Economic News
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“Up 2 down 1 is not a bad ratio or up 10 down 5 … as we go through the queue and settle with these countries who are going to bring us their best offers … we will end up in a place of great certainty on tariffs [cites drop in oil and good Treasury auction] so I don’t see anything unusual today”
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Is Powell's magic number 2% ? I forget
superrific
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No. The only reason it would is that the market would be expecting the Fed to cut rates. Obviously the Fed has a lot on its plate. I don't think there's much point to reading into a single CPI report. Inflation has been running hot for four months and this is the first respite. Let's see if it holds up.
Who puts together the information for the CPI? For that matter, who compiles the stats for unemployment? Any governmental statistic from this administration should be viewed with a high degree of skepticism. If they will lie about almost anything, including January 6, why wouldn't they lie about CPI, unemployment, and other economic measures?
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www.wsj.com
“… Prices excluding food and energy categories—the so-called core measure economists watch in an effort to better capture inflation’s underlying trend—rose 2.8%, below forecasts for a 3% increase. That was the smallest increase in the core measure since March 2021.
Normally, a slowdown in year-over-year price increases would be welcome news. But this time, it will be hard for investors, policymakers and businesses to read too much into the March data.
… Economists expect tariffs will dent economic growth and raise prices for consumers and businesses in the months ahead, teeing up a new battle for the Federal Reserve. The central bank has spent the past few years struggling to bring inflation down to its 2% target after prices spiked during the Covid-19 pandemic.
“A majority of participants noted the potential for inflationary effects arising from various factors to be more persistent than they projected,” according to minutes of the Fed’s March 18-19 policy meeting, published Wednesday.
The Fed next meets May 6-7. …”
superrific
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My understanding is that it would be really hard for them to rig the process. Paul Krugman is pretty fucking skeptical and cynical, and he says there's nothing to worry about in this regard.
One reason is that it could be quite obvious if they were trying to rig it, because there are other price gauges published by private companies. If the MIT Billion Price Index were to suddenly diverge from the CPI, it would raise some eyebrows.
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$DXY was below 100 there for a minute …
Not clear what is driving it … maybe just retrenchment against erratic American policy.
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Headline PPI decreased 0.4% in March, the first drop in 17 months, bringing the 12-month change down to 2.7%. A gauge of core prices, which excludes food and energy, rose 0.1%. Both were cooler than economists had expected. It followed a similarly cooler-than-expected reading on consumer-price inflation released Thursday.
lawtig02
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Just to point out the obvious, all of these numbers show the strength of the economy Trump inherited from Biden. They do not yet show the results of Trump's unnecessary and inexplicable fuckery with said economy.
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US consumer sentiment plummets to second-lowest level on records going back to 1952
“Americans are rarely this pessimistic about the economy.
Consumer sentiment plunged 11% this month to a preliminary reading of 50.8, the University of Michigan said in its latest survey released Friday, the second-lowest reading on records going back to 1952. April’s reading was lower than anything seen during the Great Recession.
President Donald Trump’s volatile trade war, which threatens higher inflation, has significantly weighed on Americans’ moods these past few months. That malaise worsened leading up to Trump’s announcement last week of sweeping tariffs, according to the survey.
“This decline was, like the last month’s, pervasive and unanimous across age, income, education, geographic region, and political affiliation,” Joanne Hsu, the survey’s director, said in a release. …”
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I think Trump is causing all kinds of unjustified self-inflicted wounds on the U.S. economy short term and like long term, BUT the economy is nowhere near the catastrophic state of the Great Recession. Inflation is reasonable and employment rates are strong …
I said it under Biden and it remains true under Trump a lot more than I actually expected, Americans seem to have lost sight of what a strong economy looks like. I get that when government officials predict “pain” and a need to “take your medicine” in the short term that was going to drive down sentiment and certainly the rational and erratic tariff nonsense that Trump has launched is scrambling the markets, which is in turn understandably freaking out Americans.
It really is shocking political malpractice by Trump, no matter how sure he is that he is always right (as he frequently insists everyone tells him), that he could have basked in an uptick in consumer confidence without tinkering with the economy at all just by replacing Biden. People had blamed Biden for real and perceived economic issues and were ready to give Trump a honeymoon. Businesses assumed his trade war rhetoric was mostly bluster and were ready for a deregulatory splurge. All Trump had to do was …. nothing! Just sit tight and take credit for improving trends and blame Biden for any negative blips.
Instead, he chose to radically remake the world trade system at the same time he was radically dismantling government at the same time he was radically reorienting foreign policy to invent disputes with neighbors and allies and promise 19th century Manifest Destiny expansionist plans out of the blue.
The big deal he made about Liberation Day means he owns all of it now. Just shockingly stupid from a purely political perspective.
heelinhell
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I really really need for Calla and HY to come here and reassure me that all is well...
superrific
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The economy was strong in advance of the Great Recession until the bottom fell out . . .
As I explained on the other thread, an increase in interest rates here is an almost inevitable result of more borrowing (per House/Senate budget) while cutting off our biggest creditor (because in absence of trade, China no longer has dollars to invest). And an increase in interest rates here will cause recession, in part because interest rates typically weigh on growth and in part because more domestic investment will have to go to Treasury debt.
So what we're seeing is the start, not the end game. That there are mass layoffs in the government and retaliatory tariffs and boycotts is the short-term factor. The medium-and-long-term effects are going to be demanded by the market in one way or the other, because it must necessarily happen as a matter of arithmetic (note the bit about arithmetic is a little bit oversimplifying but for present purposes it's fine).
The Fed is not magic. It controls interest rates by buying and selling bonds. To lower rates, it buys bonds. But if the market wants rates at 5% and the Fed wants them at 3%, the amount of money it would take to buy enough bonds to move rates there . . . well, it's more money than we have.
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“… Friday also began on a down note, after the University of Michigan’s closely watched gauge of consumer sentiment nosedived from last month to register one of the weakest readings of the past decade on concerns about trade, employment and inflation.
But the declines didn’t last long. Solid first-quarter earnings from some of the country’s largest financial firms, including Morgan Stanley, JPMorgan Chase and BlackRock, offered a tailwind even as their executives warned that Trump’s trade restrictions put the economy at risk. …”