Inflation in August

Readings exceeds expectations, m/m 0.6% vs. 0.3% Bloomberg consensus (0.1% vs -0.1% core).

Figure 1: CPI headline year-on-year (tan), quarter-on-quarter (green), month-on-month (blue). NBER defined peak-to-trough recession dates shaded gray. Source: BLS via FRED, NBER, and author’s calculations.

 

Figure 2: CPI core year-on-year (tan), quarter-on-quarter (green), month-on-month (blue). NBER defined peak-to-trough recession dates shaded gray. Source: BLS via FRED, NBER, and author’s calculations.

Note that narrower indices — core and 16% trimmed — are month-on-month up from last month, albeit down from recent peaks.

Figure 3: CPI headline month-on-month (blue), core (tan), 16% trimmed (green). NBER defined peak-to-trough recession dates shaded gray. Source: BLS, Cleveland Fed via FRED, NBER, and author’s calculations.

 

 

 

 

79 thoughts on “Inflation in August

  1. Econned

    With forecasts of sharp price increases in the wholesale electricity market, this upcoming winter could be interesting.

    1. Macroduck

      Interesting? Sure, but not a mystery. We already know quite a bit about what electricity bills will look like this winter.

      Electricity accounts for about 2% of household budgets, on average – more for poorer households. EIA forecasts retail electricity prices up 7.5% y/y on average this year:

      https://www.eia.gov/outlooks/steo/report/electricity.php

      That would mean less than a 0.2% increase in household spending due to higher electricity costs for the average household.

      That average is boosted by very large increases in New England and New York/New Jersey. The rest of the country will, on average, experience less than a 0.2% increase in household spending due to rising electricity costs.

      While wholesale electricity prices are up over 100% from a year ago in much of the North East, retail increases are much smaller, and in many cases, already fixed for this winter. Retail rates are up between something like11% and 80% in the region:

      https://acadiacenter.org/new-england-predicted-to-see-nations-highest-wholesale-electricity-prices-this-summer/

      That 80% rise is for Central Maine, and amounts to a $30 monthly increase on average in electric bills. That’s bad for Central Maine residents, but there aren’t all that many households in Central Maine. That $30 increase is an upper limit; much of the country will experience far smaller increases. How much smaller? Well, $2.81 is to $30 what 7.5% is to 80%, so the average monthly increase in electric bills might be around $2.81.

      Reality will be a bit more complicated, but facts and math can get you pretty close.

      1. Econned

        Certainly no “mystery” but in a discussion of wholesale electricity markets, merely focusing only on the impact of households seems like an extremely narrow view. In any case, since you’re mentioning the NE, NYISO is forecasting much higher costs to be passed along to consumers for the upcoming winter. Both National Grid and Con Edison have recently announced that, on average, customers should expect to experience bill increases around 22%-32% for electric and nat gas customers. Total bill impacts of over $100/month are expected for an average NYC residential customer when also accounting for natgas per Con Edison. Tell me, are there many homes in the New York area?

        1. pgl

          “merely focusing only on the impact of households seems like an extremely narrow view”

          And the rest of your comment focused on the impact of certain households!

        2. Macroduck

          The snotty tone is because…? Did Econned get his little feelings hurt?

          Feel free to do a little work your own self if you have a point to make. The household sector is too narrow (though you offers more household costs)? Well, what’s the effect going to be outside the household sector? Happy to have you write something worthwhile.

          I believe I mentioned that NY and NJ were going to have big increases. Since you didn’t provide a link and you have not proven reliable in the past, I did a little checking on household energy bill projections for NYC:

          “National Grid, Staten Island’s natural gas provider, announced Wednesday that residential customers in the New York City metro area should expect to see a total increase of about $306 in their bills over the 5-month period from Nov. 1 to March 30.

          “Those higher natural gas prices will also affect electricity prices in New York City, Con Edison announced Friday. Residential customers in the five boroughs should expect to pay an average of $116 a month compared to last year’s $95 a month, according to the utility.”

          That’s a total of $82 per month. Not “over $100/month”.

          Enough with the tantrums. Grown ups are trying to have a discussion.

