Inflation Appears to have Peaked

[jpn]

On Wednesday the five-year breakeven inflation rate fell to 2.48 percent. (The rate is the spread between ordinary interest rates and the interest rates on bonds that are protected against rising prices; it is therefore an implicit forecast of future inflation.)

The wholesale price of gasoline has fallen about 80 cents a gallon since its peak a month ago.

The cost of rents are down.

Shipping costs are down.

Mortgage rates have soared, which will reduce overall spending.

On the other hand, employment remains strong. (You can't talk about economics without an, "on the other hand...")

 

[Callen]

Would be nice but time will tell. I did hear on the business channel yesterday that prices are down on some major indicators, oil, lumber, used cars and wheat were a few they mentioned.

 

[reinaert]

Purely anecdotal, but I travel a large territory, and my fuel bill is noticably lower. Haven't seen any noteworthy price drops for equip. or supply, but not sure they do recover, or how far behind that lags.

 

[ttwtt78640]

On Wednesday the five-year breakeven inflation rate fell to 2.48 percent. (The rate is the spread between ordinary interest rates and the interest rates on bonds that are protected against rising prices; it is therefore an implicit forecast of future inflation.)

The wholesale price of gasoline has fallen about 80 cents a gallon since its peak a month ago.

The cost of rents are down.

Shipping costs are down.

Mortgage rates have soared, which will reduce overall spending.

Yep, at least it’s a dip. The question is: what caused it? If it’s a drop in consumer spending, because folks simply can’t afford the current prices, then that may not be good news.

 

[EMNofSeattle]

On Wednesday the five-year breakeven inflation rate fell to 2.48 percent. (The rate is the spread between ordinary interest rates and the interest rates on bonds that are protected against rising prices; it is therefore an implicit forecast of future inflation.)

The wholesale price of gasoline has fallen about 80 cents a gallon since its peak a month ago.

The cost of rents are down.

Shipping costs are down.

Mortgage rates have soared, which will reduce overall spending.

On the other hand, employment remains strong. (You can't talk about economics without an, "on the other hand...")

Your source does not say that rents are down. It says that the rate of increase in already unaffordable rents is down.

 

[Mycroft]

On Wednesday the five-year breakeven inflation rate fell to 2.48 percent. (The rate is the spread between ordinary interest rates and the interest rates on bonds that are protected against rising prices; it is therefore an implicit forecast of future inflation.)

The wholesale price of gasoline has fallen about 80 cents a gallon since its peak a month ago.

The cost of rents are down.

Shipping costs are down.

Mortgage rates have soared, which will reduce overall spending.

On the other hand, employment remains strong. (You can't talk about economics without an, "on the other hand...")

Inflation if falling because consumer demand is falling...and that ushers in another set of problems such as businesses cutting back on production/services and laying people off.

The result is negative GDP.

 

[reinaert]

Inflation if falling because consumer demand is falling...and that ushers in another set of problems such as businesses cutting back on production/services and laying people off.

The result is negative GDP.

It was steady in May. You have data that shows a shift for June?

 

[ttwtt78640]

Your source does not say that rents are down. It says that the rate of increase in already unaffordable rents is down.

Exactly - a reduction in the rate of increase of rents is not a reduction in the cost of rent.

 

[jpn]

Inflation if falling because consumer demand is falling...and that ushers in another set of problems such as businesses cutting back on production/services and laying people off.
The result is negative GDP.

U.S. Job Growth Remains Solid in June: Live Updates​

The hotter-than-expected labor market eases worries of an economic slowdown but complicates efforts to fight inflation.​

An economy is a complex thing.

 

[jpn]

Exactly - a reduction in the rate of increase of rents is not a reduction in the cost of rent.

The point of the post is actually that the runaway inflation narrative has collapsed.

 

[Lucky 1]

Would be nice but time will tell. I did hear on the business channel yesterday that prices are down on some major indicators, oil, lumber, used cars and wheat were a few they mentioned.

Yep....That's because we are heading into a recession with stagflation likely to follow........frankly.....we're in deep shit folk!

 

[aociswundumho]

The point of the post is actually that the runaway inflation narrative has collapsed.

