OH MY GOD!!! Inflation now at a 3.4% annual rate! Stock market meltdown, bond yields soaring!

The US economy's stagflation scare is over after weak Q1 jobs report

 

You completely ignore consumer spending in 2021 and 2022, which helped fuel the inflation You also completely ignore Government spending both local, state and Federal. As if individuals are the only ones who have an effect.

For decades the Government and the FED have used direct and indirect stimulus to improve a sagging economy. Now we’re supposed to believe the over 5 trillion dollars and near zero fed funds rate had zero effect..

 

Yeah I was referring to your incorrect statement that the Fed raising interested caused less consumer spending. It did not.

As for the rest of it, straw man. I never said the covid stimulus spending had no effect on inflation.

 

This time the effect on consumer spend has been slow to respond to the increased interest rates, that’s been a bit of head scratcher for some. Likely it’s due to savings rates at all time highs, increased wages, large stock market and home appreciation (the wealth effect). Of note there are some sectors that are slowly such as restaurants and restraint suppliers, where some companies have noted decreased sales in the first quarter.

Eventually spending will slow that’s part of the reason the Fed wants to “normalize” rates, they don’t want to push to hard and slow things down too much.
So far they have done a good job of trying to hit the soft landing. One thing that may delay it is the build back better plan is adding some juice now.

Perhaps I added in the other portion thinking of another poster as I was responding to a few. Sorry

 

I believe that the stimulus contributed to inflation in that it kept us from going into a more extended recession. Overall demand wasn't much different than it would be in normal times. But coupled with supply constraints it led to inflation. If the economy had been allowed to go into an extended recession, we wouldn't have had much if any inflation. But we would have had a longer recession instead. So pick your poison, recession or inflation.


Our analysis concludes that today’s inflation is largely driven by supply shocks and sectoral demand shifts, not by excess aggregate demand.

Roosevelt Institute - The Causes of and Responses to Today’s Inflation

 

The problem politically for Biden is that the overwhelming majority of American voters aren't really concerned with economic analysis, their rationale in voting is far simpler specifically, prices especially the prices of necessities like food and rent are significantly higher than they were three and a half years ago, Biden has been in office for three and a half years therefore the inflation must be Joe Biden's fault.

 

Grocery prices have escalated and none of the reasons are because of stimulus, or low interest rates, or government spending levels like people on here use as reflex responses.

The pandemic disruption has reminded us how fragile the food supply is as it came during a time of global unrest and climate impacts:

• Labor shortages tied to the pandemic led to lower production and eventually higher wages in processing plants, warehouses, and grocery stores
• Supply chain disruptions injected transportation cost increases
• Droughts and extreme heat have dampened production of fruits and vegetables.
• Dry spells in India and Thailand have curtailed sugar exports - majors food inputs
• Avian flu outbreak, the largest in U.S. history, sent chicken and egg prices soaring heavily consumed and used as inputs.

• Russia’s invasion of Ukraine led to a spike in commodity prices for wheat, corn and vegetable oils that are finally settling back down.

None of that helps the party in power generally as they bare the brunt of the bad news like Trump did about covid.

 

Agree although unlike Biden and food inflation Trump did seriously mishandle the Covid pandemic making it worse than it should have been although he did have absolutely nothing to do with its cause (to the extent blame can be placed for the origin of the pandemic it falls with the Chinese).

 

It's even worse than that. The American public will vote for the person according to their physical appearance.

 

if inflation were purely due to covid supply chain issues, once those issues were fixed, the prices would have gone back down with temporary deflation. But they didn’t. That’s because more money was chasing goods even after the supply chain issues were fixed.

 

This is how the stock market has reacted to the inflation and labor market data.
Stock market today: Stocks climb as S&P 500 notches best 3-day run of 2024

 

Do you think low interest rates had any effect on the surge in housing prices?

When I’m talking stimulus I’m talking both payments to citizens, payments to local and state governments, payments to businesses, fed actions including QE low low rates.

And I agree it was a crap choice. Crush the economy and let people starve or print money. IMHO the last “stimulus” bill was too much and not needed.

 

https://www.wsj.com/economy/housing/fed-inflation-rate-housing-rentals-2f28c5ba

This is a good article explaining the impact of cpi housing / rents on inflation

 

An analysis of some of the underlying data.

MSN

 

Dow up 2000 or so since this inaccurate, chicken little post.
Thank God for rubes so that the rest of us can profit more off the stock market.

 

Yep and S&P up another 1% today. And that's with the Fed rate at 5.5%. Just think of all the potential energy there waiting to explode as the rate comes down. Yes, some of that is already priced in, but certainly not all of it.