          1. Econned

            Your hubris and sloppiness isn’t a good look.
            “The company currently projects that its average residential natural gas heating customer using an average of 165 therms per month will pay $460 a month from November 2022 to March 2023, 32 percent more than the average bill of $348 a year earlier.”
            And
            “A New York City residential customer using 300 kilowatt hours a month this winter will pay about $116, a 22-percent increase over last winter’s $95, based on current projections.”
            So, to use your own words against you, “math can get you pretty close.”

          2. baffling

            so it seems to me, the issue is why do we continue to rely on natural gas? it seems to be the big driver in cost here. better to switch to a different, cheaper energy source.

          3. Econned

            baffling,
            NatGas is relied upon because of infrastructure – to “switch to a different, cheaper energy source” isn’t a remotely feasible option for the time frame that’s being discussed here.

          4. baffling

            that is a pretty good excuse to maintain the status quo. but I am just as concerned about the future, as I am of today. maybe our difference has to do with life expectancy. but I don’t mind investing for a better future. I don’t shy away from change, just because it is hard today.

            and rick, that is also a good argument for why the government should lead the way in the investment of renewables. it is hard today. but it is better for the future.

          5. Econned

            baffling,
            It’s a great explanation to stay on topic. I shy away from discussing it here on this thread because it isn’t relevant to this specific discussion. Otherwise this blog’s comment section turns into a complete sh*tshow of irrelevant topics… oh wait, that’s exactly what this blog’s comment section is.

            Bed Bath & Beyond is closing about 150 stores.

  2. pgl

    Given the previous 2 months of virtually zero M/M any increase in CPI would have been an increase. The market is freaking out which strikes me as an overreaction.

    1. Ivan

      I think the best hint of where prices are heading comes from calculating an average of the past 3 months M/M numbers. The markets are freaking out because they think the Fed will freak out over the news headlines of big Y/Y changes. I sure hope the Fed doesn’t freak out over the markets freaking out and continue an already overdone reaction to price increases.

  3. pgl

    Uber troll, pretend lawyer, and Trumpian serial liar Ricky Stryker tried to tell us Navy v. Egan (1988 even if Ricky thought it was a 1978 decision) supports the position of Trump on his fight with the DOJ. I posted a link to a very good discussion of the case as well as the decision and it seems either Ricky boy has no effing clue what he is babbling about (what’s new) or he knows he is lying and he hopes people are too lazy to check what this litigation was all about. Again I get it – he always lies so what’s new.

    1. New Deal democrat

      This is a good time to refer back to a comment I wrote here last December in response to November’s CPI:

      https://econbrowser.com/archives/2021/12/cpi-inflation-in-november#comment-263558

      “please consider a historical regression between house prices and owners equivalent rent. I think you will find that the former leads the latter usually by about 1 year, intermediate via increases in rent of primary residence. Both forms of rent have been increasing since this spring. If we project that trend forward one year, it very much looks like high headline inflation will persist and may well worsen.”

      When I wrote that, headline inflation YoY was 6.8%. Not only has high headline inflation persisted since then, it peaked at 9.0% in June. Meanwhile OER, which was 3.5% YoY then, has increased every month since and is now 6.3%, the highest bar two months in 1986 since the series was initiated 40 years ago. The 0.7% increase in OER in August is the biggest monthly increase since 1990.

      I would say my point has been made in spades. I notice that this week Paul Krugman has picked it up in his twitter feed, pointing out that OER plus rent of primary residence is 40% of core inflation. That means the absolute entirety of every other portion of core prices would have to be in outright deflation just to get core inflation under 0.4%.

      The FHFA purchase only index peaked at 19.3% YoY in July 2021, finally declining to 16.2% YoY as of this June. Thus we should expect OER to remain at very elevated level until at least about mid year next year. It may continue to increase further this year, as in 2006 it continued to increase until it was 40% of the FHFA index’s 2005 peak. That would call for OER to peak at about 8% by about the end of this year.

      In the past OER has sometimes peaked even after Fed rate hikes had cooled inflation substantially, even to the point of causing a recession.

