from CNBC Television
Could Dock Worker Strike Spike Inflation? Experts Are Split.
The massive dock worker strike beginning Tuesday comes at an inopportune time for the U.S. economy, as the potential uptick in shipping prices comes ahead of the holiday season and as policy makers look to turn the page on inflation, though experts are split on whether the strike will have a major impact on inflation and the economy more broadly.
by Derek Saul
Forbes
Key Facts
– The strike by 45,000 members of the International Longshoremen’s Association along the East Coast could cost the U.S. economy $3 billion to $4.5 billion daily, according to estimates from Jefferies and JPMorgan.
– Though that headline number is certainly a concern, experts largely think significant fallout would only come if the strike lasts more than the “base case” of a “few days,” noted Bank of America analysts led by Nathan Gee, who simultaneously warned a “prolonged strike lasting a few weeks could drive global congestion levels to all-time highs.”
– Austan Goolsbee, the president of the Federal Reserve’s Chicago branch, told Fox Business he’s concerned if the strike “drags on” it could “raise the cost of doing business” and the impacts of such events “are never good.”
Port Strike, If Short, Won’t Spur Inflation, Economists Say
by Megan Leonhardt
Barron’s
U.S. dock workers began a strike Tuesday at ports on the East and Gulf coasts. But a short strike would be unlikely to stoke inflation in consumer goods.
The United States Maritime Alliance, the alliance of port associations, container carriers, and employers, has failed so far to negotiate a new master contract with the International Longshoremen’s Association (ILA) that represents 85,000 longshore workers.
The current contract expired at midnight on Sept. 30. Thereafter, the ILA plans to strike at the 36 locations at 14 port authorities along the East Coast and Gulf Coast that employ the union’s workers.
Zimbabwe Already Devaluing New Gold-Backed Currency
by Mike Maharrey
GoldSeek
Well, that didn’t take long.
In April, Zimbabwe introduced a gold-backed currency in an effort to stabilize the country’s financial system. Less than six months later, the Reserve Bank of Zimbabwe has already devalued the new money.
I hate to say, “I told you so,” but, well, I told you so.
When Zimbabwe launched the ZiG, I warned that a gold-backed currency would be a great step but would not solve the country’s problems unless the government changed its ways.
It appears that hasn’t happened.
Fed Chair Jerome Powell: ‘Growing Confidence’ Inflation Cooling, More Rate Cuts Possible
by James Powel
USA Today
Federal Reserve Chair Jerome Powell on Monday said there’s “growing confidence” that inflation is moving toward the central bank’s 2% goal during a speech at the National Association for Business Economics conference in Nashville.
Powell said that two further rate cuts are possible if the economy continues to perform as expected, though they are likely to not be as aggressive as the half-percent cut the Fed made two weeks ago.
“The measures we’re taking now are really due to the fact that our stance is due to be recalibrated but at a time when the economy is in solid condition,” Powell said. “We’re recalibrating policy to maintain strength in the economy, not because of weakness in the economy.
Why Housing Inflation Looks Sticky
by Kristin Schwab
Market Place
Inflation cooled even more than expected in August. The personal consumption expenditures index — released Friday — clocked in at 2.2%, which is down from 2.5% in July. Still, one part of inflation that’s proven to be super sticky is housing.
Housing inflation is stubborn because there’s not enough housing, per Susan Wachter, a professor of real estate at Wharton.
“Demand continues and the supply is constrained,” she said.
That has to do with housing stock and interest rates. Rates have come down, but not enough for homeowners to sell. Wachter said the average existing rate is around 4%.
U.S. Inflation is Still Hotter Than Pre-Pandemic, and That’s Okay
Underlying measures of prices are still rising about one percentage point or so faster than they were in 2017-2019. But there is nothing wrong with this new normal, even if may not be fully priced in.
by Matthew C. Klein
The Overshoot
Federal Reserve officials’ preferred measure of inflation—the Personal Consumption Expenditure (PCE) price index—rose just 2.2% over the past 12 months. Over the past six months, PCE inflation has come in at just 1.9% annualized, and by just 1.5% annualized over the past three months. Little wonder that Fed officials have shifted their focus from worrying about inflation to preempting any potential further weakness in the job market.
