The Everything Shortage & Price Hikes Plastered All Over Fed’s “Beige Book”

“We need lower consumer demand to give supply chains time to catch up… recover efficiency… and break this vicious circle”: CEO of Maersk’s APM Terminals, one of the largest container port operators.

By Wolf Richter for WOLF STREET.

Today’s release of the Fed’s “Beige Book“ – an informal narrative of the economy as told by small and large companies in the 12 Federal Reserve districts – listed “shortage” 77 times, up from 19 times in January.

Shortages of nearly everything, with labor-related shortages being the most prominent. These shortages “restrained” growth, and companies were “unable to meet demand” because of these shortages. Here are some standouts:

  • “Extensive,” “widespread,” “intense,” “acute,” “persistent,” “broad,” and “ongoing” “labor shortages.”
  • “Worker shortages”
  • “Workforce shortages”
  • “Shortages of drivers”
  • “Truck driver shortage”
  • “Chassis” shortage
  • “Ongoing microchip shortage”
  • “Pervasive resource shortages”
  • “Material shortages”
  • “Inventory shortages” from retailers to housing.
  • “Supply chain shortages”
  • “Supply shortages”
  • “Shortages of parts”
  • “Shortages of inputs and labor”
  • “Increasingly severe shortage of auto inventories”
  • “Shortages of parts for farm equipment”
  • “Restaurants reported severe supply and staffing shortages”
  • “Nursing shortages”
  • “Raw material shortages”
  • “Shortages of labor and other raw materials” that delayed construction
  • “Persistent materials shortages”
  • “Shortages and higher costs for both labor and non-labor inputs”
  • “Retailers noted shortages of and increased lead times for merchandise, particularly on foreign-made goods”

The labor shortages came with “turnover,” and employees leaving their jobs to work somewhere else, which confirms the data in the report on job openings and quits in the most distorted labor market ever.

Some standouts on labor turnover:

  • “The number of workers leaving their jobs for other employment was elevated”
  • “Employee turnover was noted to have increased”
  • “To combat low availability of labor and high turnover rates, many employers significantly increased wages”
  • “Businesses also struggled to keep up with the high pace of employee turnover and retirements”
  • “Revenue growth was being suppressed by supply side factors, such as low inventories and labor shortages and turnover.

Lead times – a symptom of snarled supply chains, labor shortages, and parts and material shortages – was mentioned 7 times, up from 3 times in January:

  • “Manufacturers and services firms experienced delays and long lead times for goods”
  • “Longer lead times” for retailers
  • “Lead times continued to lengthen, and many manufacturers of perishables turned away business”
  • “Retailers noted shortages of and increased lead times for merchandise, particularly on foreign-made goods”
  • “Lead times for capital equipment were much longer than usual”
  • “Many existing [nonresidential construction] projects remained hampered by long lead times for materials”
  • “Persistent materials shortages and extended lead times”

In this environment of shortages of all kinds, amid high demand, price increases were written all over the report, including these 66 mentions:

  • “Higher prices” and “high prices”: 15x
  • “Price increases”: 12x
  • “Increased prices”: 7x
  • “Rising prices”: 4x
  • “Prices continued to rise”: 4x
  • “Price pressures”: 7x
  • “Price growth”: 7x
  • “Raise prices”: 1x
  • “Pushing up prices”: 1x
  • “Higher input prices”: 2x
  • “Increases in input prices”: 2x
  • “Rising input prices”: 2x
  • “Input price hikes”: 1x
  • “Orders were being canceled and repriced because costs were changing so quickly”: 1x

These shortages and tangled up supply chains are a symptom of the most monstrously overstimulated economy and markets ever, the result of $4 trillion that the Fed has printed since March 2020, and the $5 trillion in deficit spending that the government has blasted out into the economy. $9 trillion in total, in an economy with a GDP of $22.7 trillion (nominal annual rate).

I have documented these effects for over a year now with countless charts that sported hair-raising spikes at the right edge (such as retail sales)…

And with equally hair-raising plunges at the right edge (such as inventories):

One part of the logical solution should have been for the Fed to back off its monetary stimulus a long time ago. Just how ridiculously far the Fed is behind the curve is demonstrated in the Fed’s own Beige Book. The other part of the solution should have been for the government to back off its stimulus a long time ago.

Now comes Morten Engelstoft, CEO of Maersk-owned APM Terminals, one of the world’s largest port and container terminal operators. He sees the chaos in the shipping industry, the port congestion, the exploding transportation costs, the delays, amid a massive surge of imports into the US as many goods that Americans buy are imported, and imports have spiked:

This soaring demand was fueled by the $9 trillion in stimulus in the US. In an interview with the Financial Times, he proposed a solution everyone already knows. For the economy to get out of this “vicious circle,” as he said, consumers should buy less.

He said a “vicious circle” of shortages had formed by this surging demand that strained container carriers, suppliers, ports, and logistics companies.

“We need to work out how we break this vicious circle,” he said. “We need lower [consumer demand] growth to give the supply chain time to catch up, or differently spread out growth. Over a long period of time, we will need to recover efficiency.”

A percentage increase in US imports and exports results in a far larger bump in volumes than elsewhere, because “it’s a percentage of an enormous volume,” he said. “The sheer size of business going through is so enormous that the amount of port capacity, truckers, warehouses, and even labor to man all the equipment has created a bottleneck.”

Consumers would buy less, including fewer imported goods, if the Fed and the government ended the vast amounts of stimulus that are still ongoing in the already most monstrously overstimulated economy ever. It would allow the supply chains to catch up, become efficient again, and it would take some pressure off prices.

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  180 comments for “The Everything Shortage & Price Hikes Plastered All Over Fed’s “Beige Book”

  1. RH says:

    Read “Eric Holder, Wall Street Double Agent, Comes in From the Cold” in Rolling Stone but keep in mind that this is not confined to any party.

    • Old School says:

      I was thinking, part of our problem is inflation is not calculated correctly due to owners equivalent rent. Why not just forget home owners as Fed says housing is an asset and just base CPI on actual rents? Doesn’t give the answer they want I guess.

      • ChangeMachine says:

        What does Occam’s Razor suggest? With inflation metrics, goals and outcomes? And everything else going on?

        • peanut gallery says:

          That is a great way to think about things – what does Occcams Razor suggest?

          To state the obvious, the incentives and temptations both politically and economically are far to great to not inflate away debt. So for the now and for the future I think we can keep expecting an upward trajectory of prices in general (both goods/services and assets) as well as profligate spending by .gov

      • Joe Saba says:

        can’t screw retirees and pension cola’s if things are calculated correctly
        who cares that new computer can spit out garbage faster than before
        they still cost $400-1,500 for basic models(never does a price DROP)
        and retiree INFLATION has been 20-30% in what they need for years
        2000-2018 it was just avg 8.5%
        any wonder why pre-covid only 50% retirees live in poverty(and they have pensions)

        I have no pension, my wifes barely buys food TODAY
        and SSI – well they keep driving it down for me since I don’t have blood sucking w-2 wages
        like 75% of retirees I to will take ssi at 62 in couple years
        real problem is what to do with savings since govt keeps stealing our interest(should be 5-9% today)
        I figure conservatively we have lost over $50k in past 10 years

        • Ethan in NoVA says:

          You can get perfectly fine, usable computers for $100 all day (off lease corporate laptops and the like.) Computers are super cheap compared to the old days, when a much less useful one would cost $3000 and used ones weren’t widely available.