      So I will make a controversial (I think) call now: so long as mortgage rates remain over 5%, the Fed should stop raising rates. It should stop chasing the lagging indicator of OER. It should instead focus on steadying housing starts, and watching to see how much the FHFA and Case Shiller price indexes decelerate – because that is the future course of un-Fed-molested inflation.

    2. Rick Stryker

      pg13,

      Interestingly enough, Trump’s most recent filing with the court makes exactly the same legal arguments I made in the comments 3 weeks ago. The filing mentions the case I cited that serves as precedent for the PRA, Judicial Watch v NARA, and it also makes the argument that Trump has absolute power to declassify documents, citing Navy v Egan, just as I did.

      The filing comes close to asserting that Trump declassifed the docs but doesn’t quite do that, merely noting that whether Trump did or didn’t is a judgment for the court and the special master to make and should not be presumed by DOJ. The right stance to take I think at this point but it strongly implies that Trump intends to assert that he declassified the documents.

      It’s a good thing for Barkley that he didn’t take the $1000 bitcoin bet with 2-1 odds in his favor I proposed, because Trump’s legal team has already made 2 of the legal arguments I predicted they would and are very close to making the third argument.

      pg13, Macrod!*k, Barkley, Joseph, etc, you say I don’t know what I’m talking about in my legal analysis. How then could I anticipate with such accuracy the legal arguments that Trump’s team would eventually make? Why didn’t you read this analysis and predictions elsewhere, like from the “experts” consulted by the NYT or MSN?

      1. AndrewG

        “Trump’s most recent filing with the court makes exactly the same legal arguments I made in the comments 3 weeks ago.”

        That is absolutely not something to be proud of.

        1. pgl

          Why does the RICK insist on calling Macroduck MacroD!ck? Same reason he writes his Trumpian BS on things like the law, trade issues (which he clearly does not understand), and even the CoRev theories on climate change? Given the main point of his rants is that he thinks he is smarter than everyone else (a sure sigh of a really dumb troll),

          I suspect that he wants everyone to know his D!ck (sorry Macroduck) is even bigger than Trump’s hands or whatever. Poor Ricky as he is clueless what Stormy Daniels had to say about all of that. Of course little Ricky got fired by the porn industry. I wonder why.

      2. pgl

        Gee Ricky poo – like I said, Trump’s lawyers are incompetent liars just like you are. So maybe they are copying your comments in their brazenly stupid briefs. Or maybe you are just copying their BS. Either way no one cares.

        ‘The filing comes close to asserting that Trump declassifed the docs but doesn’t quite do that’

        They do not do that because he did not declassify those document and judges do not like lying lawyers. Which has been my point from day one. Oh wait – you should take over as you are not a lawyer and the penalties to you for lying will not include disbarment.

        Keep it coming Ricky pooh as this is really, really funny!

      3. pgl

        I see you are ducking my comments re Navy v. Egan (1988). You should because you once again proved what a CLOWN you really are.

        1. Rick Stryker

          pg13,

          I answered your comment. To summarize again, the article makes a legitimate point that Article II powers can get judicial review if Congress passes statutes, but that’s not the case here, so the point is irrelevant.

          That being said, I am interested to see how DOJ responds to this.

          1. pgl

            You took one point but misrepresented what the case was about? Oh yea – you also told us it was decided by the Courts five years before the issue even arose. Yea – you are dumb as you are arrogant.

      4. Barkley Rosser

        Rick,

        There is zero evidence that Trump declassified any of the documents, although maybe he did some. There are procedures that must be followed to do so that involve bringing in the relevant agencies that were involved in the original classification. There is zero evidence of any of that happening. Maybe Judge Cannon thinks he can still engage in declassifying things after he leaves office by some magic waving of his hands, but this is clearly not the case.

        It is also pretty clear that if he had indeed properly declassified documents, and he did have such authority while still president if doing it through channels properly, it is pretty clear he would indeed have asserted that he did so, which would completely change everything about this case. As it is, this is just a ludicrously desperate move.

        Sorry, Rick, you do not look brilliant. Yes, you forecasted this move, but it is idiotic and without legal foundation, a desperate farce.

