from MSNBC
Yellen Wants Price Inflation to Rise So the Feds Can Keep Spending
by Daniel Lacalle
Mises.org
The long-term forecast for higher interest rates, according to Treasury Secretary Janet Yellen, makes it more difficult to control US borrowing needs, which emphasizes the significance of raising revenue in the forthcoming budget talks with Republican lawmakers. There is only one problem. She is wrong.
According to the Congressional Budget Office (CBO) baseline, which does not assume a single year of recession and already counts with record tax revenues, the 2025 primary deficit will reach $851 billion, while net interest outlays will rise to $951 billion. Furthermore, the minimum expected primary deficit from 2025 to 2034 will be a staggering $676 billion with $1.2 trillion of net interest outlays, while the average annual deficit will likely be above $700 billion. The accumulated figures are even more concerning. The CBO estimates that the aggregate primary deficit in the 2025–2034 period will reach a brutal $7.4 trillion, with accumulated interest expenses of $12.4 trillion. We must remember that the CBO baseline estimates no recession and constantly rising tax receipts above the record 2024 level.
Retailers Notice Shoppers Seeking Savings Amid Inflation
Inflation and high interest rates drive cautious spending, but a potential rebound is anticipated
by Freschia Gonzales
Wealth Professional
Canadian Tire Corp., Tim Hortons parent company Restaurant Brands International, Roots Corp., and Alimentation Couche-Tard Inc. have all observed that shoppers are increasingly seeking cost savings and reconsidering some purchases.
According to BNN Bloomberg, this trend was noted across the latest set of quarterly earnings calls, with many companies attributing it to a mix of inflation and higher interest and mortgage rates that strained budgets last year and have continued to slow consumer spending into this year.
However, there is consensus that the latter half of 2024 might see these concerns ease, especially if the Bank of Canada cuts its key lending rate over the summer.
RBA’s Hauser Says Inflation ‘Predominant Challenge,’ AFR Reports
by Swati Pandey
BNN Bloomberg
(Bloomberg) — Australian central bank Deputy Governor Andrew Hauser said the “first and predominant challenge” for policymakers is to bring down inflation, according to an interview with the Australian Financial Review.
Hauser, who joined the Reserve Bank earlier this year from the Bank of England, also cited the RBA’s full-employment mandate to justify Australia running a lower benchmark interest rate than global counterparts, in the interview published Monday. He said part of the RBA’s strategy is to “test” the level of full employment.
“We have a dual mandate,” he said. “If there is an opportunity to capture those gains on the employment side, I think we have an obligation to do it.” His comments reiterate those of Governor Michele Bullock and her predecessor Philip Lowe, who both stressed that they are trying to maintain employment gains while bringing down consumer prices.
Food Retailers Are Still Lying About Inflation and Profits
American consumers are paying more and more at both grocery stores and fast-food chains. These retailers are disingenuously blaming the price hikes on inflation while they put their massive profits toward stock buybacks and fat dividends.
by Veronica Riccobene
Jacobin
As food costs have skyrocketed for Americans, some of the country’s biggest chains and grocery brands, including General Mills, PepsiCo, and Tyson, have blamed the price hikes on supply chain issues and economy-wide inflation. But behind the scenes, these companies have expanded profits and quietly authorized billions of dollars in lucrative stock buyback programs and dividend payouts to shareholders.
Americans paid roughly 25 percent more on groceries and dining out this March than they paid in January 2020, outpacing the rate of general inflation. Over that same period, the companies behind the country’s ten largest grocery and restaurant brands have together returned or pledged to return more than $77 billion to shareholders.
Inflation Continued to Decline in April
by William J. Luther
The American Institute for Economic Research
Inflation ticked down further in April, according to new data from the Bureau of Economic Analysis (BEA). 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 3.1 percent in April, down from 4.1 percent in the prior month. It has grown at an average annual rate of 3.7 percent over the last three months.
Inflation has typically exceeded the Fed’s average inflation target since January 2020, with thirty-eight of fifty-one (74.5 percent) months registering inflation above 2 percent. Prices today are 16.4 percent higher than they were in January 2020 and 9.0 percentage points higher than they would have been had they grown at an annualized rate of 2.0 percent over the period.