While that may be the correct decision, many of the underlying inflation measures that are supposed to strip out the noise from volatile and idiosyncratic components imply that prices are still rising about 1 percentage point faster than they were in the years immediately preceding the pandemic. That is broadly consistent with the latest data on nominal wages and incomes, which suggests that it is more representative of the underlying trends than a few good months of headline inflation prints.
Saving the U.S. Dollar Will Require More Carrot. Less Stick.
by James Hickman
Schiff Sovereign
At a campaign rally earlier this month, President Trump promised that if he is elected, “We will keep the US dollar as the world’s reserve currency. It is currently under major siege. Many countries are leaving the dollar.”
What he’s referring to is the extreme privilege that the US has, i.e. that central banks around the world hold the US dollar in reserve as form of savings.
The entire world also conducts trade in US dollars. Since World War II, the vast majority of cross-border transactions among international businesses have been settled using US dollars.
Today, US dollars account for 54.8% of central bank holdings around the world. That’s still a lot, but it’s down from around 70% in the late 1990s, according to the latest IMF data.
And the US dollar is currently used for 42% of international trade, down from 52% in 2014, according to SWIFT, the Society for Worldwide Interbank Financial Telecommunication.
Half of a Percent Rate Cut? It’s Worse Than We Thought.
by Dave Kranzler
Investment Research Dynamics
“The US economy is in a good place and our decision today is designed to keep it there.” – Jay Powell at his post-FOMC press conference
Here’s the opening sentence to the latest FOMC policy statement: “Recent indicators suggest that economic activity has continued to expand at a solid pace.” Think about it for a moment: why does the Fed need to cut rates at all given that the alleged unemployment rate is low relative to history, the stock market is at a record high and housing prices are at all-time highs? As the global head of Deutsche Bank’s economic research (Jim Reid) wrote: “the interest rate cut of a half-percentage-point to kick off its easing cycle looks harder to justify than those in 2001 and 2007.” I qualify that by saying “at least on the surface.”
The Fed only cuts 50 basis points at the start of a rate cut cycle as it did in 2001 and 2007 after there’s been a severe deterioration in the markets or the economy. We know the economy is not expanding at a “solid pace,” unless the Fed’s definition of “solid” is the opposite of the dictionary definition.
Darn Facts On the Economy
by Jack Hellner
American Thinker
One of the biggest lies of all from the Democrats and the media is that Biden-Harris inherited an economic disaster—but in reality, they inherited a soaring economy.
Another lie we are told is how much better Biden-Harris policies have been for minorities and manufacturing, but facts are stubborn things.
The following are a set of facts from the Bureau of Labor Statistics from February of 2020, three years into Trump’s term and before COVID, and for August 2024, three years and seven months into the Biden-Harris term.
Teenage unemployment
Trump’s Big Ideas Would Stunt U.S. Growth and Spur Inflation
The damage he would do is much worse than anything an “anti-business” liberal might offer.
[Ed. Note: And you know that you can trust Fareed Zakaria, because he’s not just another World Economic Forum stooge… Oh… Oops. Nevermind.]
by Fareed Zakaria
Washington Post
From the start of his entry into political life, Donald Trump has had one enduring advantage. Many see him as a man who knows a lot about how to generate economic growth for the country. After all, he’s a rich businessman and he played a super successful one on prime-time television for years. The feeling is, he must know what creates growth. In fact, almost everything Trump proposes would have the opposite effect.
Take his most important proposals, ones that he repeats constantly: sweeping tariffs on all imported goods and mass deportations of undocumented workers. It is rare to find topics on which economists agree as strongly as they do that both would be bad for growth and cause inflation to spike.