        • A/C in SD says:

          I suggest you keep working if you are able. This isn’t going to get better any time soon. My brother in law retired at 62 and gets a paltry amount. He complains that he can’t keep up with the price increases. He is able bodied and could still be working at his present age of 71 and salted it away all these years. I have no sympathy for him. I wish you well.

        • Auldyin says:

          @JS
          “can’t screw retirees and pension cola’s if things are calculated correctly”
          UK State pensions are/were tied to a triple lock.
          ie 2.5% or RPI or wage inflation whichever is the greatest.
          On Wed the pensions minister announced that the wages link would be set aside for 1yr due to the ‘exceptional’ circumstances of Covid19.
          The correlation between what politicians say and do is <0.50 always and everywhere.
          They also banged up taxes by 1.25% in spite of promising it would never happen at the election a couple of years back.

    • General Strike says:

      Indeed. This is what happens when the needs of the ruling class are the only item on the agenda, and no heed is paid to the needs of the working class.

  2. CDMDevil says:

    How about getting the Unionized dock workers to step up their production. What a complete joke!

    • Infin says:

      Ok… your sure about this…

      • Joe Saba says:

        avg dock worker makes between $160k-300k per year
        yah let’s ‘bump’ their pay
        problem is not enough trucks to haul junk away
        throw in fake covid scare and they shut down for week
        today truck driver is making $100k easy
        I say drop ship on rail to Tucson from LA and we’ll handle from here
        but not much gets thru to us
        we have excellent access to east and mid-west
        with HUGE WAREHOUSES that remain mostly empty

        • Lynn says:

          quick Google;
          What Is the Average Dock Worker Salary by State, annual salary

          California $27,094
          Massachusetts $26,982
          New York $28,951

          average truck driver salary, annual

          Truck Driver Salary in California
          Annual Salary
          Top Earners $73,241
          75th Percentile $58,986
          Average $45,515
          25th Percentile $35,391

          People who own their own trucking businesses do earn more, but generally their drivers do not.

        • Lynn says:

          Oops, I was wrong. Union makes more. However, not *that* much more. According to the Chron

          “Longshoremen overall earned an average hourly wage of $24.98 an hour. The bottom 10 percent of longshoremen made under $39,671 a year, and the top 10 percent made more than $134,653 annually. The ILA set the starting pay rate for longshoremen entering between October 2017 and September 2018 at $22.00 an hour, while the ILWU offered those starting between July 2017 and late June 2018 $29.49 an hour.”

          Which makes more sense. I had a room mate years ago who was a longshoreman. He made $23 an hour when he could get the work. He had been in the union for several years.

    • Brant Lee says:

      Maybe you can get the union busted and bring in some $10 hr, no benefit labor. That should help.

      Not everyone who belongs to a union is a bum, sir. It seems everyone in government is.

    • Paulo says:

      Longshoring ILWU union is pretty strident due to the fact longshoremen were basically treated like slaves in the 1800s and early 20th. Without the union it would return to the same.

      There are actually people ‘out there’ who believe workers are well paid because company owners are benevolent and want to be good guys. To those I say you haven’t worked pulling lumber or in construction. For that matter, in any industrial setting. 100 years ago, if a logger died in the bush the body wasn’t taken down until he could be strapped onto the last load of the day. My 81 year old tenant knew a man treated thus, and at quitting time his crew was surprised to see he was still alive after laying behind a stump all day. He survived.

      It might help to get the criminals out of the ILWU, like in Vancouver where the Hells Angels run the docks, but when you see how ships crews are treated, especially during the pandemic, it’s hard to decide who the real criminals are.

      • RightNYer says:

        As long as mobsters like John Coli are involved in the unions (read about his indictment re: the Teamsters), I’ll never be a fan.

      • Cas127 says:

        Paulo,

        “pretty strident due to”

        The fact that they are an absolute chokepoint for America’s idiot-level import-based “economy”.

        Some guy driving a forklift in a port today making $175k, has zero to do with the mistreatment of people in 1880.

        This isn’t reparations (for a non-victim made rich by a long, long dead victim’s suffering? How does that work? Institutional profession-ism?).

        It has everything to do with the fact that a small number of fairly wealthy individuals can use their union to legally disrupt $2.2 trillion in annual imports to the US.

        Btw, how much do the longshoremen financially share with their labor “brothers” in non-chokepoint unions?

      • NBM says:

        Paulo,

        You should see San Francisco where minorities have owned the jobs at the ILWU, except the officer positions.

        Fastest way to get verbally jumped around here is to walk into the ILWU hall on North Point Street to ask for directions.

    • KGC says:

      You, obviously, have never worked the docks. I have. (No, I’m not Union, I used to work contract oversight for ocean going vessels). It takes 10-14 years of casual labor to join the Union. Anyone can work casual, just show up and be prepared to work your ass off; it’s physical, dirty, and dangerous. You get paid a heck of a lot more than $10/hour, but most people can’t/won’t do it. (I’d bet that at least 30% of those 11 million drawing unemployment are nominally capable of performing this job; perhaps the gov’t should force people back to work.)

      Many dockworkers work, and have been working, double shifts. Port of Los Angeles, for example, lost half the workforce due to covid last year for months. They are still trying to get rid of that backlog.

      Trucks and rail are a big part of the issue. There’s only so much space on the port. If you can’t move stuff away, you can’t bring stuff in. the fires in the west and the rain/flooding in the south are massively impacting rail operations. You want to improve moving stuff? Build more rail, make it high speed like other countries have. Good luck with that here in the USA.

      It costs about $17,000 to move a 40′ container from coast to coast, and that’s if you can find a truck driver willing to undertake the trip. Most containers move by rail. So, unless your products really expensive it’s not moving very fast. Delays getting product (USA manufactured stuff being exported) are averaging months right now. It’s not just a import problem.

      • Cas127 says:

        “It takes 10-14 years of casual labor to join the Union.”

        I don’t doubt it, given the huge salary bump.

        But, now that I think about, I wonder if 10+ yrs isn’t so transparently abusive/manipulative that it actually might violate labor laws (ironic for a union).

        The labor laws regulate union behavior as we’ll as employer behavior.

  3. Mwerk says:

    But, wait … a nation of consumers should do what? buy less? cant do that Sir.

    • Chris says:

      The Fed wants no deflation against their currency and by God that’s what we get.

      • Cas127 says:

        Right…the Fed has been warning of the absolute horrors of deflation (witness the gruesome slaughter of consumers in, say, the PC or television markets…) for 20 years.

        Meanwhile the Fed provides a multi-decade Kama Sutra of hedonic adjustments for why inflation in housing, health care, or education really isn’t inflation.

        DC is nothing but Baghdad Bobs lined end to end.

    • Joe Saba says:

      I’ve pretty much stopped buying junk
      wife and I already said we’re NOT buying xmas stuff
      we have fake tree my daughter loves so nothing to buy($100 trees – no thanks)
      will celebrate at CHURCH way it’s supposed to be

      really can’t wait – for cooler weather
      90 degrees and humid at 9:30am

      • gametv says:

        agree. just dont buy stuff and there is no inflation. of course, that doesnt work with food, but I can stop buying the expensive food, like steak.

        i do think this bubble is all temporary. it blows my mind that most people spent their stimulus money and will soon need to return to work or else have nothing in the bank.

        give it through the end of the year for the stimmie money to vanish out of bank accounts. no more unemployment will result in a flood of people going back to work.

        bond market will soon be a huge mess and billions of fake money will evaporate. then stock market and then real estate. that is when people will return to work, and find that they cant get a job.

        bubbles that get pushed this far become terribly dangerous.

