Instantaneous Inflation in October

Core PPI flat, vs. +0.3% m/m consensus. Here’re instaneous core CPI and PPI inflation (per Eeckhout):

 

25 thoughts on “Instantaneous Inflation in October

  1. James

    Summers now says inflation was due to “transitory factors” – LOL https://finance.yahoo.com/news/summers-says-transitory-factors-behind-001613380.html – but he contends the drop in inflation was due to “tighter Fed policy.” I can’t determine if Mr Summers argument is a cum hoc ergo propter hoc or post hoc ergo propter hoc fallacy. I do know – us working class folks will have to tighten out belts until we can’t get any credit to invest in energy efficient appliances.

    1. Macroduck

      Clothes line. Mop. Broom. Highly recommended, even if you have a healthy budget.

      Nobody ever died from using hand-powered appliances. Well, almost nobody.

      1. Moses Herzog

        I get some kind of therapeutic pleasure out of putting a small amount of bleach in water, in a rectangle shaped pail. Using one of those super old school white mop heads, screwing the old school white mop head onto the broom handle and washing the entire kitchen floor. And this is coming from an extreme lazy man. It just feels so good. No reboots, no blue screen of deaths, no loud motors, no managerial dictums, no “woke”people looking for anything to be violated about. . Just swoosh swoosh swoosh, hand squeeze, dunk, swoosh swoosh swoosh and you know with a small ratio of bleach to water, the germs have been eliminated. It reminds me of my teacher dorm years in China. So good.

    2. James

      Menzie – what I don’t understand is why these economic pundits never mention the sure cure for inflation = increase taxes on wealthy. That would take a lot of speculative money out of the stock market (decrease investment in crypto); pay down national debt, and reduce wealth inequality. By the way, I’m always reminded of this when I drive by the Amazon warehouse here in Madison and I see people living rough in the wetlands behind the warehouse. The billionaire class can’t be bothered to contribute a few more pennies to improve the community but they gladly take advantage of the educated workforce and road network. Also – maybe a lot of inflation really was due to corporate price-gouging https://ritholtz.com/2023/11/revisiting-greedflation/

      1. JohnH

        ” why [is it that] these economic pundits never mention the sure cure for inflation = increase taxes on wealthy?” For the same reason that mainstream economists are loath to say that Corporate America was a major driver of inflation.

        1. Macroduck

          Johnny tells the same lie, over and over, no matter how many times he’s shown to be lying.

          Here’s a list of some of the economists who have publicly and explicitly called for higher taxes on the rich:

          Thomas Piketty
          Joseph Stiglitz
          Joel Slemrod
          Irem Guceri
          Kenneth Scheve
          David Stasavage 
          Emmanuel Saez
          Gabriel Zucman
          Jarod Bernstein
          Jason Hickel
          Jayati Ghosh
          Kate Raworth
          Lucas Chancel
          Adrien Fabre
          Agus Salim
          Alex Clark
          Alex Cobham
          Alex Pies
          Alice Krozer
          Alvaro Conde
          Ana Luiza Barbosa
          Andrew Melville
          Augusto Albuquerque
          Axel Gastambide
          Baptiste Willems
          Brett Scott
          Brendan Lynch
          Chiril Gaburici
          David Barkin
          Dirk Bezemer
          Dirk Philipsen
          Dula Abdu
          Edmund Valpy Fitzgerald
          Edouard Dommen
          Elli B. Tzatzanis-Stepanovic
          Emilien Ravigné
          Emmanuel Chavez
          Enrique Provencio
          Ernesto Tavera
          Fernando Pimentel
          Ferran Navinés
          Gabriel Zucman
          George Tchanturia
          Gilles Marechal
          Ha-Joon Chang
          Haluk Levent
          Hans Stegeman
          Hernández Yefren
          Himanshu Himanshu
          Ida Krestine Bille Andersen
          Idann Gidron
          Ignacia Pinto
          Inhoe Ku
          Jad Moawad
          James Meadway
          Jason Hickel
          Jayati Ghosh
          Jérôme Lange
          John Langmore
          John Quiggin
          José Torres
          Juan Carlos Moreno Brid
          Kaiser Bengali
          Karla Ayala
          Kathryn James
          Kerstin Hötte
          Kohei Saito
          Kosal Nith
          Krispijn Beek
          Laura Bannister
          Linda Van Goor
          Lucas Chancel
          Luis Barreto
          Luisa Montes
          Marie van Hasselt
          Marcelo Oliveira
          María Victoria Román de Lara
          Martin Guzman
          Mateus Labrunie
          Matteo Gasparini
          Matthew Cole
          Mehmet Tuncel
          Michael Mezzatesta
          Michiel Welling
          Miranda Stewart
          Moisés Roberto Escobar
          Muhammed Abdul Khalid
          Natassia Nascimento
          Niall Glynn
          Nigel Driffield
          Nuno Bigotte Santos
          Octavio Quintero
          Owen Gaffney
          Óscar Cabrera Melgar
          Patrick Eichelmann
          Patrick Feltesse
          Pete Barbrook-Johnson
          Pramod Junankar
          Raymundo Campos
          Rémi Lei
          Ricardo Martner
          Rob Vos
          Rosie Collington
          Saskia ter Ellen
          Stephan van Zyl
          Sudhir Shrestha
          Tim Polaszek
          Tinghua Yu
          Tom McDonnell
          Tung Phung
          Yanfe Zhou

          1. Todd Ramsey

            Subtracting those economists from the total number of economists in the world, that leaves about 19,900 economists who have not publicly and explicitly called for higher taxes on the rich.