        Oh, and I view all these challenges people make here and elsewhere to bet on stuff to be third rate infantile macho bs. It shows how inadequate you are that you are making such demands. But then, what should we expect from somebody who picks as his fake name here that of a notorious porn star?

        1. pgl

          What do you expect from a clown who thinks the Supreme Court ruled on a litigation five years before the actual issue arose. Does Ricky lie a lot? Yea but he is also dumber than a rock.

        2. Rick Stryker

          Barkley,

          I’m forced to engage in tactics like offering bets and issuing challenges to counter the left-wing trolls that try to silence conservatives and drive them from the comment section of this blog.

          In your case, you very rudely told me that I was completely wrong about my econometric point that if two series have a trend and you regress one on the other, then the estimate will go to the ratio of the trends, R2 will go to 1, and the t stat will go to infinity as T goes to infinity. Now what am I supposed to do. You were trying to discredit me and shut me up. The casual onlooker sees a Professor vs. a guy with a funny name, so who will they believe? Thus, I challenged you to prove me wrong within a set time limit and if you didn’t I would show you how to do the proof. You didn’t demonstrate I was wrong so I showed you how to do the proof. The beauty of this tactic is that I win whether you know how to do the proof or not. If you do know how to do it, then you’d have to admit you were lying when you said I was wrong. And if you don’t know how to do it, then I expose you as a #fakeeconomist, which is just punishment for your trolling.

          I did the same when you rudely told me that I don’t know anything about climate science while you are an expert. So I challenged you to demonstrate a basic result in the simple physics of global warming. When you couldn’t, I showed you how to do it.

          I don’t like doing that, but I have to silence the trolls.

          In both those cases, it was possible to use some kind of mathematical argument or proof. But in other cases, that’s not possible. For example, when you and others rudely accused me of knowing nothing about law (when in fact I have a lot of expertise) I used a bet to demonstrate the truth. Bets are nice tools when you want to reveal that the troll is not willing to put any money behind his claims. It shows that they are just trying to silence someone but without any personal cost. And bets provide an objective way to see who was right and who was blowing smoke.

          1. Barkley Rosser

            Um, Rick, you were right on the econometric point a couple of years ago.

            I do not remember you ever being right on a matter of climate science about which we disagreed, although perhaps this is my senility kicking in again.

            On this matter of the FBI search at Mar-a-Lago you have made numerous statements that have proven to be factually seriously inaccurate, but you conveniently ignore that as you trumpet how some arguments you have made have been used by the Trump legal team.

            This betting stuff remains infantile attempted macho bs that just reminds people that indeed you do have an embarrassing fake name you were so stupid to pick and now you ger ticked off when people remind you how stupid and ridiculous it is.

          2. Baffling

            Rick, as i pointed out, your bets are very one sided. It would be foolish for anybody to take them. Those bets did not disclose anything. Unfair bets with unfair odds are simply used for propaganda. You would make a very poor bookie.

    1. pgl

      Rick Stryker has moved by noting his expert legal analysis dovetails the nonsense from Trump’s incompetent boob lawyers.

    2. Macroduck

      It’s unlikely this is just random bad luck. Goldman was probably going after weaker sub-prime credits. That might mean higher returns, but we’ll know soon enough. Quarterly statements will probably clear up questions of capital and revenue loss from sub-prime cards.

      Credit card delinquencies tend to be leading for downturns, coincident for rebounds:

      https://fred.stlouisfed.org/graph/?g=TFgV

      The lead tends to be quite long, more a reflection of over-extension of credit than of credit shocks ending expansions. Commercial real estate loan delinquency rates tend to turn up later in cycles:

      https://fred.stlouisfed.org/graph/?g=TFhD

      No bad news from commercial real estate loans so far in this cycle, but given the weirdness of commercial real estate in this cycle, I’m not sure how much that means.

      1. AndrewG

        Good old Macrod!ck. Always pointing to the most relevant data!

        No, seriously, the credit card delinquencies one is very nice. There is a recent upturn, but it’s from a very low level. Note also a nice shallow upturn before 2020, but one can imagine that’s composition (more lower-quality borrowers) due to new lending practices in the industry (lots of small-credit companies like Karna and whatnot).