        • NBM says:

          Mr. Game,

          As I look out my corner window I can see 2 free refrigerators that work fine, a washing machine, shoes, clothes and lots of furniture with a free sign on it. In addition, one can buy almost anything used at a 90 to 75% price reduction, and that’s without any sales taxes, which means you save another ten percent off the full cost.

    • Gld Digr says:

      It will regulate itself as soon as the world stops accepting worthless dollar bills in exchange for real goods and services. That’s the American con.

  4. josap says:

    108 days until Christmas.

  5. Mendocino Coast says:

    Overall : All the charts tell the story and its hard to look / the news talks of the people behind it all and the List is long.
    Seems:
    Very well orchestrated actually by people doing great financially but at a cost of the rest of us .
    Now how to fix it , takes to long to replace everyone at the top .
    I wish I had the answer. Astounding actually that this can happen
    A complete disarray of the economy and we can just watch moan and groan.
    I understand the protests but they don’t help .
    When you tear out the roots the plant dies.
    I guess we need a Gardener , better make that landscape Architect this thing is a Total mess

    • Ron Acker says:

      Gardener

      Go, bind thou up yon dangling apricocks,
      Which, like unruly children, make their sire
      Stoop with oppression of their prodigal weight:
      Give some supportance to the bending twigs.
      Go thou, and like an executioner,
      Cut off the heads of too fast growing sprays,
      That look too lofty in our commonwealth:
      All must be even in our government.
      You thus employ’d, I will go root away
      The noisome weeds, which without profit suck
      The soil’s fertility from wholesome flowers.

      Servant

      Why should we in the compass of a pale
      Keep law and form and due proportion,
      Showing, as in a model, our firm estate,
      When our sea-walled garden, the whole land,
      Is full of weeds, her fairest flowers choked up,
      Her fruit-trees all upturned, her hedges ruin’d,
      Her knots disorder’d and her wholesome herbs
      Swarming with caterpillars?

      Gardener

      Hold thy peace:
      He that hath suffer’d this disorder’d spring
      Hath now himself met with the fall of leaf…

      Richard II, Act 3, Scene 4

  6. Depth Charge says:

    You mean when you pay people more to stay home than they earned working you get labor shortages?! Knock me over with a feather. And they did it for more than a year. These political hacks and central bank idiots need to be stripped of their jobs and sent to prison on economic terrorism charges..

    • Helmut Beintner says:

      What to do with all the empty Buildings then ? Somebody has to fill the Parking Lots ,right ?

    • 911Truther says:

      They are just following orders.

    • Freedomnowandhow says:

      Some of what if what you say is true, but the Augest unemployed figures has 5 million not seeking employment because of the upsurge in coronavirus infections. Lessen the outbreak= more employment. This fact isn’t in graphs and analytical thinking, at least at this time.

      • Wisdom Seeker says:

        Amen. The greatest shortage isn’t in goods or services, labor or jobs.

        It’s the lack of pragmatic analytical thinking about choices made and their unintended consequences.

        There’s too much ideology and not enough common sense.

        Too much “data” and not enough trustworthy information.

        Too much propaganda and not enough compromise.

        Well, we will get what we deserve.

      • Grima Squeakersen says:

        Measuring the unemployed merely requires honest counting. Attribution of the numbers requires reasoning, guesswork, or politically motivated propaganda.

    • MCH says:

      No… that’s not economic terrorism…

      Economic terrorism is when the stock market and various asset classes tank because it is time. Time to terrorize people’s 401K.

      We have the first sign of this already… Kaplan is selling out his stocks out of “ethical concerns” before end of September. This right on the heels of his taper talk…. I wonder if he is telegraphing here. Time to short the market, or at least buy well timed puts.

      • Wisdom Seeker says:

        Gotta read past the headline. He’s not selling his stocks, he’s switching from trading individual stocks to trading index funds.

  7. Depth Charge says:

    I haven’t purchased ANYTHING aside from the basics this entire time. I have nothing to do with any of this. People are dumb.

    • COWG says:

      Okay… I confess… I’m patient zero in the buying pandemic…

      I, ummm, bought a new tv last year…

      And probably started this whole mess…

      Sorry…

  8. Depth Charge says:

    But Weimar Boy Powell is still printing, still buying $120 billion per month in bonds and MBS, barking “transitory inflation” and expressing concern over price increases as he tries to push the throttle all the way through the floorboard. Why doesn’t somebody stop this deranged LUNATIC?

    • William says:

      Exactly!

    • Tom says:

      Gee because everyone wants their stocks to keep going up! The minute your friend Weimar boy lifts his foot off the throttle… the market will respond. CEOs who have been stripping their companies will be left holding the bag and over leveraged investors too. 1929?

    • Helmut Beintner says:

      Can be be done only with another deranged Lunatic ,as he/she will be known by the media then.

      • Swamp Creature says:

        Ms Brainard is warming up the bullpin. Measuring the curtains in J Powells office. You ain’t seen notin yet!

    • Chris says:

      9 TRILLION Wow

    • Ralph Hiesey says:

      Depth Charge:

      Powell is not a deranged lunatic!!

      He’s just trying to stand in as the FDIC for the bond market. Doing a pretty good job too. Bonds haven’t crashed yet!

  9. Carlos Leiro says:

    Chinese real estate company Evergrande on the brink of bankruptcy The giant has a liability of more than 250,000 million euros The credit rating agency Fitch has lowered the note that grants the long-term bonds of the real estate developer (the second largest in China). In a report, Fitch assures that “it seems probable that there is some kind of default”

    • Sams says:

      And it may suit the Chinese to let i go bancrupt. At least if that will result in aserious jolt to the financial markets in the USA. The Chinese government probably have the means to supress most unvanted impact in China. In the USA the American counterpart may not have the possibility.

      • Peanut Gallery says:

        Great point. Now let’s pick apart this for a minute…

        Why would China allow an Evergrande default, whereas why would the US intervene? That sounds so backwards – that a centrally controlled economy would allow a major bankruptcy/collapse/price discovery, whereas supposedly the greatest free market economy in the world (US) won’t allow?

        • Sams says:

          Phycology, what matter a lot on Wall Street.
          China let some of their real estate companies go bankrupt. Preferably also some with foreign investors that like their Chinese counterparts lose it all. Then seizes the real estate and get new owners that start with a clean sheet. Some Chinese banks may fold and the Chinese let them, nullifying the loans they have given. Life carry on, some rentiers have lost their future income, but no big surprise to anyone that the government ruled as they did see fit.

          Now, at Wall Street do everyone sit calm?
          What with those investors that have lost a lot in China that are now insolvent without collateral? And the banks that have given credit? Anyone that want shares in a technical bankrupt bank? Fear may quickly take hold, panic could break lose. Then, what do the US government do if panic break lose in finance?

          China may allow a major price discovery, they make the money on building the real estate. In the USA it’s more making money by manipulating the price of real estat.

        • Ron says:

          COMUNIST country can’t you phd ,s figure out they fleeced the world to build a super power there money is irrelevant there laughing about u nunbiscales

        • RH says:

          Sadly, for decades, the US has been a kleptocracy controlled by organized crime, so that the banksters’ “Federal” Reserve has been lending to banksters trillions of dollars at 2.5% or less a year that they can then lend to ordinary Americans at 25% a year or more: the Cosa Nostra, Red Mafia, etc. Read Lucky Lucciano’s autobiography about how organized crime could already select a president early in the 20th century.

    • RH says:

      I have seen estimates of their liabilities and debts as being from that sum to over $800 billion. Of course, since they have more businesses than their real estate investments, that might be counting their debts AND unofficial liabilities (e.g., from tofu-dreg construction projects and resulting lawsuits) aside from their formal, real estate, junk bonds.