          2. JohnH

            Tricky Ducky still doesn’t know how to read quotation marks. I was quoting James.

            But seriously, Ducky, can you cite mainstream economists who have called for raising taxes on the wealthy specifically as a cure for inflation? It actually makes a lot of sense, since the wealthy account for a disproportionate share of spending power.

            Sure lots of people have called for raising taxes on the wealthy over the years…but how many in the specific context of inflation since 2020?

          3. Macroduck

            Johnny is playing games. I’m able to show that plenty of economists have called for higher taxes on the rich. (That list is the 2023 version, by the way, not for all of time.) So Johnny insists that they have to have said that they called for tax hikes specifically as a response to inflation or it doesn’t count.

            Johnny has made lots of accusations against economists, all of which show his ignorance of the actual profession of economics. When called out, he falls back on debating tricks like this one.

            The economics profession is not in a debate with one ignorant guy named Johnny, so can’t be expected to have lined up to do whatever it is that Johnny requires of it in one particular blog comment. Johnny is simply wrong again about what economists think, and once again refuses to admit that he’s wrong.

      2. JohnH

        Barry Rotholtz: , Greedflation Revisited: “The “tell” about corporate profits and greedflation came after 2022 proved to be such a challenging year in the markets. Despite 500+ BPS of rate increases, a ~20% drop in the S&P500, and a 30+% drop in the Nasdaq 100, profits have remained much better than expected:

        “A comparison shows how extraordinary our current inflationary distress actually has been and still is. Unlike during the 1970s, corporations today wield sufficient market power to effectively protect their profit mark-ups (and, by doing so, to realize higher profits) during a time of inflationary stress that is comparable to that of the 1970s.”

        Even as inflation has come back down, the aftermath is that price increases have held. Corporate margins and profits could be the reason why price increases will stick, even as CPI falls back to normal. The rate of price increases may have normalized, but the absolute price levels today are much higher.

        As Emily Stewart observed, “What goes up may not come down. Like, ever.”

        Let’s hope she is wrong…”
        https://ritholtz.com/2023/11/revisiting-greedflation/

          1. JohnH

            Love that chart, pgl. It shows just how much corporate profits have skyrocketed!!!

            Way to make your point!!!

          2. pgl

            JohnH
            November 18, 2023 at 12:54 pm

            I was clearly referring to what happened in the last year. I never denied they rose in 2021. But come on Jonny boy – remember your repeated claims about UK real wages under Cameron. They fell a LOT but little Jonny boy only wanted to look at what happened in a single year. Two faced lying is Jonny boy’s only skill.

          3. pgl

            If little Jonny boy wants to talk about corporate profits over an extended period of time – an honest discussion would do this as a share of GDI. Over Jonny boy is never honest and we know he is incapable of doing any real work, so permit me by looking at this ratio for the 2nd quarter of 2019 v. .2021, 2022, and 2023.

            It was 9.61% as of 2019Q2 but yea it rose to 12.68% by 2021Q2. This ratio fell a bit by 2022Q2 to 12.28%. Something little Jonny boy denies. For 2023Q2? 10.9%.

            So yea this ratio is coming back down despite how many stupid lies we get from little Jonny boy.

          4. pgl

            Nice chart:

            https://ycharts.com/indicators/corporate_profits_usgdp
            US Corporate Profits After Tax (I:USCPATGD)
            10.73% of GDP for Q2 2023
            ‘US Corporate Profits After Tax is at 10.73%, compared to 10.74% last quarter and 12.33% last year.’

            As I have been saying. 2023 lower than 2022 which was lower than 2021. Yes this ratio was around 12.8%, which WAS high.

            I checked going back in history and it seems this ratio was above 12% back in early 2012. Of course little Jonny boy was totally unaware of that as his research skills SUCK.

            But

        1. pgl

          “Over at Alphaville, Robin Wigglesworth looks at whether ‘Greedflation’ (aka price-gouging) meaningfully contributed to Eurozone inflation. Specifically, Bank of England research suggests that while they “find no evidence of a rise in overall profits in the UK” they did notice that “companies in the oil, gas and mining sectors have bucked the trend” with “some companies… much more profitable than others.”

          Did little Jonny boy not read the FIRST paragraph. Yea – he has a chart about how markup rose in 2021. Hey Jonny boy – it is late 2023.