Looking at the nominal prices of a few goods doesn't tell you anything, in fact it demonstrates that you don't understand what inflation actually is.

 

[Callen]

Inflation if falling because consumer demand is falling...and that ushers in another set of problems such as businesses cutting back on production/services and laying people off.

The result is negative GDP.

Yep....That's because we are heading into a recession with stagflation likely to follow........frankly.....we're in deep shit folk!

Guess you missed today's jobs report. The number blew estimates out of the water. Job growth is still strong which may not be good for inflation but it sure as heck does not point to a recession.

 

[Mycroft]

It was steady in May. You have data that shows a shift for June?

About oil.

The price of U.S. crude oil was hovering around $98 per barrel on Wednesday afternoon, down from about $108 late last week. Brent crude fell to about $101 per barrel, down from about $111 late last week.

[…] “We’re on the cusp of seeing more savings,” said Patrick De Haan, head of petroleum analysis at gas price tracking site GasBuddy. “I’m trying to be a little bit optimistic here that this relief could make its entire way to the pump in the weeks ahead.”

[…] “The average price per gallon could fall 40 to 65 cents over the coming weeks,” he said, adding that the drop could be over a three- to six-week period.

“Stations are getting lower prices already,” he added. “Prices could go down a penny or two every day or two for the next six weeks as long as nothing changes.”

Experts say the decline is a double-edged sword, since the cheaper price isn’t due to any real changes on the supply side but rather to consumers scaling back their expenses and pulling down the expectation of demand. (read more)​

https://thehill.com/policy/3547968-us-on-cusp-of-falling-gas-prices/

About worldwide and US manufacturing.

Factories around the world are reporting weakening demand for their products, a sign that the consumer-goods boom that kick-started the postpandemic economic recovery could turn into a bust as surging prices and interest rates erode spending power.

Surveys of manufacturers released Friday told a similar story whether the factory was in South Korea, Italy or the U.S.: Output is falling or is rising at a slower pace, driven by declines in new orders, and particularly those from overseas buyers.

When prices began to rise rapidly early last year, central bankers thought the surge would be short-lived because supply would increase to match higher demand. As higher inflation persisted, they stopped waiting and began raising borrowing costs to reduce demand.

Now it seems higher prices themselves appear to be having the same effect, weighing on purchases even in places such as the eurozone, where interest rates have yet to rise.

“Demand is now weakening as firms report customers to be growing more cautious in relation to spending due to rising prices and the uncertain economic outlook,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.

U.S. factory activity grew in June at the slowest pace in two years, according to the Institute for Supply Management’s measure of U.S. manufacturing activity known as the purchasing managers index.

New orders fell for the first time in two years as customer demand weakened. Employment in the manufacturing sector also fell for the second straight month, the survey found.

A separate measure of U.S. manufacturing PMIs produced by S&P Global indicated that output stagnated in June as sales fell for the first time since May 2020. Expectations for future output dropped to the lowest level since October 2020. (read more)​

More on that here: https://theconservativetreehouse.co...dmitting-demand-side-economy-is-in-free-fall/

 

[reinaert]

About oil.

The price of U.S. crude oil was hovering around $98 per barrel on Wednesday afternoon, down from about $108 late last week. Brent crude fell to about $101 per barrel, down from about $111 late last week. ​

​

[…] “We’re on the cusp of seeing more savings,” said Patrick De Haan, head of petroleum analysis at gas price tracking site GasBuddy. “I’m trying to be a little bit optimistic here that this relief could make its entire way to the pump in the weeks ahead.” ​

​

[…] “The average price per gallon could fall 40 to 65 cents over the coming weeks,” he said, adding that the drop could be over a three- to six-week period. ​

​

“Stations are getting lower prices already,” he added. “Prices could go down a penny or two every day or two for the next six weeks as long as nothing changes.” ​

​

Experts say the decline is a double-edged sword, since the cheaper price isn’t due to any real changes on the supply side but rather to consumers scaling back their expenses and pulling down the expectation of demand. (read more)​

https://thehill.com/policy/3547968-us-on-cusp-of-falling-gas-prices/

About worldwide and US manufacturing.