      I do wonder how this will play out, because the news reports are that the CCP may only bail them out partially. Since the CCP has other white elephants to bail out, e.g., the fantasies of Fantasia Holdings Group, can it even marshal the resources to bail them out given its increasingly limited dollar and foreign reserves once the banks/creditors cannot give more and more loan extensions?

      If not, what will happen? US commentators can often not be trusted due to their ties to the CCP: e.g., listen to the recent interviews of Kyle Bass, who claims that Dalio’s fund a huge portion of investment from China. The littlest billionaire’s news company also cannot be trusted, since he is so dependent on information and sales to mainland China; his company’s “news” reports sound like coming from a shill for the CCP most of the time. Russia’s media imitates his example.

      As another commentator pointed out, I suspect that the collapses of these companies together may be a black swan that is about to crash the world’s financial markets, which are in terrible shape anyway and ripe for a crash.

  10. Caius Preposterous says:

    This is crazy. Can Michael Engel please come back and explain it?

    • Wolf Richter says:

      People kept harassing him for his style.

      • doug says:

        I wished I had praised his style, as I liked it. But I said nothing…

      • SOL says:

        I enjoyed his comments as well. If we all answered the same way it would be boring. I will admit, most of the time his comments were over my head, but they always made me think.

        • bemused says:

          It seemed he had interesting things to say. But they tended to be so cryptic I was never really sure. If he had only spent another 5 minutes or so to spell his thoughts out clearly I would have known one way or the other.

      • Caius Preposterous says:

        Then we’re agreed. Michael, come back!

      • JoeC100 says:

        He also often had quite interesting real estate information – Michael, please come back!

    • Cobalt Programmer says:

      My simple theory is he was a .gov mole here to watch all the dissident souls. He was a good one on the job. Now, he retired to a secluded ocean front cabin with full pension and healthcare. He cashed his investments from the stocks, bitcoins and everywhere else. Most importantly, he is not disconnected from the internet.

  11. Sams says:

    The wealth pyramid and all systems around, it fine tuned to maximize profit and agregate it at the top show signs of cracking.

    Neither the fundation nor the stucture is strong enough to carry the all the weight now concentrated at the top.

  12. Felix_47 says:

    We are building the Chinese and other east Asian economies and exporting our competencies and these countries will dominate the next few hundred years. The Arab oil states will prosper again with US remittances. As I look at South LA and Pomona and Riverside and Victorville it is pretty clear we are gradually lowering the US standard of living to the level of Brazil. Our exports will be dominated by low value added agrarian and raw materials….we already are there. There will be plenty of rich Americans but the average American is going to have a much more difficult time. And what global warming will do is not yet clear but until we get campaign finance reform expect the worst possible outcome just like we achieved in Iraq and Afghanistan. I think the Yuan is a long term buy.

    • Dr. Gonzo says:

      It is very clear what climate change will do:

      Millions displaced within next decade
      Millions to Billions of people dying as a direct result of climate change until 2100 or before
      “Inhabitable earth” becomes a thing in many regions, then entire countries, metros
      Massive crop failures within next 1-2 decades
      Uncontrollable sea level rise. Just to give you an idea: There are thousands of large scale landfills around the planet at sea level. Those will be leeching into the water ways/oceans
      Amazonas forest, boreal forest, west coast and canada forest will burn down and be replaced by steppes and desert
      Dustbowl 2.0, this time entire north america
      Cat 6 Hurricanes become the standard

      Cost to avoid this today: 5% of US GDP (1 Trillion USD / year), if all countries do the same mitigation
      Cost to go CO2 neutral for the entire planet: 6 Tril USD / year

      All caused by an exponentially rising stock market, commodity prices, energy use, population, money supply

      Very well researched and all baked into the current “lifted pickup truck” economy we have

    • Wisdom Seeker says:

      Re: “The Arab oil states will prosper again with US remittances.”

      Not US remittances. Eurozone, Japanese and Chinese remittances. The US is self-sufficient in petroleum and has been for many years now.

      Re: “The Yuan is a long term buy” – not with the current dictator-for-life in charge, trampling all over the economy with daily new mandates, sitting atop an enormous debt bomb which will only be resolved with more Yuan. (Not saying the dollar is noticeably better – we have our own authoritarian nightmare edicts.)

      • Nick Kelly says:

        In 2020 the US imported an average of 6.2 million barrels of oil per day.

        • Wolf Richter says:

          Nick Kelly,

          The US EXPORTED 9.3 million barrels per day of crude oil and petroleum products in June, including gasoline and diesel from California that was refined from imported crude oil (I see those tankers going out every day).

          It’s easy to ignore the other side of the equation. But when you ignore the other side of the equation, out comes nonsense.

  13. DG says:

    Covid closures, years of supply chain streamlining and just in time production combined with a shift in spending away from entertainment and travel made this happen.
    But sure, it’s the people’s fault, because the plebs now have a couple of extra bucks to spend on stuff they don’t need and they get F U money from the fed somehow…

  14. drifterprof says:

    The article states that:
    $4 trillion that the Fed has printed since March 2020, and
    $5 trillion in government deficit spending

    I’m unclear about how much each of the different methods was used by the Fed to “print” the $4 trillion:

    1) reducing federal funds rate for member banks (which increases the debt-created money supply through cheaper lending);

    2) open market operations: Fed buys U.S. Treasuries and other securities (galore) from its member banks, by allocating credit in member banks’ accounts.

    3) monetizing the debt: Fed buys treasuries directly, not on the open market.

    A main thing that’s confusing me is how much, if any, of the $5 trillion in government deficit spending, was part of the $4 trillion in Fed “printing” money (via monetizing the debt)?

    • 911Truther says:

      You’d have to see the Fed’s real balance sheet to figure that out.

    • Wondering says:

      These are great questions. I’m not sure I have this is correct but,
      1) I don’t think the Fed “prints” money (creates money out of thin air) to do this directly. They do buy treasuries with in order to keep rates low though.
      2) Does allocating credit (deposits?) from its member banks require the Fed to create new money? Not sure but I think they do create new money for other purchases on the open market.
      3) I believe that when the Fed monetizes the debt they mostly have to create new money (money out of thin air). They create the new money, give the money to the Gov to spend in exchange for Treasuries held on the Fed’s balance sheet. Then (in a wtf moment) remit the interest paid by the gov on the notes back to the gov. So free money created, no interest paid by the gov, and in 10 years when the the Treasuries mature (are due) the Gov doesn’t pay the “loans” back, they just reissue new debt. That the new MMT. It’s a great business to be in.

      Can anyone else chime in to clarify?

      • Auldyin says:

        @W
        Check out W’s archives over recent months, this subject has been very exhaustively discussed.
        In a nutshell, when the Fed buys anything it increases liquidity in the money markets.
        Vice versa when it sells anything it reduces liquidity in the money markets. All the fancy transmission mechanisms then kick-in to spread that simple act through the economy.

    • Wisdom Seeker says:

      The correct answer is (2). The Federal Reserve expands the money supply by “purchasing” treasuries from approved dealers and crediting them with new-from-thin-air money (called “reserve bank credit”), which the banks can then lend out.

      Therefore, the Fed’s purchase of $4 trillion in Treasuries has funded $4 trillion in expanded national debt due to the government’s deficit spending binge. And then someone else used some of the $4 trillion in reserve bank credit to buy another $1 trillion. Why anyone would own any US (or other sovereign) debt at these interest rates is beyond my comprehension. Yet someone must hold them all to maturity and reap the consequences.

