from CNBC Television
The $150,000 Housekeeper: Wage Inflation Kicks Into Second Gear
by Charles Hugh Smith
Of Two Minds
If we add up all these tidal forces, the conclusion is self-evident: labor “inflation” has just shifted into second gear.
One of the lesser known manifestations of the inflationary crisis in early-1920s Germany was rampant wage inflation. Bourgeois burghers complained bitterly about the high wages being demanded–and received–by tradespeople. This reversal of fortune–wage earners gaining some power over the upper-middle class and wealthy–was naturally upsetting to those accustomed to wielding power over mere laborers.
But when the roof is leaking or the car won’t start, negotiations favor the few who can actually fix the problem. Despite the overblown hoopla about AI, ChatGPT can’t fix leaky pipes or roofs, nor will it ever be able to do so because all it can actually do is play around with words. Since we can’t repair a leaky roof or prune a tree with words, Large Language Model (LLM) – Machine Learning AI is useless in the real world.
Fed Rate Cuts Face Big Reset On Renewed Inflation Risks
The economy continues to roll, jobs are plenty and consumers are getting a bit more upbeat. That’s bad news for interest-rate-cut bets.
by Martin Baccardax
The Street
The U.S. economy continues to defy both calls for a slowdown and suggestions that a recession is on the horizon, as a resilient job market and solid consumer spending continue to power stronger-than-expected growth prospects.
The surprising strength, however, has deepened concerns that the Federal Reserve, which is focused on stubborn inflation pressures, will delay any move to lower borrowing costs over the coming months and could scrap rate cuts altogether until early next year.
Minutes from the central bank’s May policy meeting, published last week, noted a willingness to “tighten policy further should risks to inflation materialize.” But the document otherwise suggested a “wait-and-see” preference to determine any near-term interest-rate moves.
Fed President Kashkari: Immigration Surge Keeps Inflation and Interest Rates Sky-High
by John Carney
Breitbart.com
Surging immigration is keeping inflation and interest rates high, Fed honcho Neel Kashkari said in an interview with the Telegraph.
Kashkari, who runs the Federal Reserve Bank of Minneapolis, said he’s not ready to consider cutting rates until he sees “several months of real progress on inflation.” The flood of immigrants, he argued, is hindering that progress.
U.S. borrowing costs are likely to stay put for “an extended period of time,” Kashkari warned.
He’s particularly freaked out by the booming demand for housing, which just won’t cool off despite sky-high rates.
Home Insurance Rates Continue to Surge, Media and Industry Blame ‘Climate Change’ Catastrophes
by Jack Hellner
American Thinker
Home insurance rates are continuing to skyrocket, to the point that many people no longer have good options on affordable coverage.
And the cause? Well the media and the industry say it’s climate change. From NPR:
‘Everything is rising at a scary rate’: Why car and home insurance costs are surging
Last year, there were around two dozen severe storms in the U.S. with billion-dollar price tags, spreading lightning, hail and damaging winds through many parts of the country.
‘While a lot of these storms don’t make national headlines, they do tend to be very costly at the local level,’ says Tim Zawacki, principal research analyst for insurance at S&P Global Market Intelligence. ‘And the breadth of where these storms are occurring is something that I think the industry is quite concerned about.’
From Marketplace:
Is Hyper-Inflation That Destroys a Currency a “Solution”?
by Charles Hugh Smith
Of Two Minds
When predicting the future, we’re best served by following “what benefits the wealthy and powerful,” as that is the likeliest outcome.
This contrarian sees a strong consensus around the notion that hyper-inflation is the inevitable end-game of nation-states / central banks issuing fiat currencies, i.e. currencies that are not restrained by being pegged to tangible assets such as gold reserves. The temptation to issue (via “printing” or borrowing new currency into existence by selling sovereign bonds) more currency becomes irresistible to politicians and central bankers alike. as the means to mollify every constituency, from elites to the military to commoners dependent on state-funded bread and circuses.
This unrestrained creation of new money far in excess of the expansion of goods and services (i.e. the real economy) devalues the currency, as “all the new money chases too few goods and services.” Gresham’s law kicks in–bad money drives good money out of circulation–as precious metals, fine art, gemstones, etc. are hoarded and the depreciating currency is spent as fast as possible before its purchasing power declines even further.
Gold Rises On Softer Dollar as Focus Shifts to U.S. Inflation Data
by Brijesh Patel
Yahoo! Finance
Spot gold was up 0.3% at $2,357.44 per ounce by 1:55 p.m. ET (1755 GMT). U.S. gold futures settled 0.9% higher at $2,356.5.
“The dollar index is down and we are seeing the yield curve rates drop a little bit. Gold is coming off a correction and is hovering around resistance levels and now it’s bouncing again,” said Bart Melek, head of commodity strategies at TD Securities.
U.S. Consumer Confidence Recovers; Inflation Worries Persist
by Lucia Mutikani
Reuters.com
WASHINGTON, May 28 (Reuters) – U.S. consumer confidence unexpectedly improved in May after deteriorating for three straight months amid optimism about the labor market, but worries about inflation persisted and many households expected higher interest rates over the next year.
The mixed survey from the Conference Board on Tuesday also showed more consumers believed that the economy could slip into recession in the next 12 months. Nonetheless, consumers were very upbeat about the stock market and more planned to buy major household appliances over the next six months.
While the economy is expected to slow this year as a result of the cumulative impact of 525 basis points worth of interest rate hikes from the Federal Reserve since March 2022 to tame inflation, economists and most business executives are not forecasting a downturn.
No, Corporate Greed is Not the Cause of Inflation
from Zero Hedge
Authored by Lance Roberts via RealInvestmentAdvice.com,
Corporate greed is not causing inflation, despite the claims of many on the political left who failed to understand the very basics of economic supply and demand.
“If you take a look at what people have, they have the money to spend. It angers them and angers me that you have to spend more. It’s like 20% less for the same price. That’s corporate greed. That’s corporate greed. And we have got to deal with it. And that’s what I’m working on.” – President Biden via CNN
Dem Rep. Jonathan Jackson: Can’t Cut Food Stamps Because Inflation’s So Bad, But That’s Supply, Not Biden
by Ian Hanchett
Breitbart.com
On Friday’s edition of Bloomberg’s “Balance of Power,” Rep. Jonathan Jackson (D-IL) argued against cuts to SNAP benefits because “people are aching” due to inflation, but argued that’s not Joe Biden’s fault and there were supply chain issues.
After discussing crop insurance, Jackson said, [relevant remarks begin around 1:05:50] “I’ve come to look at SNAP as food insurance and family insurance that the government uses. So, when people cannot do for themselves, I think the government should help them. When the people can do for themselves, the government needs to step back. Right now, people are aching. There’s been auto inflation, there’s been housing inflation, there’s education — if you will — the cost of education inflation. But this farm bill doesn’t even address the deal with food inflation. And so, to think that we could talk about taking $30 billion out of the budget to attack women and children, we’re going to take a stand and we’re not going to concede an inch.”
Services Inflation for Japanese Businesses Spikes by Most Since 1991, Bank of Japan Gets Lots of Rate-Hike Ammo
by Wolf Richter
Wolf Street
Huge month-to-month jumps for second month in a row as businesses jack up their prices for new fiscal year.
The producer price index for services that Japanese businesses buy jumped by 0.82% in April from March, after a similar jump in March from April, according to data from the Bank of Japan. On an annualized basis, both those jumps amounted to just over 10%.
In the data that exclude the consumption tax hikes in the past, the April spike boosted the year-over-year increase to 2.9%, the worst jump going back to 1991.