        1. baffling

          i think iPhone users get a pass when applying for the apple card. not all iPhone users are financially stable. this probably contributed to the goldman issue. lots of college kids have iPhones, not all of them are paid for by mom and dad.

    3. pgl

      “More than a quarter of Goldman’s card loans have gone to customers with FICO scores below 660, according to company filings. That could expose the bank to higher losses if the economy experiences a downturn, as is expected by many forecasters.”

      Since I usually deal with corporate borrowings and the arm’s length interest rate for intercompany loans, I’m no expert on FICO scores but even I know being below 660 is pretty bad. Of course, lending to these folks has less credit risk than lending to Donald Trump.

  4. Macroduck

    As of yesterday, money markets priced in 90% odds of a 75 basis point Fed hike next week, 10% odds of a 50 bp hike. Mid-day today, it’s 78% odds of a 75 bp hike, with 22% odds of a full 1% hike. I find that odd. Moses will probably find it worst than odd.

    Not quite half-way through September, mid-grade gasoline is down 6.5% from a month ago. After seasonal adjustment, that should represent a considerable drag on consumer inflation in September.

    The New York Fed’s latest Survey of Consumer Expectations finds expectations of inflation over five years to have fallen to 2.0% from 2.3%.

    Quantitative tightening accelerated this month.

    So we have a cooling trend in inflation, reason to expect September headline inflation to be tame, inflation expectations right where the Fed wants them and an increase in tightening through the Fed portfolio, but one month’s upside surprise in measured inflation is enough to boost rate hike expectations substantially. Please, let it be machine trading. I don’t want to think humans spook that easily. I know Jay and Lael have been talking tough, but that’s so they DON’T have to go crazy with rates.

      1. Moses Herzog

        I could bore everyone with my most recent grocery shopping list and prices. But I won’t unless someone genuinely wants to inspect it. I don’t know where the hell all this inflation excitement is, outside of energy and housing. And if real estate conglomerates and hedge funds are buying huge chunks of suburban property for renting out, why the hell would I be shocked housing prices are rising?? And as far as cars are concerned, if you’re not intelligent enough to buy a car that lasts at least 10 years, I file that under “sounds like a personal problem”. Got a 2007 Toyota sedan in the driveway. Other than leaking motor oil at a faster rate than a Toyota should (which was specific to that year’s model from the time it sold), I’m not “sweating out” the next car purchase. Let the rubes overpay now and I’ll wait ’til whoever gets their act together supplying computer chips.

      1. Macroduck

        I firmly believe that one’s comments here should reflect what’s going on from the neck up. The troll choir, with its focus on manly-man-ness, may disagree. There are vague rumors of places on the internet where below-the-neck activity is the focus. I mean to investigate them someday, but I’m too busy right now. 😉

        Besides, who’d look after the ducks?

        1. AndrewG

          “I firmly”

          Exactly my point.

          And ducks have sex lives too, you know. Corkscrew-shaped ones.

          [MC’s looks over accusingly] UHHHHH ECONOMICS! INTEREST RATES! THAT PAUL SAMUELSON, EH?

        2. pgl

          It is rather funny that the manly-man-ness has trouble getting a nice lady in bed unless they bribe her with millions of dollars they ripped off from other people. Of course I have to admit that I just learned with O.P.P. was all about. Yea I have been taking boxing lessons from Brooklyn brothers who are schooling me on both boxing and rap! Biggie Smalls lives forever! And course, Southern rap rules. We Ready, We Ready, We Ready for Ya’ll. OK it is football season.

        1. pgl

          Details matter from the clown that thinks the Egan issue which initially arose in 1983 was decided by the Supreme Court in 1978!

    1. Rick Stryker

      Macrod!*k,

      Isn’t this a buying opportunity for you? There are hundred dollar bills just lying around. Why don’t you pick them up?

      1. pgl

        Hey Ricky pooh – go down to Maro Lago where all those national security records are loosely stored. Putin will pay you millions for them but you have to accept rubles. Sorry dude – he is out of crypto.

  5. t

    More historical context, regression, and context. August 2022 was the 17th consecutive month of negative real wages movements. Median US real weekly wages [FRED] were $393 in 2Q2020. Most recent, $358.