      Note on the other choices:
      (1) Does not expand actual credit in the system directly. To enforce a lower Fed Funds rate target, the Fed has to purchase short-term Treasuries (as opposed to longer term bonds). But they can do that by selling longer-term bonds to buy the shorter-term ones; they don’t need to buy new treasuries with new money.

      (3) is illegal but is the net effect of (2) after you subtract the profit skimmed by the dealers between Treasury and Fed. Only lawyers and bankers could think such a system actually makes sense, and even some of them occasionally express their doubts.

  15. SocalJim says:

    Blaming all that ails the economy on the FED is just too myopic. There are so many things that have gone wrong at once. Political problems. COVID. Supply chain break downd. Cracks in the promise of globalizatiion. Too much monetary policy, fiscal policy, and debt. Inflation. This is going to be wild. The smart money is overweight hard assets and overweight cash equivalents while underweight financial assets.

    • Nick Kelly says:

      The Fed is in charge of monetary policy.

    • Wisdom Seeker says:

      We have met the enemy, and they are us.

      But most people can’t stomach seeing the cascading side-effects of their own bad choices, so they blame others.

      I’m seeing a lot of nearly-insane policy changes, backed by poor analysis of flawed data with insufficient attention to uncertainty, and then implemented with near-Nazi authoritarianism.

  16. Kenny Logouts says:

    Too much demand?

    Surely this is massively bullish?

    Unless people are spending magic money given to them by magic government.

    What happens when all these under-employed under-monied people can’t actually exercise their demand and buy stuff?

    They go get jobs.
    Supply returns to normal levels.
    Demand drops to previous levels.
    Deflation.
    Job losses.
    More deflation.

  17. David Hall says:

    During the apple harvest there are worker shortages. The harvest is plentiful, the workers are few.

    That is why there are H-2A visas for foreigners to work on farms, orchards and ranches in the U.S. There were not enough Americans willing to pick apples for low wages.

    There are some H-1B visas for those hiring professionals capped at 85,000 workers. There used to be 195,000 H1-B visas available 2001-2003.

    • Nick Kelly says:

      True. BTW: picking apples is almost fun compared to the ‘crop from hell’ strawberries. They are the ultimate stoop labor, where you have to bend lower and more selectively than lettuce etc. This job is usually avoided by Mexicans of Spanish descent and falls to Mestizo Indians based in Mexico.
      Many land owners get around labor laws by renting the land to Mexicans making them the employer.

  18. historicus says:

    Powell said he was keeping rates at zero because of the unemployment situation, which he then went on to explain was caused by..
    1. generous federal payouts
    2. COVID fears
    3. Looking for better jobs
    4. Child care issues.

    If only the question had been asked….”What do low interest rates have to do with any of the mentioned causes of the employment situation?”

    What can be seen is that Powell is looking for any excuse to keep things as they are. Transitory, etc….pointing fingers at everything but themselves.

    • historicus says:

      When I was taking economics, 5% unemployment was considered full employment because of people changing jobs, looking for better work, or simply not willing to work.
      Now, Powell tells us 5% unemployment is a problem….with record job openings.
      Is this really how these people think?
      They SKEW everything they touch.

  19. NoPrep says:

    Spikes don’t decline slowly when they stop..they go down like a shot. Panic ensues. Is Team Biden prepared for the GFC of 2022? I’m totally an amateur observer with what is going on, but it sure smells like that is what is next, quite soon.

    I have also read where Bezos and Musk have both basically sort of said “hey we have businesses, and sure, businesses can fail, our companies may not always be around” Many people now seem to assume Amazon just has to be “forever”, as if there can’t be a world without it, if it does collapse with the next GFC, or collapses with a GFC that happens after the next GFC if the next one doesn’t do the trick.

    Probably the only two truly essential empire/companies the planet really needs, to continue, are Boeing and wolfstreet.com.

    • Rick says:

      Forever as in Sears? Amazon is Sears through the internet.

      • Grima Squeakersen says:

        This. Except that the internet not only shortens the rise cycle for such a behemoth by an order of magnitude, but (potentially, at least) also the fall cycle. I worked for Sears retail as a teen-ager in 1966-67. Signs of trouble were just beginning to become apparent from the inside. It took several more decades for the decline to be fully manifest. I see major problems with the way Amazon presumes upon its customers, but like Sears in its heyday, Amazon arrogantly appears to perceive none of it. Unless the goobermint decides that Amazon is “too big to fail” (and possibly even then) I think that Amazon’s ultimate decline won’t be gradual, it will be more akin to a free-fall… Google, too, for that matter.

  20. Helmut Beintner says:

    American Workers..What job can you get at 25 with 4 years of “Creative Poetry” Except as a teacher (extreme Shortage ;) to teach the same Subject.

    • Peanut Gallery says:

      Only requirement in America today to be a teacher is to be fluent in Liberal Speak

      • drifterprof says:

        Are you speaking of the teacher on Beavis and Butthead?

        • Beardawg says:

          Mr Van Diressen !! I loved that guy !!

          Coach BuzzCut was pretty cool though too.

          “I’m gonna kick you in the jimmies !”

    • Rick says:

      Creative Poetry? There once was a man from Nantucket….

  21. Keepcalmeverythingisfine says:

    And Jimmy Carter 2.0 is just getting warmed up. Told you so. We are already deep into stagflation territory. When Pfizer is the only stock with explosive earnings it will all be over. The waiting is the hardest part. Nice summary of the Beige Book btw.

  22. Winston says:

    Simple fix: government sponsored ads to tell people to avoid buying anything Made in China that they don’t absolutely need to accomplish two things: reduce demand and thank China for their deadly forever virus.

    That’ll never happen, of course.

  23. Mora Aurora says:

    Nickel just breached $9 US/lb. The cost has doubled in five years while LME (London Metal Exchange) stockpiles have halved during the same period.

    Nickel is ubiquitous in modern day consumer and industrial applications, an essential alloy in stainless steel.

    One more node in the interwoven ‘shortages and price hikes’ scenario.

    • Brant Lee says:

      Go to the bank and buy a few rolls of nickels, 75% copper, 25% nickel metal content. Instant 20% profit. Current melt value .06 per coin, $2.41 per roll.

      • Depth Charge says:

        It’s illegal to melt it down, which you’d have to do to profit. Are you suggesting criminal activity? You’d be as bad a politicians and bankers.

        • Brant Lee says:

          No, just fill your safe with plenty of nickels so burglars can’t lift it, LOL. And, I keep a few nickels for that fuzzy feeling of money being actually worth its weight.

      • That’s it? Only 20%? I think we’re better off waiting for metals prices to drop, pay the market price for the metals and store them in the garage. When the government collapses, no one will care about whether it used to be illegal to melt the nickels, so that’s not a concern for long-term thinkers. The question is how to get the most bang for your buck, or in this case, nickel.

    • Peanut Gallery says:

      Doubling in five years is roughly consistent with other assets (including RE?), so that basically points to an approximate doubling of our money supply in that period of time?

      Am I thinking about that correctly? Yushan and others please correct me if I’m wrong…

  24. Minutes says:

    Maybe I should have been a truck driver. They cannot be replaced easily.

    • Peanut Gallery says:

      Paging trucker guy…

    • Trucker guy says:

      You can get black listed from the industry quite easily nowadays. You spend a year or two sucking raw eggs and hope you don’t do something wrong enough to get ejected from the industry to then move to a job providing a lower middle class wages assuming it’s a union gig.

      You’re still way better off getting into a stem field with a bachelor’s degree. Also, this is the good times for any trade. When the bottom falls out trucking is the first sector kicked in the teeth followed closely by construction. If you’re working based off mileage pay (aka being robbed.) , you’re dead in the water without substantial savings in the downturn.

