Yahoo Finance: Inflation data arrives at critical moment for Fed after bank failures, jobs data..

[sprinkleeninow]

https://finance.yahoo.com/news/inflation-data-arrives-at-critical-moment-for-fed-after-bank-failures-jobs-data-192322720.html

[progree]

1. A 0.4% rise in both the core and the full CPI will raise the rolling 3 month average

Last edited Thu Mar 23, 2023, 06:54 PM - Edit history (1)

Over the prior month, consumer prices are expected to have risen 0.4% in February, down from the 0.5% monthly increase seen in the year's first month.

On a "core" basis, which strips out the more volatile costs of food and gas, prices in February are expected to have risen 0.4% over the prior month and 5.5% over last year, according to Bloomberg data.

If the expectations of a 0.4% rise of both the CPI and the core CPI is met:

The rolling 3 month annualized average for the CPI would rise from 3.2% to 4.0%. Not a big rise, but a rise.

And that of the core CPI would rise from 4.4% to 4.8%

No serious person who is interested in the CURRENT or RECENT inflation rate really gives a fat whoop and a holler about what the 12 month figure does -- that has several months of ancient data in it.

And in rolling averages, the number that drops out of the series at the beginning is just as important in changing the rolling average as the new number that has just been added. 12 months ago the CPI one month number was 0.7%, and the core CPI was 0.5%, and these are dropping out of the 12 month average. Fat whoop? Big holler? I don't think so.

But the media and innumerable message board pundits and "smartest people in the room" types will be blathering that inflation is cooling citing the movement in the useless 12 month figure. Sorry but inflation isn't cooling. Tomorrow's actual numbers might change that perception, but if they are 0.4% and 0.4% as forecast, then I continue to vote for "stalled at more than twice the Fed's target with a worrisome uptilt at the end" (see later on down when I discuss the core PCE -- classically the Fed's preferred inflation indicator for future inflation predictions -- and the other indicators. And the 3 month, 6 month and 12 month rolling averages of the core PCE).

There is nothing magical about the 3 month rolling average either - I chose it for its recency, and yet it is more than one data point so people can't dismiss it as a "one off" so readily.

For the CPI, I only have the month by month numbers in graphical form, below. (I don't give a fat whoop about 12 month rolling average graphs, which are ubiquitous everywhere).



The full set of the latest graphs, all through February, (CPI, PPI, and PCE) and their core equivalents are at https://www.democraticunderground.com/10143038482#post12

The rolling 3 month, 6 month, and 12 month graphs of the core PCE (classically the Fed's favorite inflation indicator for projecting future inflation) is in the same thread at https://www.democraticunderground.com/10143038482#post23 . They all indicate that this inflation measure has been essentially stalled for 6 months to a year depending on which rolling average you look at, with upward movement at the end. At more than twice the Fed's 2% inflation target.

==========================

As the article points out, on the Fed's next rate increase, the CME FedWatch tool https://www.cmegroup.com/markets/interest-rates/cme-fedwatch-tool.html

As of mid-afternoon on Monday, markets are pricing in an ~80% chance the Fed raise rates by 25 basis points at its March 22 policy meeting with a ~25% chance the Fed leaves rates unchanged, according to data from the CME Group.

Hmm, ~80% + ~25% = ~100%? Who knew

Last week, investors placed a better-than-50% chance on the Fed raising rates by 50 basis points this month following two days of testimony from Fed Chair Jerome Powell that emphasized interest rates were likely to go higher than previously forecast.

Oh, before blaming Powell for his interest rate policy, realize that although he was appointed by The Great Orange Slobfather, he was reappointed by President Biden, and confirmed by an 80-19 vote in the Senate (only 5 Dems voted no. Additionally Bernie voted no. Obviously a huge majority (43) of Democrats voted yes. 13 Republicans voted no) https://www.senate.gov/legislative/LIS/roll_call_votes/vote1172/vote_117_2_00176.htm

Democratic no votes: Markey (D-MA), Menendez (D-NJ), Merkley (D-OR), Ossoff (D-GA), Elizabeth Warren(D-MA).

