https://www.bls.gov/news.release/cpi.nr0.htm M/M O.1 meh definitely expected a negative number. Y/Y decelerating from 8.7 to 8.5 Food is still high at 0.8 but that’s the lowest increase Dec 2021 The consensus is the Fed will use this report to raise another 75 bps. Still a mistake. If we are moving 0.1 m/m that’s annualized 1.2, with 2 months of deceleration.
The FED is going to keep pushing probably and crash this economy that is already seeing signs of slow growth. In my little neck of the world customers have slowed down purchasing after the great inventory load up in the spring and summer at the highest prices we have seen. Having inventory after dire shortages was hte primary objective over price. Now that inflation has finally cut down buying and inventories are backing up, things are slowing down as we head into the end of the year. Form a logsitics standpoint freight rates have come down 50% on many routes from Asia and space is opening up. It takes time for these costs to trickle through, especially as people are sitting on expensive inventory and have to cut pricing to move it to make room for cheaper inventory. COmbinations means lower pricing. If the FED and politicians just stay out of the way the ship will right itself all on its own within 2 quarters...
That's not "decelerating" that's a "reduction" according to the regime. Time for another PLAN, spend some more tax dollars. Send Ukraine another $100 billion, do something! Fed - raise rates, raise some more! Economy tanks. Lower rates. What a plan.
It was interesting to see new cars and medical services kicking up. There was a lot of focus on excess inventories and used cars, at least from my perspective, they sort of snuck in. The truth is core cpi was actually very high 0.6. Renters are simply getting crushed. Now is not a good time to not have long term housing.
I think there are still sectors with decent demand despite inventories creeping up but the mismatch of demand to supply that caused huge price spike sin 2021 is waning. It will take some time depending on the sector. I think microchips from Asia are still behind the demand curve withr educed supply so anything requiring chips, like new cars, is still facing a backlog to some extent. Consumer goods though must be backing up with a surge in buying to get ready for the Xmas holiday but lately inflation really kicking people and changing buying habits... Go to Trader Joes or Wegmans and see what two bags of groceries cost now. Wages and earnings are still really strong so many are still spending but it is coming in slowly...takes a lot of time. I think Xmas season will be really good, not great. But good enough to keep things afloat. I say let the cracks keep coming in and prices adjust naturally....takes time but it is already starting.
The housing costs haven't really been factored in yet. OER usually takes 6-9 months to show up in the CPI. That will keep the numbers up. Rents in my area have gone parabolic. A 1950's 3 bedroom has gone from $1400 to $1800 since Jan. I think the thing the market really has wrong is how long this will take and the necessary pain it will require. How do we go from 8%+ to 2-4% in a year and NOT have a recession?
I still think we are in a recession masked by a labor shortage. Housing is an over the horizon issue that will continue to persist because we have a structural shortage. I read somewhere we have 1000 square feet of parking for every car but 800 square feet of housing for every person.