      For a guy like myself who did a whole lotta bad as a kid and no future for the path I was set upon by my actions… Trucking was a good option. For probably everyone else posting here, fish further upstream.

      • Used to be you could over the road for a couple years and save enough for a down payment on a house. Live in the Mayflower motel. There are all sorts of truck driving jobs, some of them pretty good. You show up with a spotty resume, you aren’t going there. You end up driving unsafe equipment, over the legal hours, and when they catch up with you they take your ticket and nobody else will hire you. I understand a lot of excons will do the number. Anyone can drive one of those, but it takes years to become a driver.

    • sc7 says:

      Until autonomous vehicles take the bulk of their work. Not a field I’d get into if I were looking to work for more than 10 years.

      Much better off becoming a plumber, electrician or HVAC installer. Complex, abstract work that requires dexterity that won’t be easily matched by AI/robotics for a long time.

      • Peanut Gallery says:

        Does anyone have any insight or perspective on Rivian and their trucks that they are building? I’m curious what the future of self-driving semi-trucks will look like.

        • Harrold says:

          Its all a pipe dream.

        • Snickers says:

          Peanut G the future for self driving or autonomous trucks is bleak on major highways although be it there have been small gains on certain European routes.
          Where these type of heavy equipment accelerate are in places like the frozen north. Great successes in the Alberta oil patches, at the miseries of many hard working people displaced.
          Probably the same in other remote locations.
          Autonomous driven cars for the general public are a myth, elevated to the fraudulent levels.
          The Tesla fiasco is a case in point where thousands of consumers paid an additional Ten Thousand USD for this addition that they never received nor will they.
          There will probably be a very large group of angry motorists wanting the 10 grand back as the Tesla’s pile up unwanted at the end of their service life.
          For a better look into this go to Quoth the Raven’s podcast #262.
          You will see the problem clearly.

        • shandy says:

          The future for self driving or autonomous trucks is bleak on major highways although be it there have been small gains on certain European routes.
          Where these type of heavy equipment accelerate are in places like the frozen north. Great successes in the Alberta oil patches, at the misery of many hard working job displaced drivers.
          Autonomous driven cars for the greater part are a myth, elevated to fraudulent levels.
          The Tesla fiasco is a case in point where thousands of consumers paid an additional Ten Thousand USD for this addition the never received nor are likely to ever.
          There will be a very large group of angry motorists wanting the 10 grand back as the Tesla’s pile up unwanted at the end of their service life.
          For a better look into this try QTR pod cast number 262.

  25. edmondo says:

    Why is it when the government gives money to poor people it is inflationary but when it gives it to billionaires, then everything is A-OK??

    • Mr. House says:

      That’s also inflationary but only for the stock market! Which is the good kind of inflation, but actually i think at this point any kind of inflation is considered good.

    • Peanut Gallery says:

      Giving to billionaires also has negative inflationary impacts. They are just harder to understand, which is why you think it is “A-OK”…

      QE that inflated asset prices are the same pressures that made housing unaffordable for many americans over the past 10+ years.

      Both types of stimulus are inflationary and neither are necessary nor wanted for the common layman who wants sound money and freedom from interventionist government

    • RightNYer says:

      Who on this site has said that giving money to billionaires is A-OK?

      I’m really getting tired of this asinine strawman.

      • drifterprof says:

        It’s not a strawman in the sense that if one is always pounding on the fact that the government breeds a lot of lazy poor tosser cheaters (like some do on these threads), and not giving same focus on the rapacious flow of money and power to the upper oligarch system, it’s kind of like focusing on only the low end.

        • 91B20 1stCav (AUS) says:

          drift-in my experience, ‘lazy poor (relative to their class peers financially and/or in their humanity) tosser cheaters’ exist in roughly the same proportion in all classes, The perception that wealth on its own washes everything clean, including ‘moral hazard’, in the minds and hearts of those with little objective belief in themselves…(recalling tennis pro Agassi’s old Minolta ad: “…image is everything…”), leading to wealth-worship, appears to be widespread. Perhaps ‘the quick buck’ impulse, rather than majority cooperation is the true driver of human evolution…

          may we all find a better day.

    • GirlInOC says:

      Because people love to bash on the poor. It has gotten to the point I mostly avoid the comments here anymore, especially with Unamused gone. I’d buy a Wolfstreet beer mug if ever there was an article without commentary on “lazy” “entitled” “free-loading” Americans. And ftr, we have worked our a**es off for 20yrs & still aren’t anywhere near where our parents were at the same age. The lesson Zoomers are seeing is that all the bootstraps in the world isn’t enough to get them to where they need.

      #NoWarButTheClassWar ✊

      • Petunia says:

        I agree the poor bashing is ridiculous. These people have nothing and get a pittance whether they work or not.

        The real lazy bunch are the ones who think the economy owes them a living collecting rents of all sorts.

        • Beardawg says:

          Petunia

          Are you insinuating that a person who seeks a career in real estate rental investments is, by definition, lazy ? I know many people who have taken great risks and worked hard physically as well as financially over the course of decades, to create positive cash flow for themselves.

        • Petunia says:

          Bear,

          I’m not insinuating anything, I think the rentier economy is parasitic. They may add some value to the economy by spending their income, but otherwise it’s capital at work and not much else. I worked in banking and finance and never saw anything created there that did much good.

        • Beardawg says:

          Petunia

          I find it hard to argue with you that a rentier economy is parasitic.

          That said, entrepreneurs who take risks in real estate must build a business like anyone else. They are not banks who can lend $1 out 10X for interest. As such, I don’t see them as an arm of the “Finance” industry. Rather, they provide a service (lodging) and make a profit (sometimes) from their speculative risk.

          I defend the industry (at least the Mom n Pops anyway) because I’ve seen steadfast hard work and patience pay off as much as I have seen speculators crash. Those who sit on the sidelines tend to have disdain for both types. It fascinates me.

      • Peanut Gallery says:

        So is it alright to bash both the poor and the ultra rich? Both are culpable, are they not? Just for different reasons?

        • Petunia says:

          It isn’t the poor raping the country, it’s the rich.

          Some guy in CA just defaulted on a $165M debt for a house.

        • RightNYer says:

          Did that guy rape the country or did he rape the lenders stupid enough to loan him $165m for a spec house (I’m assuming that’s what this was).

        • Petunia says:

          RNY,

          I can’t count high enough to track all the condemnations of people foreclosed on during the GFC, for buying homes they couldn’t afford, living beyond their means, etc.

          When a rich parasite runs out of lenders to bilk, not a peep is heard. Maybe he bought a house he couldn’t afford and was living beyond his means.

      • COWG says:

        “ I’d buy a Wolfstreet beer mug if ever there was an article without commentary on “lazy” “entitled” “free-loading” Americans. And ftr, we have worked our a**es off for 20yrs & still aren’t anywhere near where our parents were at the same age “

        The question I have is “ why not?”

        Perhaps you drank some Cali kool-aid ?

        If you had been paying attention the last 20 years, there have been a plethora of opportunities for success… as for today, that ship sailed while you were looking the other way…

        Now have to wait it out and look for opportunities…

        Your parents (or any other) were lucky enough to have been beneficiaries of an entirely different set of economic circumstances… no reason to be bitter or jealous..