    I’m placing all of you ideologues need on suicide watch.

    And for all this we thank Brandon.

    1. Macroduck

      Could you maybe edit that and try again! I’m pretty sure you haven’t tried to say anything sensible, but I can’t tell for sure.

    2. AndrewG

      You mean this?

      Employed full time: Median usual weekly real earnings: Wage and salary workers: 16 years and over
      https://fred.stlouisfed.org/series/LES1252881600Q

      The peak is due to composition, due to so many low-wage people losing their jobs. Note how sharp the peak is. The recovery was just as sharp, which is why there was a *decline* in real wages, which was fastest during Your Favorite President while he was recommending the Lysol cleanse and pressuring election officials to cough up fake votes.

      But no, smarty-pants, please do put us all on suicide watch.

      1. Ivan

        I think you are throwing pearls to a swine. This troll is using artificial intelligence (I doubt he has any of the real stuff) to sort through thousands of numbers to find one that “looks bad” (in his his puny uninformed mind) – then proudly displays it. He is neither capable nor interested in understanding the reality of the numbers he floats. A true Trump minion; just throw mud at the wall and hope something will stick.

        1. AndrewG

          Completely agree! But the link to the graph is devastating to the argument (which is why they didn’t post it in the first place) so I thought I’d be helpful by sharing it.

          BTW, pearls, not my thing. Pigs? Yes. They are cute.

    1. Moses Herzog

      “There are known knowns; there are things we know we know. We also know there are known unknowns; that is to say we know there are some things we do not know.”

      Then there are implicit assumptions. Such as “T. Shaw is a sullen sulky bore”. None of us here have to express that. It can be worked out from what T. Shaw has typed.

  6. Ivan

    The only tool the Fed has is rate hikes, yet those do not seem to have much effect on the type of inflation that we are currently suffering from. When inflation is not driven by consumers and businesses excessively borrowing and spending, why would we expect the level of interest rates to influence inflation?

    The price increases have already pushed people to not purchase things they don’t need – and they certainly would not take out loans to do any frivolous spending. However, the things people have to have such as housing, food, gas, vehicles for transportation etc. will be purchased even if it has to be done via loans (regardless of rates).

    Even though further rate increases predictably will have only very minor influence on reducing inflation by traditional pathways, they are likely to have substantial negative influence on the kind of investments (in additional production) that could reverse a lot of the supply constraint driven price increases. Further rate increases will likely hinder the attempts to reduce supply chain issues by building factories here in the US. Not good.

    1. AndrewG

      “When inflation is not driven by consumers and businesses excessively borrowing and spending, why would we expect the level of interest rates to influence inflation?”

      Energy aside, the economy is still too hot, meaning excessive borrowing and spending. See Paul Krugman’s comments yesterday.

      Also, even if it were just an energy shock, that can translate into inflation elsewhere if we’re in a hot-but-not-too-hot economy. It may be prudent to raise rates to slow aggregate demand. This is why I keep saying that the Fed board in Summer 2021 almost certainly wishes they could go back and start raising rates, slowly but early. Keeping demand away from capacity can help avoiding the mess we’re in. Raising rates slowly (as opposed to big hikes in rapid succession) helps avoid a Fed recession.

      Macroduck recently posted a link to a great Gita Gopinath speech at Jackson Hole. I don’t know if MD agrees with her, but I do – the “run the economy hot” strategy and the “wait, don’t react to energy shocks” strategy don’t seem to have been a good idea, at least in combination. She says: “It will be important to revisit the robustness of policy strategies—including of “running the economy hot” and “looking through” temporary supply shocks—in the light of more palpable upside inflation risks.”

      https://www.imf.org/en/News/Articles/2022/08/26/sp-gita-gopinath-remarks-at-the-jackson-hole-symposium

      BTW Macroduck, what was the other Jackson Hole speech you recommended? I forget and I never read it.

      1. Ivan

        I am looking at this from a mechanistic angle. How can increased interest rates have much effect on inflation if nobody is buying discretionary items on loans?

