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.
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 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.
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.
Fast food has become increasingly expensive — and some consumers are changing their spending habits because of it.
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.
Visualizing Global Inflation Forecasts (2024-2026)
Investors should be buying stocks this month, as inflation is bound for a steep decline for the rest of the year, according to Fundstrat’s head of research Tom Lee.
From President Joe Biden’s point of view, Americans ought to be thrilled with the recent trends in inflation.