Yeah, the Economy is Great

The new inflation numbers are in, and it is f%$#ing ugly.

I think that Trump's pet Federal Reserve Chairman won't be able to hold rates steady at their next meeting later this month.

With inflation rising faster than predicted, according to new data from the Trump administration, a rate hike at the Federal Reserve’s next meeting is beginning to seem like a fait accompli in some quarters.

Futures showed investors priced in a rate hike next week as a near certainty following the release by the Bureau of Labor Statistics, and put a high likelihood on a second increase before the end of the year.

………

Now attention turns to Fed Chair Kevin Warsh, who was asked during confirmation hearings whether he would be a “sock puppet” of the man who gave him his job. President Donald Trump ordered up a criminal investigation into Warsh’s predecessor, a shocking move that was widely seen as more about Jerome Powell’s reluctance to cut interest rates then a Fed building revamp. Now, Powell’s successor faces intense pressure to vote to raise rates at next week’s policy meeting.  

In terms of the actual inflation numbers, it's not good.

The month-to-month all-items CPI bounced back, jumping by 0.40% in August seasonally adjusted (+4.9% annualized, blue line in the chart), after a low positive reading in July and the steep negative reading in June when energy prices had plunged.

Only part of it was driven by the jump in gasoline prices, which mostly occurred in late August and September, so some of it will show up in the September CPI. A big driver was the “core services” CPI, which jumped by 0.33% (+4.0% annualized). Core services account for nearly two-thirds of the all-items CPI and include housing, healthcare, insurance, etc.

On a year-over-year basis, the all-items CPI rose by 3.4% in August, roughly the same pace as in July. Since the beginning of 2020, it has surged by nearly 30%. 

How's that Iran war going, Donnie?