        You’ve made decisions, as have a lot of people, which got you exactly where you are… there is not a conspiracy directed a you specifically…

        It might be just be that you made poor choices in finance, lifestyle, etc…

        And yeah, I do know what I’m talking about…

        Got my a$$ handed to me in 08-09 with two foreclosures, divorce, an IRS calling card along with a bunch of other things…

        Took my last little bit of money, bought an old boat and lived on it for six years while I licked my wounds…

        I’ve recovered today to where I’m comfortable…

        I’m not preaching, ( at least trying not to), only trying to say that while your wah wah looks good in print, it’s of no consequence to today… or any factor in reviewing the decisions you made that has you where you are…

        And please, no more wah wah rants…

        I DO know poor people ( and a few drug dealers and their customers) better than you…

        Not trying to piss you off, just trying to point out something different…

        Good luck to you…

      • georgist says:

        This site entirely misses the real war: rentiers vs wealth creators.

        If you are a rich doctor who treats children for cancers: I hope you get very well paid.

        If you are a waiter on tables, I hope you get paid enough for a decent living.

        If you are exploiting shortages, like a landlord ticket scalper, there is the problem.

        Left vs right isn’t where it’s at.
        Rich vs poor isn’t where it’s at.

        Rentier vs wealth creator.

    • Harrold says:

      Billionaires do not spend their money.

  26. Poor like you says:

    No shortage of homeless people, though.

  27. DR DOOM says:

    We are a booming. Over 60% of the population produces nothing and consumes the productivity of the other 40% and the “free money” from government to exchange for the rest of the worlds production. As long as the rest of the productive world will give us their production for “free ” set back and relax. Most of the worlds economy looks more like a South Pacific cargo cult with the exception that the washed up cargo is not a piece of metal flotsum but instead bundles of fiat paper. For the moment what we need is more cargo flotsum floating up on our shores. The shipping companies are going to ride this wave with the ships they got. They will keep raising prices untill collapse. They know how to milk this cow. The shipping companies are like an arsonist that loves to watch the fires they set

    • GSH says:

      re “South Pacific cargo cult”.

      Excellent. We print dollars to make sure the goods keep coming. The Fed is our “John Frum”.

    • Harrold says:

      Its not often we ask ourselves, old people and children, why aren’t they working?

    • georgist says:

      Productivity is too high for everyone to have a job.

      So instead we have X number of people producing more than they need and Y number of people engaging in rentier activity to extract the surplus.

      As progress increases productivity increases. Rentiers can take more and more without producers really missing out that much, at least in terms of materialistic stuff. What they are missing out on is time. Time spent at work, working to pay part of their surplus to their landord or to the bank for their mortgage.

      Progress and Poverty. Henry George. Outsold by The Bible in the 1890s.

      The more progress the more poverty.

  28. Ralph Hiesey says:

    I’ll just pick one thing to complain about. The graph “US imports” WOW HORRIBLE LOOK HOW FAST IT”S RISING. Must be BAD INFLATION.

    I also noted as you you wrote: the Fed is using the word SHORTAGE over an over.

    Hey, we’ve had Covid for over a year! Look at the same graph just before in 2020. BIG DIP meaning people were NOT buying. Was that precursor to DEFLATION? No, it is hard to tell WHAT the cause was but VERY LIKELY because of COVID. The sharp rise now looks like it’s just making up for the big dip just before. After that it looks to me that people were trying to make up what they didn’t buy before.

    When supply goes down because of supply suppression, prices going up do NOT necessarily mean wild inflation. The Fed is not being completely stupid!

    By no means do I agree with everything the Fed says. Or is doing. But they are not being unreasonable to give serious consideration that Covid HAS been responsible for price rises. At least 10 years without Covid before the Fed was dumping huge cash–with BARELY discernible price rises.

    I’m getting a bit tired of the OH INFLATION– WE’re paying TOO MUCH to those in the bottom 50% wealth crowd. Want get those people to stop buying . AMERICAN WORKERS! Gotta stop that right now. CUT OFF THEIR MONEY! Yes, we NEED cheap labor to make our money.

    All while the top 1% have increased wealth by multi trillions over 10 years. I credit the Fed for doing that, unfortunately.

  29. COWG says:

    I dunno…

    Who are we to assume that the labor shortages will remain…

    Can the business community not shift their labor demand or recalculate or change their business models so as to reduce or eliminate unfilled current positions?

    Can the guy who owns 5 MCDonalds decides to only operate 4?

    Can the ice cream shop owner referenced above decide they don’t want the ice cream business any longer and start or buy some other business and close the ice cream shop?

    If the world adjusts like I think it will, many of these supposed jobs will disappear into the ether and the world will figure out they really didn’t need these people after all?

    What then, when all these people , who have been sitting on their a$$ have their money cut off going to do?

    Just because you breathe air doesn’t necessarily make you valuable in the real world…

    That’s when the screaming for UBI or stimmies is going to amplify… but I think they are in for a rude awakening when they realize the world has moved on… and didn’t bring them with us…

    • doug says:

      Can the guy who owns 5 MCDonalds decides to only operate 4?

      The only 5 outlet owner I am aware of shut the inside dining down at all five and is now making more profit. He doesn’t want to ever open inside again.
      For the repair/install/replace service industries(for cars, boats, houses, plant and industrial equipment), you must have the bodies. And for many that has been very hard to find, despite offering above average wages and benefits.

  30. Artem says:

    According to the U.S. federal administration, inflation is fine if you exclude “pork” and other meat products.

    Oh, the irony.

    • drifterprof says:

      Really? Can you like, give any citation or reference on that?

      • Texas23 says:

        Zero Hedge had an article regarding WH saying inflation wouldn’t be as high if you take out the stuff that’s gotten more expensive. 🤯

        Here’s the headline if you want to google it….

        Biden Admin Says If You Exclude Beef, Pork, & Poultry, Inflation Is Actually Not That Bad

        • 91B20 1stCav (AUS) says:

          TX23-there go those hedonics, again…

          may we all find a better day.

      • Artem says:

        That’s a bloomberg quicktake but the quote relates to food prices, and meat products in particular:

        “Meatpackers are to blame for rising food prices, White House says”

        “White House National Economic Council Director Brian Deese said Wednesday that increases in the prices of beef, pork and poultry are responsible for half the jump in food prices since late 2020.”

    • Peanut Gallery says:

      Costco Ribeye choice grade steak

      Last year: $10.99/lb

      April 2021: $13.99/lb

      Now: $16.99/lb

      • Albertson’s Beef Chuck Tender Steak

        Regular price in past years: $9.99/lb

        Today: $2.97/lb

        See weekly ad on website.

      • COWG says:

        Goober,

        Copped 6 for the freezer at Publix yesterday @ 7.99…

        2 months ago offered @ 13.99 and I passed … still had some in the freezer…

  31. Input prices 1X, Higher Prices 15X, explains the under performing manufacturing sector. Why make capital investment when spec pays so well? Kill the spec kill the goose. Consumer pull demand is only a minor role. Most immigrants are Central Americans seeking asylum not jobs. A few Afghanis, will help. China is no longer exporting low value merch, US cannot find low wage workers. Gringos for export! 3X ratio Americans to Mexicans, Poor huddled masses need to head south where a low wage economy is still good. Tear down that wall we built, Mr Obrador.

    • Old school says:

      It’s clear to most that Fed bowed to political pressure and goofed up with Zirp and QE. Now what do we have? Markets addicted to the policy. Asset values dependent upon the policy. Societal unrest and real wages declining.

      Now the talk of whether Brainard is what the economy needs to take us to a new place.