        One of the presumed mechanism, as I understand it, is that when it costs more to borrow money, then people will reduce their spending. Therefore, demand is reduced (and more in sink with availability), so prices will be forced down to be in better balance with the cost of production. But if the borrowing is not going to discretionary spending then that channel for using rates as a brake on inflation is useless. The main borrowing for consumers is mortgages and that has already been stopped drastically. Nobody who have a choice is buying a house today with mortgage rates doubled in the last 6 months. Further increases will have minimal effects on that particular channel of “borrow and spend”. Same goes for the second big “borrow and spend” item, cars. Prices and monthly payments have already gone so high that those who would be discouraged by interest rates have already been.

        So I have a hard time seeing how increased interest rates can decrease demand, at this time. However I see good reasons to think that increased interest rates can DECREASE SUPPLY. In order to increase supply businesses need to borrow and invest in increased capacity – that is harder to do if rates are high. So I would say there is a good mechanistic argument that when supply constraints drive inflation, then increased interest rates can INCREASE inflation (especially if overdone). I know it is the opposite under normal conditions, but current conditions are not normal.

        1. AndrewG

          I don’t think you’re thinking about this the right way. Investment (including housing, which is mostly a consumer story) is indeed very sensitive to credit, but in the short term it contributes more to output than aggregate supply. Aggregate supply also increases due to new technology. (And by the way, why is it that you think no one is buying discretionary items with loans? And why would “discretionary” be important here?)

          The *only* good argument I’ve seen attempting to change the expected sign on interest rates’ effect on inflation was by Stefanie Schmitt-Grohe, and it was a result of her exasperation at the post-GFC data, and within just a couple years it was quickly rendered moot.

  7. pgl

    https://fred.stlouisfed.org/series/CPIAUCSL

    Wait – CPI rose by a more 12 basis points in August after falling by 2 basis points in July. And everyone is freaking out about high inflation? I’m sorry but this FRED graph looks relatively flat.

    Of course famed lawyer Rick Stryker might put out his elaborate first derivatives to mansplain to us why this is hyperinflation!

  8. joseph

    So last week keyboard Rick Stryker (“I’m quite knowledgeable about legal matters — and cheese”) blessed us with his brilliant legal loophole saying that if you wrap your bag of cocaine in your personal tax return and the investigators see it, the cocaine evidence is “tainted” and must be thrown out.

    And then today he has another brilliant legal loophole. Unless the government can prove otherwise, the judge must assume by default that documents clearly marked Top Secret are declassified.

    And even more ridiculous, that a special master is qualified in any way to determine classification. If anything, that’s an issue for trial, not a special master.

    1. Rick Stryker

      Joseph,

      Nope. I’m saying that if the DOJ planned to make an obstruction charge and in the papers the FBI seized contain any attorney advice about a possible obstruction charge for not turning over all docs marked classified, then the fact that prosecutors saw that privileged info would taint the investigation. Or let’s say they found incriminating evidence on Jan6 in the docs but they also found legal advice to Trump on that issue in the raid, that would taint the Jan 6 investigation.

      I’m also not saying that a judge must assume that classified docs were declassified. I am saying that because they might be declassified, we need a neutral arbiter like a special master, to make that decision as to what is or isn’t, rather than defer to the judgment of the prosecutors to make those decisions. Prosecutors are not neutral. But the DOJ is taking the position that they should make all the decisions without any transparency or independent review and Trump just has to accept whatever they decide. That would be fine if they were in fact neutral but it’s clear from the affidavit that they are far from neutral.

  9. joseph

    Menzie Chinn: “Readings exceeds expectations, m/m 0.6% vs. 0.3% Bloomberg consensus (0.1% vs -0.1% core).”

    I’m having a problem parsing that sentence. Shouldn’t that be core is 0.6% vs 0.3% expected and headline is 0.1% vs -0.1% expected? Or am I missing something?

  10. Bruce Hall

    https://www.barrons.com/articles/august-cpi-inflation-troubling-cleveland-fed-data-51663107730
    Inflation is sticky—and even stickier than it looks.
    So, despite gasoline prices falling, we’re still stuck with higher inflation.