        2. pgl

          Jonny boy forgot to read the research from the UK:

          https://bankunderground.co.uk/2023/08/30/profits-in-a-time-of-inflation-some-insights-from-recent-and-past-energy-shocks-in-the-uk/

          How have profits behaved in this context of sustained level of inflation? In part, the answer depends on how ‘profits’ are defined. Some broad measures suggest increasing profits, but conflate market and non-market sector dynamics and omit important corporate costs. We construct an alternative measure of corporate profits to capture UK firm earnings in excess of all production costs. This measure has been declining since the start of 2022, consistent with evidence from historical energy shocks. This decline has not been uniform across firms, however: firms with higher market power have been better able to increase their margins; others have experienced large declines.

          We have been through this before little Jonny. If you provide a link – do bother to READ it before making a total fool out of yourself.

        3. pgl

          Profits in a time of inflation: what do company accounts say in the UK and euro area? By
          Gabija Zemaityte and Danny Walker, November 16, 2023

          “We compute the ratio of profits to value added for all non-financial listed companies in the UK and the euro area. The profit measure we use is earnings before interest and taxes (EBIT), which is a standard accounting measure. Value added is defined as EBIT plus total wage and salary costs at the company level. This measure naturally avoids some of the issues that distort the national accounting data, such as the inclusion of non-market income, tax and self-employment or mixed income.”

          I should note that this is a proper way of capturing whether the profit share rose relative to the labor share so maybe we should applaud Jonny boy for letting us know about this analysis EVEN THOUGH Jonny boy once again failed to read it. So permit me to tell everyone what they found:

          “How has the profit share been so stable? Profits have increased significantly in nominal terms in the UK and euro area, by somewhat more in the UK than in the euro area. But this increase in profits has been accompanied by sharp increases in inputs costs. Indeed, total costs – defined as the sum of the cost of goods sold, wages and salaries – has increased by around 60% in the Euro area since 2020, and around 80% in the UK. The level of the profit share reflects the set of companies captured in the sample, which tend to be larger, more profitable and more capital-intensive than the average in the economy as a whole – and the oil and gas sector is over-represented. These compositional issues mean we should focus on analysing changes in the UK or euro area over time, rather than differences between the two. But it is notable that in aggregate, the profit share has been broadly stable even when excluding oil, gas and mining sectors.”

          Oh my – this contradicts what little Jonny boy has been saying. Thanks Jonny boy for providing us actual analyzes that rebut your BS. Maybe someday you will learn to READ your own links before making a fool out of yourself.

    3. pgl

      “Summers, a Harvard University professor and paid contributor to Bloomberg TV, was prominent in predicting a surge in inflation and in criticizing the arguments of “Team Transitory.”

      So Summers was against Team Transitory before he decided to join the same team?

  2. Macroduck

    Jobless claims for last week were reported today. New claims rose to the highest level since the week of August 19:

    https://fred.stlouisfed.org/graph/?g=1bsSj

    New Deal Democrat has pointed out the leading nature of new jobless claims. There is very little lag between layoffs and claims in reality, but claims are reported nearly two months earlier.

    Initial jobless claims and JOLTS Layoffs and Discharges starting in 2000:

    https://fred.stlouisfed.org/graph/?g=1bsKs

    Same two series more recently:

    https://fred.stlouisfed.org/graph/?g=1bsLM

    It looks like layoffs are in for a modest rise in October and November readings.

    Just for fun, the ratio of new claims to JOLTS Layoffs and Discharges:

    https://fred.stlouisfed.org/graph/?g=1bsN8

    This ratio gives a notion of two things mixed together – whether those who lose jobs are able to find a new job before filing for benefits, and the share if those laid off who are eligible for benefits. The current ratio is pretty health compared to most times prior to 2015, but high relative to anything between 2015 and the onset of Covid.

    By the way, hiring peaked around November 2021, and layoffs began to pick up fairly persistently in May of 2022:

    https://fred.stlouisfed.org/graph/?g=1bsRn

    In the picture, both series have been indexed to January of 2021, to show fluctuations more clearly. Hires are still well above layoffs.

  3. Macroduck

    For those who like data cooked up and served, Statista is a good place to look. I think their goal is to show off what their product can do. Anyhow, immigrant employment performance is the theme of the day. The results make one question what all the immigrant angst is about.

    https://www.statista.com/chart/31268/unemployment-rate-gap-between-migrants-and-the-native-born-population-in-selected-oecd-countries/?utm_source=Statista+Newsletters&utm_campaign=665f2b2ae2-All_InfographTicker_daily_COM_PM_KW46_2023_Th&utm_medium=email&utm_term=0_662f7ed75e-665f2b2ae2-354581950

  4. Macroduck

    Speaking of inflation, or prices, anyway…

    Gasoline and WTI price levels – falling pretty sharply:

    https://fred.stlouisfed.org/graph/?g=1btKS

    Both down from a year ago:

    https://fred.stlouisfed.org/graph/?g=1btLj

    Fed officials generally try to look past energy prices, but consumers, as we know, tend to associate inflation with energy prices. Lower energy prices represent a reduced headwind to consumer spending and economic growth outside the energy sector.

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