      • That’s the reason JP shouldn’t be reappointed and the reason that he is. If you bow once. Analysts believe earnings estimates are too low, so who gets the blame for ruining the economy if the Fed tightens credit (or even slows the rate of monetary expansion, much less actually contract the money supply). China doesn’t really have a Fed (quasi independent banking industry umbrella org) The just set rates an ignore the public private firewall, and ways to violate that covenant. If Xi Ji were our potus he would crush the Fed I think and the banks would take orders directly from Treasury. The US seems to be heading down that path, Fed haters be careful what you wish for.

    • Nick Kelly says:

      Check a Walmart near you.

  32. polecat says:

    Oh boy! That’s quite Fed-Speak chicken$h!t entrails what splattered all over dat ‘ol beigy parchment. Do you think Jeffery wears gloves before turning a blood infused page??
    Those Fed doods .. and doodetts sure seem plastered alright.

    Might the plebes have a serious beef with the Eccles Porkers 2-legs-good?

  33. MonkeyBusiness says:

    Not sure why there is a labor shortage. What happened to all that automation and AI?

    Also Musk will be producing the Tesla Bot soon, so in theory:
    1. UBI is coming.
    2. All labor shortages will disappear.
    3. Amazon has no need to hire an extra 50K people.
    4. We’ll all just watch Netflix all day long

    Did I miss anything?

    • Old School says:

      Not sure. Seems like government is going to have to run negative real rates for a long time, but policy will have to change. We have reached debt saturation where the multiplier for government spending is less than 1. That means further deficit spending is not the solution, but may be sustained for a while by negative real rates.

      A new policy either fiscal or monetary will be attempted.

    • Beardawg says:

      Monkey

      That would be super cool – as long as we could also workout, take vacations etc (RE your #4)

    • polecat says:

      “Everybody’s got somptin to hide .. ‘cept for Jeff an his moneykee”

  34. Nick Kelly says:

    ‘Shortage of nurses’

    No doubt. Shortage of ICU beds and oxygen too. I think we can say under the circs there would be a shortage of nurses no matter what the Fed had done.

    As to all the other stuff, is there a cure? Yes. It’s the same cure for an extended period of excess demand and therefore inflation that always applied, until now, apparently. It’s called a RECESSION.

    The White House would love inflation to go away, The way the Fed can do this it to raise interest rates. This will cause a recession. If the WH applauds a recession it will be the first one to do so. I predict the opposite: if the Fed raises rates a huge scream will go up: WHY US?

    The idea that this huge overextension of credit and money creation can be corrected without pain, without a recession, is a delusion that is responsible for how we got here. I can remember reading praise for Allan Greenspan for having ‘tamed the economic cycle’, and thinking ‘oh oh’.
    In classical economics, before AG invented perpetual motion, recessions were considered normal, and so was the economic cycle. It’s natural for some humans to overextend themselves. Then they would be punished and proceed with more caution.

    Unlike the US, Canada didn’t have a housing correction in 2008. In fact it’s been 26 years since one here. In 2020 Canadians took out over 400, 000 mortgages, averaging 350,000 apiece. The CBC biz site providing this info asks: what if rates rise?

    • Sams says:

      A recession may cause bancrupcies and default on loans. A defaulted loan do not bring future income to the rentiers. And the rentiers own and run the country. The strategy is then to kick the can as far down the road as possible.

    • COWG says:


      ‘Shortage of nurses’

      No doubt. Shortage of ICU beds and oxygen too. I think we can say under the circs there would be a shortage of nurses no matter what the Fed had done.“

      Nick,

      Perhaps our resident retired MD could weigh in…

      Down here in old white people land, a lot was made of that on the news as headlines…

      And the doctor groups and administrators were on the Telly every day with dire and apocalypse predictions…

      However, in a deeper dive, it wasn’t so much a shortage of physical “beds”, the hospital corporate didn’t want to pay to staff them… and reported the percentage of “staffed” beds…

      Might be different somewhere else…

      • Harrold says:

        The For Profit hospital industry staffs for an optimal profit level.

        • Nick Kelly says:

          Should they staff for 70K new cases in 24 hrs as in Florida?

          Last nite on CNN someone asked Gupta how do you triage when you have five times more urgent cases, plus usual accidents etc. How about if you MUST chose, put the unvaccinated second. Their condition is self- inflicted. You could also ask, if someone doesn’t want to believe medical science, and therefore won’t get vaccinated, why go to a hospital at all? Take home remedies, horse de-wormer, vitamins, etc.

    • Cheney's Toy says:

      RE: Nurses. This is a huge problem that will soon become obvious. The boomer nurses are retiring (may wife last worked last March) and there are not enough younger nurses to replace them. For some time now, the nursing grads just want to go into management and/or get advanced degrees to earn the higher wages. These younger BSNs are not that interested in actual patient care – take a look around the next time you’re in a hospital. Who is going to take care of all the aging boomers?

  35. MonkeyBusiness says:

    Looks like Kaplan and Rosengren will be selling their stock holdings. Time to go short the market?

    It would be great if Madam Speaker would do the same though. That’s a more reliable signal.

    • Wisdom Seeker says:

      Wrong – read past the headline. They’re selling “individual” stocks so they can buy INDEX FUNDS. They still get to own stocks and bonds, so the fundamental conflict of interest remains.

      • Wisdom Seeker says:

        P.S. If FOMC voting members were properly required to have no conflicts of interest, they would divest all stocks and bonds and so on. Imagine if they were only allowed to own money-market funds, and could not accept external employment, speaking fees or book deals etc. for life. Then “price stability” would really mean “zero inflation”, and interest rates would be kept to quite reasonable levels!

  36. LM says:

    I get it now—the Fed is like a parent who is also a heroin dealer and the financial community is his insanely enabled child. Raising rates would cut off the drug—and force the kid into rehab. It’s called boundaries. Sadly, the little guy/gal thinking he/she has made it big with the bit of excess that splashes over will be the hardest hit. Like the friend driving in the car with the enabled, overdosed kid. And we are supposed to believe any attempt at bullshit to convince us otherwise?

  37. Peanut Gallery says:

    Not sure Kaplan and Rosengrens sales are necessarily indicative of much. I suppose their timing to “clean up” and be ethical is advantageous to them, not a bad time to sell.

    What is the O/U that we have a correction before year end?

  38. Turtle says:

    Need a new roof. Only two colors available.

    Want my fence stained. Only one color available.

    Hmmm

    • Wolf Richter says:

      You could also check out the metal roofing shingles from our sponsor, Tim Miller and his manufacturing company: they come in all kinds of colors, including custom colors.

      https://www.classicmetalroofingsystems.com/

      • Turtle says:

        I had not seen metal roofing that looks like traditional shingles before. Already got my roofing lined up but hope your sponsor does well. It just so happened that the dark color my wife wanted is one of the two colors remaining. The more common gray shingles are wiped out.

        PS. Sherwin Williams almost never has paint in stock! Recoloring our interior has been going on for a long time now. Can only buy two cans at a time and they don’t even have that most of the time. Strange times.

    • Nemo 300 BLK says:

      There’s a global resin shortage. Resin is the foundation of any coating whether aerosol, bathroom paint, metal roof enamel, or aviation polyurethane.

      • Wisdom Seeker says:

        Got any more details? Wonder what the supply chain for resin looks like and where it’s bottlenecked…

  39. Ryan says:

    Anecdotal story:
    I went to a hardware store last month to shop for a chainsaw. The clerk said they only had about 10% of their normal inventory on hand and weren’t expecting more until Summer 2022.
    He stated the obvious shortage was due to unprecedented demand. He went on to say that the store’s yearly sales goal was met in April. The store was content with leaving the shelves bare – the sales goal was reached.
    The ‘shortage’ IMO is due to people gobbling up commodities as a way to exit the dollar; money is burning holes in their pocket.

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