Factories around the world are reporting weakening demand for their products, a sign that the consumer-goods boom that kick-started the postpandemic economic recovery could turn into a bust as surging prices and interest rates erode spending power.​

​

Surveys of manufacturers released Friday told a similar story whether the factory was in South Korea, Italy or the U.S.: Output is falling or is rising at a slower pace, driven by declines in new orders, and particularly those from overseas buyers.​

​

When prices began to rise rapidly early last year, central bankers thought the surge would be short-lived because supply would increase to match higher demand. As higher inflation persisted, they stopped waiting and began raising borrowing costs to reduce demand.​

​

Now it seems higher prices themselves appear to be having the same effect, weighing on purchases even in places such as the eurozone, where interest rates have yet to rise.​

​

“Demand is now weakening as firms report customers to be growing more cautious in relation to spending due to rising prices and the uncertain economic outlook,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.​

​

U.S. factory activity grew in June at the slowest pace in two years, according to the Institute for Supply Management’s measure of U.S. manufacturing activity known as the purchasing managers index.​

​

New orders fell for the first time in two years as customer demand weakened. Employment in the manufacturing sector also fell for the second straight month, the survey found.​

​

A separate measure of U.S. manufacturing PMIs produced by S&P Global indicated that output stagnated in June as sales fell for the first time since May 2020. Expectations for future output dropped to the lowest level since October 2020. (read more)​

More on that here: https://theconservativetreehouse.co...dmitting-demand-side-economy-is-in-free-fall/

Why just oil? I'm sitting on the Bloomberg article that shows retail demand steady for May, and asked for indication that this has shifted, and you come back with factory and oil? Is there a reason you pivoted to these?

The Bloomburg piece, by the way:

US Retail Sales Jump in Sign Robust Consumer Spending Continues

US retail sales grew at a solid pace in April, reflecting broad-based gains and suggesting demand for merchandise remains resilient despite rampant inflation.

www.bloomberg.com

 

[Mycroft]

Why just oil? I'm sitting on the Bloomberg article that shows retail demand steady for May, and asked for indication that this has shifted, and you come back with factory and oil? Is there a reason you pivoted to these?

The Bloomburg piece, by the way:

US Retail Sales Jump in Sign Robust Consumer Spending Continues

US retail sales grew at a solid pace in April, reflecting broad-based gains and suggesting demand for merchandise remains resilient despite rampant inflation.

www.bloomberg.com

May? Old news. We have June numbers out now.

 

[Lord Tammerlain]

Yep....That's because we are heading into a recession with stagflation likely to follow........frankly.....we're in deep shit folk!

Stagflation is dependent on how bad the recession is. A deep recession like 1982 combined with high interest rates will drop the inflation rate.

 

[Checkerboard Strangler]

On Wednesday the five-year breakeven inflation rate fell to 2.48 percent. (The rate is the spread between ordinary interest rates and the interest rates on bonds that are protected against rising prices; it is therefore an implicit forecast of future inflation.)

The wholesale price of gasoline has fallen about 80 cents a gallon since its peak a month ago.

The cost of rents are down.

Shipping costs are down.

Mortgage rates have soared, which will reduce overall spending.

On the other hand, employment remains strong. (You can't talk about economics without an, "on the other hand...")

 

[Integrityrespec]

Would be nice but time will tell. I did hear on the business channel yesterday that prices are down on some major indicators, oil, lumber, used cars and wheat were a few they mentioned.

Some of that is due to the mortgage rates rising, housing sales and starts are beginning to slow slightly. As the next 6 months show the numerous increase by the FED those will likely become even fewer in number. Inflation is long from gone away and if it dead stopped now it's still way too high for the average family. It's a same that the democrats are planning a 1.5 trillion dollar BBB bill. Schumer has been in meetings with Manchin in hopes of getting his support. Government spending will not lower inflation and at some point the bill comes due and we will be back into the same problem again. Housing is almost double what it was 3 years ago and despite the claims of so many available jobs, (11 million) we are still 2.5 million jobs fewer than feb 2020. The markets are still struggling and there are few buy recommendations from advisers because of the volitility of the market and the expected further FED increases.
What we need is a change across the government and I hope it's coming in November.

