Commentary The Federal Reserve’s balance sheet reached its all-time high in May 2022. Since then, it was supposed to drop at a steady pace and shed $3 trillion by 2024. The normalization of monetary policy was built on the idea of a soft landing for the economy. However, the Fed may be killing the private…
Crowding-Out: The Fed May Be Killing the Private Sector to Save Government
Why Can’t Inflation Escape the Fate of the Mid-1970s?
Commentary As the first round of the banking crisis fades, the market is refocusing on inflation and interest rate hike. Although U.S. inflation did come down, whether measured by consumer price index (CPI) or personal consumption expenditure (PCE), the year-over-year (YoY) downtrend was slow, and the month-over-month (MoM) decline was not persistent. For other advanced…
Producer Prices Rose in January, Signaling Continued Inflation
U.S. Wholesale prices rose 0.7 percent over the same month last year, seasonally adjusted, the largest increase since March 2022. Experts see the increase as an indication that the inflation hampering the U.S. economy for more than 18 months will continue into 2023. The Bureau of Labor Statistics (BLS) released the Producer Price Index (PPI)…
Inflationary Policies Are Destroying Wages
Commentary When we read about the U.S. economy, we often get wage growth as a signal of a strong labor market. It’s hardly a strong market when the labor participation rate and the employment-to-population ratio are both below the February 2020 levels and have been stagnant for months. Additionally, the headline figure of 4.6 percent…
The Sky-High Gas Prices Biden Has Wanted All Along
Commentary Joe Biden is a real pain in the pump. Yet, you’ve probably heard President Biden say it seemingly 100 times: “I’m doing everything I can to bring down gas prices.” Sure you are, Joe. When you came into office, the prices at the pump averaged $2.49 a gallon and now, we are at $5.01…
Inflation Will Be More Persistent Than Expected
Commentary The most important economic question to date is still the old one: whether inflation has peaked or still has some months to go. The U.S. official tone on inflation has always been on the supply side such as the logistic blockage due to Covid-19 lockdowns or the Ukraine-Russian war. The demand side of ridiculous…
Over a Third of Americans Making $250,000 Are Currently Living Paycheck to Paycheck: Surveys
About 36 percent of Americans earning at least $250,000 a year claim that they are living paycheck to paycheck, a sign on how rising inflation is hitting households at all ends of the spectrum throughout the country, according to two surveys quoted by Bloomberg. Individuals earning $250,000, who are among the top 5 percent of income…
Inflation Striking Middle-Class Consumers With Higher Prices For Groceries
Middle-class consumers in the United States have begun to overtake low-income shoppers as the financial group most affected by rising grocery prices for the first time since the pandemic, according to a May 31 report by Numerator, a consumer data analytical service. The Numerator report utilized purchase data gathered by its mobile-receipt app, “Receipt Hog.” Lower-income Americans making…
Projecting Inflation Peak and Rate Hike Path
Commentary The US personal consumption expenditure (PCE) based inflation released last week eased a bit from 6.6% in March to 6.3% in April. Thanks to the higher base in April 2021 than March 2021, larger denominator makes year-over-year growth lower. Analysts claim that inflation had peaked. But this number is subject to base effect and…
The Fed Made a Serious Mistake
Commentary The latest released U.S. inflation was expected to slow down. The rationale behind such a bet by the economists might be the high base of a year ago: March 2021 was at 2.6 percent, and April 2021 was 4.2 percent. If only in this sense, a slower number for last month may not mean…
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