Warning Signs of Hyperinflation: Is the U.S. Following Venezuela’s Path?
by Gabriela Berrospi
Forbes
Many of us in the Latino community in the United States have firsthand knowledge of the devastating effects of hyperinflation, having seen it wreak havoc in countries like Venezuela, Argentina, Cuba and even my homeland, Peru—with Venezuela’s situation among the most severe. In the wake of a global pandemic, the U.S. economy faces a critical challenge that could reshape its future: a significant and long-term rise in inflation.
Since 2021, the cumulative inflation rate has soared to over 18%, with the current annual rate at about 3.5% at the time of writing. This steady price climb is reminiscent of the early stages of Venezuela’s economic meltdown, which began subtly and later spiraled into a catastrophic crisis. To analyze this situation, it is important to note the difference between deflation and disinflation. Deflation means prices are generally going down, while disinflation means inflation is going up—but at a slower rate. We are currently in a disinflation phase, which means inflation is not improving.
Trump’s Plan to Supercharge Inflation
Voters believe Trump would handle the economy better than Biden. Economists think differently.
by Ronald Brownstein
The Atlantic
Among prominent economists, no one was more explicit than former Treasury Secretary Larry Summers in warning that President Joe Biden and the Federal Reserve Board risked igniting inflation by overstimulating the economy in 2021. Soaring prices over the next few years proved Summers correct.
Now Summers sees the risk of another price shock in the economic plans of former President Donald Trump. “There has never been a presidential platform so self-evidently inflationary as the one put forward by President Trump,” Summers told me in an interview this week. “I have little doubt that with the Trump program, we will see a substantial acceleration in inflation, unless somehow we get a major recession first.”
Super-Sized Prices! Here’s is How Much a Big Mac, Chick-fil-A Nuggets and Chipotle Burrito Cost Thanks to Inflation
by Graig Graziosi
Yahoo! Finance, Canada
Americans heading for a quick bite, or a guilty pleasure, are seeing sticker shock when they visit their favorite fast-food joint thanks to inflation. Many restaurants, such as McDonalds, Chipotle and others, have raised prices in recent years because of rising costs. Overall, the cost to eat out is up about 22 percent in the last year, according to federal data, and fast-food has not been immune.
Fast-food price also outpaced inflation, rising 41 percent since 2017. The consumer price index has risen by 35.9 percent during the same period.
Projected Annual Inflation Rate in the United States From 2010 to 2028
[Ed. Note: We’ll be revisiting this prediction in the future. I think it’s going to age like fine milk.]
from Statista.com
The inflation rate in the United States is expected to decrease to 2.1 percent by 2028. 2022 saw a year of exceptionally high inflation, reaching eight percent for the year. The data represents U.S. city averages. The base period was 1982-84. In economics, the inflation rate is a measurement of inflation, the rate of increase of a price index (in this case: consumer price index). It is the percentage rate of change in prices level over time. The rate of decrease in the purchasing power of money is approximately equal. According to the forecast, prices will increase by 4.5 percent in 2023.
The annual inflation rate for previous years can be found here and the consumer price index for all urban consumers here.
The monthly inflation rate for the United States can also be accessed here.
NBC’s Memoli: Biden Team Has Given Up On Trying ‘to Fix the Inflation Problem’ and is Trying to Argue Style
by Ian Hanchett
Breitbart.com
On Friday’s edition of NBC’s “MTP Now,” NBC News White House Correspondent Mike Memoli stated that “the Biden team has seemed to concede that there’s nothing they’re going to be able to do to fix the inflation problem” and are trying to reframe things to a “stylistic” argument.
Memoli said, “Every single demographic, every poll shows the number one issue, cost of living, inflation. And the Biden team has seemed to concede that there’s nothing they’re going to be able to do to fix the inflation problem. So, they’re trying to make this a whose side are you on, who are you fighting for question. The president may have some economic announcements to make over the course of the rest of the year to try to say, we’re bringing costs down, we’re trying to forgive student loans to put more money in your pocket.