Michigan 1 year expectations at 4.3% vs 3.3% Bloomberg consensus.
Figure 1: Year-on-Year CPI inflation (bold black), one year ahead Michigan (red), NY Fed (green), all in %. Source: BLS, U.Michigan and NY Fed.
A one percentage point increase in y/y expected inflation is over two standard deviations from expected.
In add, the 5-year inflation expectations index came in at 3.3%, matching early January and the highest reading since early June, 2022. Good thing the rapist-in-chief backed down on tariffs for Canada and Mexico. Too bad he now says he’ll impose reciprocal tariffs on everybody and eveything.
For those who missed it, trump made nih drastically reduce indirect cost for university research. It is going to crush medical research in this country. Now the true impacts wont be felt for another decade, when folks like rick stryker, bruce hall and corev will be long dead. But the rest of the country will suffer from a lack of medical progress that trump leaves us, long after he is dead as well.
If you notice, trump and musk are not reducing the payouts companies like spacex can receive from the government. Apparently those can remain very profitable ventures. Trump has now weaponized us government spending.
Medicare will be throttled by the end of the year, along with social security. Trump wants a revolution and does not care who he hurts.
Republicans, when legislating the Medicare Part D drug benefit, exactly forbade Medicare from negotiating drug prices. Obama care doesn’t have a public option, preventing government from competing with private insurers on price; this was partly an effort to garner Republican support for the bill, but failed to gain a single one.
As a result, government and the public pay billions more than necessary for health care. Medical knowledge is a public good, with research done by public and non-profit institutions, so let’s stint on that.
Off topic – federal budget negotiations:
https://thehill.com/business/budget/5133807-trump-funding-deadline-tension/
It’s looking increasingly like a fiscal 2025 budget will cannot be passed. Republicans cannot agree among themselves and Democrats won’t help pass a bill. As a result, a continuing budget resolution, with spending levels the same as in FY 2024, may be the only path to funding government operations.
Menzie recent noted that First Trust’s forecast is for a recession this year, the result of budget cuts:
https://econbrowser.com/archives/2025/01/forecasts-wsj-vs-cbo-vs-biden-troika-vs-imf
That forecast always seemed poorly founded, more so now. The felon-in-chief’s latest tariff proposal – reciprocal tariffs – could save the First Trust forecast, but probably not. If those tariffs are actually imposed, and are widespread enough, they will cause a small deficit reduction. Small fiscal swings don’t generally cause recessions.
By the way, under current law, fiscal policy will go from a 0.3% add to GDP in calendar Q4 (first quarter of fiscal 2025) to a roughly 0.5% drag in Q1, less in subsequent quarters – unlikely by itself to induce a recession:
https://www.brookings.edu/articles/hutchins-center-fiscal-impact-measure/
Macroduck: “Obama care doesn’t have a public option, preventing government from competing with private insurers on price; this was partly an effort to garner Republican support for the bill, but failed to gain a single one.”
No it wasn’t an effort to garner Republican support. The public option was in both the House and Senate bills all along.
The reason Obamacare doesn’t have a public option is due to a single person, Joe Lieberman. The same Lieberman who subsequently quit the Democratic Party and went on the campaign trail for John McCain and Sarah Freakin’ Palin. Lieberman was the 60th vote needed in the Senate and his last minute surprise demand was no public option. Republicans had nothing to do with it. It wasn’t taken out to garner Republicans. It was cut out on the very last day before the vote in a surprise reversal by Lieberman. The public option was in the Senate bill until that moment.
It’s also worth noting that Pelosi had already passed their version of Obamacare in the House and it included the public option. It’s posted on the House web site and you can read it yourself. It had a public option. But because the Senate passed a different version without the public option, the House had to conform to the Senate’s version on reconciliation or there would be no Obamacare.
We came very close to having a public option — it passed in the House but was one vote short in the Senate due to Lieberman.
Regardless, it was Pelosi’s most monumental achievement. We wouldn’t have Obamacare without her.
Sorry, Lieberman campaigned for McCain and Palin previous to the Obamacare vote, but still caucused with the Democrats. He was their 60th vote in the Senate after Kennedy died.