    (Reuters) – The average interest rate on the most popular U.S. home loan rose above 6% for the first time since 2008 and is now more than double the level it was one year ago, Mortgage Bankers Association (MBA) data showed on Wednesday.

    Rising mortgage rates are increasingly weighing on the interest-rate sensitive housing sector as the Federal Reserve pushes on with aggressively lifting borrowing costs in order to tame high inflation. The central bank has raised its benchmark overnight lending rate by 225 basis points since March.

    Expectations for Fed tightening have led to a surge in Treasury yields since the start of this year. The yield on the 10-year note acts as a benchmark for mortgage rates.

    Sure, inflation is a problem, but we have to focus on real issues like abortion and “gender affirming” surgery for members of the military and proportional (ethnic/racial/gender) representation on corporate boards. Besides, we’re going to fight inflation by having the government spend another $0.5 trillion on “anti-inflation” programs and have no impact on deficits whatsoever.
    https://www.cbo.gov/system/files/2022-08/Honorable%20Chuck%20Schumer.pdf

    1. pgl

      I hope you realize an extra $500 billion per decade is only $50 billion in spending per year. Or did you flunk preK reading and preK arithmetic? Of course repealing that massive Trump tax cuts for the rich would raise a lot more than $50 billion per year. You don’t know that either? Ph yea – you flunked freshman accounting too.

      1. Bruce Hall

        Yeah, another “fighting inflation” program with a trillion here and there and a half-trillion thrown in for good measure.

        … doublespeak….

        1. Barkley Rosser

          Bruce,

          You do understand that the IRA reduces the budget deficit, do you not? That is anti=-inflationary, although most neutral observers see the IRA as basically a net wash, neither inflationary or disinflationary.

          As for abortion, it is a serious issue. I have three daughters. Maybe you are not close to any women who might be affected by this, or maybe you are one of those religious fanatics who think it is murder, so undoing Roe v Wade is just great and about time, and all those women should just suck it up. For many, it is in fact a life and death issue. Sorry, but inflation is not a life and death issue.

          1. Moses Herzog

            I think if “you” (you meant in a general/broad sense here) have ever been close to women in your life, mainly meaning in an emotional/relations sense~~it’s much easier to put “yourself” in their shoes, “develop” some empathy, and understand abortion is not a “black and white” issue. Which, to be clear, I think Barkley, you and I maybe don’t “exact” agree on this, but pretty closely agree.

            I don’t think that 998 time out of 1,000, even without “conservatives” or church figures waving the naughty finger at women considering getting an abortion, this is anything other than an excruciatingly hard, painful decision for women. I think most males would do better, to keep this thought in mind.

            My Ex-GF in China, told me how her mother was “this close” to having the Chinese government force her to abort My Ex-GF’s younger brother. A totally different problem, but still instructive in many ways. My girlfriend was fascinating/special in many ways (and I don’t mean in the spoiled/”guanxi” way). But for a mainland Chinese girl her age, it was very unusual for her to have a biological brother.

    2. pgl

      “we have to focus on real issues like abortion and “gender affirming” surgery for members of the military and proportional (ethnic/racial/gender) representation on corporate boards.”

      I get Brucie thinks women should stay bare foot and pregnant fulfilling their duties as baby machines and cooking his meals for him. But if he really wants to ban brave transgenders for serving in the military – is he going to offer up his two sons to die on the battle field? After all we know Brucie is too cowardly to serve the nation. MAGA.

      1. Bruce Hall

        piggly, did you serve? I spent 4-years with the 321st Strategic Missile Wing as a combat crew commander. What did you do? But you’re more worried about pronouns than protagonists. So STFU.

        CV?

        1. Barkley Rosser

          Bruce,

          Oh, and this provides you with expertise on economics issues or how abortion is not a serious matter? Were there any women under your command, sir?

    3. pgl

      And of course Brucie does not want any blacks or Hispanics or females in upper management. After all – his white male buddies did a great job of bankrupting their company all on their own! MAGA!

    4. AndrewG

      “real issues like abortion and “gender affirming” surgery for members of the military and proportional (ethnic/racial/gender) representation on corporate boards”

      Gee, I wonder why anyone thinks you’re a bigot.

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