July CPI numbers released

Not sure about that. If prices go up year-over-year 5% because of tariffs, once the first year has passed we'd see a drop in year-over-year inflation. But prices for everything would still be 5% higher than they were pre-tariffs. And the economy would still be slower because of the tariffs.

 

Tariffs continue to add costs to doing business as long as they are in place. I think what you mean is tariffs won’t “compound” year over year, it’s a one time bump. But as long as the tariff exists it adds cost on top of whatever the underlying cost of doing business would be without the tariff. For businesses choosing to “eat” the tariff cost, perhaps the “step up” to consumers won’t be so neat as a one time step - it’ll just be more incremental. Eventually prices rise to meet the tariff.

 

If you are tariffing 30%, that means there’s a lot more runway prices need to rise to meet the tariff than just 5%. I think that’s what you are missing. Price hikes wouldn’t just stop, even if the economy slows. The tariff would be a constant pressure until domestic production comes in at the new equilibrium. Isn’t that why stagflation is such a concern?

 

Yes, I know tariffs cause inflation. But in an economy where there is 0% inflation, and then tariffs cause a permanent price increase of 10%, year-over-year inflation will be 10% for a year. Then after a year inflation will return to 0%. That would be a case of transitory inflation because the inflation rate didn't stay high for an extended period of time.

 

Oklahoma, I see you agree with this and in a vacuum, it's true. But you still have a lot of other factors at play. Price inflation tends to lead to wage inflation which in turn could cause more price inflation. Also less competition could mean higher prices in the long term, fewer choices for the consumer and lower quality goods. And the tariffs and the uncertainty around them will result in lower growth too. Hope you're not banking on that 3% GDP growth continuing beyond Q2. It won't. All in all, these across-the-board tariffs are really dumb and will harm our economy.

 

Buried in the PPI numbers was the huge rise in the cost of fresh and frozen veggies. Wholesale up 40% in July. Mainly because this time of year, about 33% of our produce comes from foreign countries like Mexico. Probably won't get any better come our traditional harvest season because we'll have significant labor shortages due to immigration crackdowns. We've already seen this with fresh produce that ripens earlier in the years, such as cherries, which saw the largest price increase due to not enough labor to pick them from the trees.

In home food CPI dropped .1% in July, but out of home food costs rose .3%. Unfortunately, we should expect the out of home number to rise, and the in home to go in the other direction in upcoming months.

 

“But another argument for the limited impact is gaining traction: that tariffs being paid by importers are lower than advertised.

In a new study, Barclays economists went through census data to see what tariffs importers actually paid in May. They found that the weighted-average tariff rate—the average of all tariffs, adjusted for import volume from each country—that month was around 9%. That number is well below the 12% rate that they had previously estimated based on White House announcements, and far less than what some others have estimated.

JPMorgan economists argue that actual tariff rates in June were lower than headline averages suggest because importers switched to countries with lower tariffs or to domestic producers.

Initially, he says, he didn’t raise prices in response to tariffs, as the announced levies kept changing, and he didn’t want to alienate customers by constantly adjusting his prices. Paying the tariffs cost his company more than $1 million, he says. Now he feels more confident about where tariffs will end up, and his company is raising prices on the East Asian-made patches by 6% to 25% starting in September. “We just don’t see the sense of waiting anymore,” he says.“


https://www.wsj.com/economy/trade/t...06efa?st=dyS6Xq&reflink=article_copyURL_share

 

Coffee prices are already up 14.5% YoY in July. And these prices were calculated mostly before the 50% tariffs on Brazil, where 40% of US coffee beans are imported. Expect higher prices on veggies and coffee for the next CPI report.

 

“Wholesale prices—the cost of goods and services purchased directly from producers—rose at the sharpest monthly rate in three years, raising fresh alarm that tariffs are taking root in the economy and pushing up inflation.

Prices charged by U.S. manufacturers and service providers rose by 0.9% month over month in July, the Bureau of Labor Statistics said Thursday, the biggest month-over-month increase since March 2022.”

https://www.wsj.com/economy/central...34c13?st=M2v362&reflink=article_copyURL_share

 

Wall Street will soon begin seeing what you're seeing. It's only a matter of time.

 

CPI doesn't always follow PPI, but PPI is a leading indicator of CPI more often than not. Especially when there is a huge increase in PPI. What are wholesalers supposed to do when their acquisition prices jump by almost a full percentage point? Let that eat into their profits? No, they pass those costs onto retailers, who have the same dilemma. And prices go up.

Especially for things that took a massive PPI inflationary hit, like fresh and frozen veggies, up around 39%! Or coffee, as the Brazilian tariffs start to take effect.

Wall Street didn't react well at all to Trump's "Liberation Day." Since then, Trump has been TACOing on many of the new tariffs, and Wall Street has been reacting as such. But tariffs are stating to take hold, and prices are starting to rise. And Wall Street will react.

 

Hmmmmm ....

Home Foreclosures Soar Nationwide—and Nevada and Florida Are Hit the Hardest

A growing number of U.S. homeowners are losing their properties because they cannot keep up with mortgage payments—with some states seeing drastically higher default rates than others.

In July, nearly 36,130 properties nationwide were hit with a foreclosure filing, up 13% from a year ago, and the steepest annual increase so far this year, according to the latest report from real estate data analytics firm ATTOM.

Put another way, 1 in every 3,939 housing units in the U.S. saw foreclosure activity last month, including default notices, scheduled auctions, and bank repossessions.

"July's foreclosure activity continues to trend upward year over year, with increases in both starts and completions," says Rob Barber, CEO of ATTOM. "While rising home prices are helping many owners maintain equity, the steady climb in filings suggests growing pressure in some markets."

 

Even more worrying, from that same article, regarding completed foreclosures NOT initial filings:

 

^ Just more indication that Trump's recession is on the way.

 

Add car repossessions to the list of poor economic indicators. In addition to foreclosures up, car repossessions have increased by 23% in 2025. And getting a replacement ride is getting more and more expensive. According to Kelly Blue Book, tariffs are set to increase the cost of a new car by an average of $6,000. This is also expected to cause the price of used cars to rise due to a rise in demand for more affordable wheels.

 

No worries, just clearing out inventory so our corporate overlords can buy up more houses to rent. Everything is going to subscription service baby!

 

The housing market has been looking at a hard reset for years. Trump hasn’t helped, but the underlying causes of a lot of this pre-date him. Same with all the back and forth on many of the working and middle class issues.

IMO though, and I’ve said it before, but this will prove to be the biggest mistake he’s made in his first 6 months. He has completely misunderstood why he was elected. It was economic angst, not all the other stuff he revels in. Throwing the economy into turmoil with his nightly tariff tweets, and then settling on larger tariffs which will ultimately hurt far more people than it helps will only make things worse. It’s the exact opposite of what he was hired to do.