 

[HangLow]

Why just oil? I'm sitting on the Bloomberg article that shows retail demand steady for May, and asked for indication that this has shifted, and you come back with factory and oil? Is there a reason you pivoted to these?

The Bloomburg piece, by the way:

US Retail Sales Jump in Sign Robust Consumer Spending Continues

US retail sales grew at a solid pace in April, reflecting broad-based gains and suggesting demand for merchandise remains resilient despite rampant inflation.

www.bloomberg.com

​

 

[Kushinator]

About oil.

The price of U.S. crude oil was hovering around $98 per barrel on Wednesday afternoon, down from about $108 late last week. Brent crude fell to about $101 per barrel, down from about $111 late last week. ​

​

[…] “We’re on the cusp of seeing more savings,” said Patrick De Haan, head of petroleum analysis at gas price tracking site GasBuddy. “I’m trying to be a little bit optimistic here that this relief could make its entire way to the pump in the weeks ahead.” ​

​

[…] “The average price per gallon could fall 40 to 65 cents over the coming weeks,” he said, adding that the drop could be over a three- to six-week period. ​

​

“Stations are getting lower prices already,” he added. “Prices could go down a penny or two every day or two for the next six weeks as long as nothing changes.” ​

​

Experts say the decline is a double-edged sword, since the cheaper price isn’t due to any real changes on the supply side but rather to consumers scaling back their expenses and pulling down the expectation of demand. (read more)​

https://thehill.com/policy/3547968-us-on-cusp-of-falling-gas-prices/

About worldwide and US manufacturing.

Factories around the world are reporting weakening demand for their products, a sign that the consumer-goods boom that kick-started the postpandemic economic recovery could turn into a bust as surging prices and interest rates erode spending power.​

​

Surveys of manufacturers released Friday told a similar story whether the factory was in South Korea, Italy or the U.S.: Output is falling or is rising at a slower pace, driven by declines in new orders, and particularly those from overseas buyers.​

​

When prices began to rise rapidly early last year, central bankers thought the surge would be short-lived because supply would increase to match higher demand. As higher inflation persisted, they stopped waiting and began raising borrowing costs to reduce demand.​

​

Now it seems higher prices themselves appear to be having the same effect, weighing on purchases even in places such as the eurozone, where interest rates have yet to rise.​

​

“Demand is now weakening as firms report customers to be growing more cautious in relation to spending due to rising prices and the uncertain economic outlook,” said Chris Williamson, chief business economist at S&P Global Market Intelligence.​

​

U.S. factory activity grew in June at the slowest pace in two years, according to the Institute for Supply Management’s measure of U.S. manufacturing activity known as the purchasing managers index.​

​

New orders fell for the first time in two years as customer demand weakened. Employment in the manufacturing sector also fell for the second straight month, the survey found.​

​

A separate measure of U.S. manufacturing PMIs produced by S&P Global indicated that output stagnated in June as sales fell for the first time since May 2020. Expectations for future output dropped to the lowest level since October 2020. (read more)​

More on that here: https://theconservativetreehouse.co...dmitting-demand-side-economy-is-in-free-fall/

What a joke of a post.

 

[Mycroft]

What a joke of a post.

If you can't explain why, you are wasting everyone's time.

You are dismissed.

 

[What if...?]

Inflation if falling because consumer demand is falling...and that ushers in another set of problems such as businesses cutting back on production/services and laying people off.

The result is negative GDP.

There are three things that I would like to buy but I can’t because of the chip shortage.

 

[Kushinator]

If you can't explain why, you are wasting everyone's time.

You are dismissed.

I don't have to explain why linking to a trash site like conservative treehouse is a joke. You consume propaganda and then try to push that nonsense here as fact.

 

[OrphanSlug]

We have not experienced enough of a decline to point to the correct indicators on why inflation appears to have peaked. Early evidence points to interest rates pulling back on consumers willing to buy on credit, hence throttling demand. But even that seems too fast to be definitive as the overall reason.