Democratic yes votes: Baldwin (WI), Bennet (CO), Blumenthal (CT), Booker (NJ), Brown (OH), Cantwell (WA), Cardin (MD), Carper (DE), Casey (PA), Coons (DE), Masto (NV), Duckworth (IL), Durbin (IL), Feinstein (CA), Gillibrand (NY), Hassan (NH), Heinrich (NM), Hickenlooper (CO), Hirono (HI), Kaine (VA), Kelly (AZ), Klobuchar (MN), Leahy (VT), Lujan (NM), Manchin (WV), Murphy (CT), Murray (WA), Padilla (CA), Peters (MI), Reed (RI), Rosen (NV), Schatz (HI), Schumer (NY), Shaheen (NH), Sinema (AZ), Smith (MN), Stabenow (MI), Tester (MT), Van Hollen (MD), Warner (VA), Warnock (GA), Whitehouse (RI), Wyden (OR).
+ King(I-ME)

The other annoying tiresome meme, that it's all Powell's fault, leaves out the fact that the vast majority of the Federal Open Market Committee has also voted for the rate hikes at every meeting.

[sprinkleeninow]

2. Not totally on powell, but he IS chair. No influence?

Yes, I read the deregulation was passed by many in Democratic seats.

The economy just doesn't 'feel' like it's so very bad, heading into dire straits.

Seems like the rate increases appearing to make matters worse.

But I know only what I see/feel, not numbers.

I do appreciate your statistics, 'though.

[progree]

4. Yes, I think that he's Chair of the FOMC and that they try to reach consensus (but often don't)

Last edited Tue Mar 14, 2023, 12:02 AM - Edit history (1)

means he has some influence on the others, in my mind. But I really don't think, and I haven't seen, read, or heard that any of the other FOMC members are opposed to the rate hikes, some just differ on the exact size of the rate hikes.

All's I've been hearing -- from between when the hot inflation reports and retail sales reports came out in mid-February, and until the Silicon Valley Bank became news -- was various FOMC members making hawkish noises about larger rate increases. Maybe they are just sucking up to Powell, but I really don't think so.

I very strongly believe that fighting inflation is NOT just a Powell thing. Even at the current about 4.5% level (see the rolling core PCE graphs), it is more than double the Fed's 2% inflation target. They long have had that target, and no serious person thinks it's there just for shits and giggles, and that they are going to say, well, it might hurt the economy if we try to do something about it, so we better just let inflation roar. So what if the purchasing power of the dollar is cut in half in 10-20 years (At 4.5% inflation, it would take 16 years for the purchasing power of the dollar to go down to 50 cents. At the peak 9% inflation last June, it would take just 8 years to cut the dollar in half). I don't think that any of them think 4.5% inflation is no big deal, and I don't think anyone at the cabinet level and above thinks that way either.

I find it unacceptable as to what inflation is doing to the purchasing power of my nest egg, for one (I'm retired). As for workers, I've never known a period when wages have kept up with prices during times of serious and rising inflation. So inflation isn't a good deal for them either.

And unlike the stock market, purchasing power never recovers. It always stays down, and goes down some more. For there to be a "recovery" in purchasing power, there would have to be sustained DEflation, and that would only occur if there was a very serious prolonged multi-year deep recession. And obviously we don't want that.

As for raising interest rates as the tool to fight inflation, that's what they have always done, and it has worked, although too often causing a recession to do so. That's where I think we're headed, again.

I know there is a huge DU chorus about how inflation is different this time -- it's an international issue this time (and in the past too I might add), supply chain, Ukraine, Long Covid, and I forget what else -- and raising rates increases business's costs and mortgages etc. -- and so raising interest rates is neutral to counter-productive in bringing down inflation. All that may be true, but I see no evidence that any FOMC members or anyone in the Biden administration think so.

[sprinkleeninow]

3. "Here, hold my Slivovitz!"

😘

[progree]

5. Slivovitz? Another bank failure?! -- Silvergate, Silicon Valley, Signature, and now Slivovitz?

So I looked it up -- some kind of booze

[sprinkleeninow]

6. Heheh. An alcoholic beverage as they say in the south.

Serbian in nature. Gotta find one similar pertaining to Ukraine. If it's Slavic, it's aight by me.😆

[sprinkleeninow]

7. Holee Smocks! Found sumpthin': 'Exquisite, warming, hints of chawklit...'

THE FIRST UKRAINIAN WHISKEY
Mykulynetsky whiskey - exquisite warming soft taste with notes of milk chocolate, which gives a feeling of warmth and completeness of taste.

See where this went? Seriously thinking of finding some.

[progree]

8. That really does sound interesting. Would love to try, but I'm involuntarily sober (an "INSOB") /nt

[sprinkleeninow]

9. I say stuff, but actually only use alcoholic products for cooking/dousing anymore.

Don't even drink any wine. I do not frown upon imbibing. I just don't anymore. Imma ditzy enuff.🤭

[roamer65]

10. The Federal Reserve now needs to hold steady on interest rates.

Interest rate cuts need to be on the agenda there after.

[sprinkleeninow]

11. It would seem the ideal response. Yes. 👊