.
So You Want to Buy a House?
by Karl Denninger
Market-Ticker.org
There’s a lot of misinformation and worse flying around — and given that after doing things that destroy your health errors here are the second-most difficult to recover from and can ruin you financially, this is truly sad.
First, interest rates on loans are not historically high, nor unreasonable. In fact they’re bog-standard up-the-middle from a historical point of view in an economy with an actual 1-2% inflation rate. The rate of short-term (that is, less than one year) borrowing in a 2% inflation economy with a 2-3% productivity improvement (historically about average) should be about 5%, and that for longer-term money about 7%. Why? Because time has value; go ask any 60 year old how much they’d pay to have the last 20 years back.
In a normal market the average ownership period is about 7 years. You have a 30 year loan as the “usual” but the average ownership is 7 years; this is why most mortgages are based on the TNX, or 10 year Treasury rate — its the closest large-liquidity government bond issue.
U.S. Inflation Increases Moderately; Consumer Spending Boosts Q2 Outlook
by Lucia Mutikani
Yahoo! Finance
The report from the Commerce Department on Friday, which also showed strong consumer spending last month, offered some relief to financial markets spooked by worries of stagflation after data on Thursday showed inflation surging and economic growth slowing in the first quarter.
“Markets should breathe a sigh of relief this morning,” said Chris Zaccarelli, chief investment officer at Independent Advisor Alliance. “Given the elevated levels of inflation, and this is the new normal for 2024, the market is going to need to get over hopes for Fed rate cuts.”
Consumer Inflation Expectations Unexpectedly Climb
by John Carney
Breitbart.com
The rate of inflation expected by American households climbed in April, the latest signal that the Fed’s progress in bringing down inflation has stalled.
The University of Michigan’s survey of consumer sentiment showed Friday that the expected rate of inflation in the year ahead rose to 3.2 percent in April from 2.9 percent a month earlier. The longer-run expected inflation rate rose to 3.0 percent from 2.8 percent.
Inflation stopped falling in the second half of last year and has accelerated this year. The personal consumption price index rose at an annualized rate of 3.4 percent in the first three months of the year, a big jump from the 1.8 percent recorded in the last quarter of 2023. The core rate of inflation, which excludes food and energy, rose at a 3.7 percent annualized rate, up from two percent at the end of last year.
Inflation Declined in March, But Remains High
by William J. Luther
The American Institute for Economic Research
Inflation is once again on the decline, new data from the Bureau of Economic Analysis (BEA) show. The Personal Consumption Expenditures Price Index (PCEPI), which is the Federal Reserve’s preferred measure of inflation, grew at a continuously compounding annual rate of 3.9 percent in March. It grew at an annualized rate of 5.1 percent in January and 4.0 percent in February.
The renewed disinflation is certainly better than the alternative. But it is nonetheless difficult to celebrate: inflation remains well above the Fed’s 2-percent average inflation target. Prices today are 8.9 percentage points higher than they would have been had they grown at an annualized rate of 2.0 percent since January 2020.
Why Do My Groceries Cost So Much?
Giant corporations want to keep their taxes low and the prices we pay high. We can’t let them win.
by Sulma Arias
NC Newsline
In 2004, I was a single mom raising three daughters on my own. I worked three jobs, including an overnight shift as a translator at our local hospital, to make ends meet. Every time I stood in line at the supermarket, I worried about what I would have to put back on the shelf to stay within our weekly $100 food budget.
My daughters are all grown now. But whenever I’m buying groceries, I still get that horrible feeling in the pit of my stomach as I remember not knowing if we would have enough to eat, and how much — or how little — I could provide for my family with $100.
Prices for all of us have gone way up since COVID, and $100 now buys about $65 worth of groceries compared to five years ago. This puts a huge bite on working families, because we spend most of our income every month — as much as 90 percent — on food and other necessities. So when prices rise, we hurt the most.
Investors Are More Worried About Inflation Than a Weakening Economy
by Josh Schafer
Yahoo! Finance
New data revealed a slowdown in the US economy in the first three months of the year. But even more concerning to investors was that inflation accelerated faster than Wall Street had expected, sending shockwaves through markets on Thursday.
The latest data from the Bureau of Economic Analysis showed the “core” Personal Consumption Expenditures (PCE) index, which excludes the volatile food and energy categories, grew by 3.7% year over year in the first quarter, above estimates for 3.4% and significantly higher than 2% gain seen in the prior quarter.
This marked the first quarterly increase in the Fed’s preferred inflation gauge in a year, underscoring concerns that the central bank may not cut interest rates as quickly as it has projected.
Why Experts Say Inflation is Relatively Low but Voters Feel Differently
by Ailsa Chang and Mia Venkat
NPR
A lot goes into planning a personal budget – and the price of food and how it fluctuates with inflation can be a big part of that.
According to the U.S. Department of Agriculture, food prices rose by 25 percent from 2019 to 2023. And a report from Purdue University found that a majority of consumers expect food prices to keep rising in the coming year.
Are food prices as bad as consumers think?
All Things Considered host Ailsa Chang spoke with Joseph Balagtas, a professor of agricultural economics at Purdue University and the lead author of that report.
People Are Really Annoyed About the Price of Fast Food
Fast food is getting more expensive, and Americans are annoyed about it.
by Grace Dean
Business Insider
Fast-food chains have raised prices drastically in recent years — blaming everything from rising food costs and labor shortages to Russia’s invasion of Ukraine.
Because of this, some fast-food customers are starting to cut back and are opting to eat at home or switch to dine-in options, which are increasingly viewed as better value for money.
Sara Senatore, a restaurant analyst at Bank of America, told Business Insider that fast-food restaurants historically increased prices by about 2% yearly. At some restaurants in 2022 and 2023, they went up by double digits, she said.
As general inflation comes down, including for groceries, Senatore expects consumers to be even “less tolerant” of the price increases in the restaurant industry.