Wage Price Spiral Takes Off, Companies Point at it: Albertsons Shares -8%, JP Morgan’s Dimon Sees “Huge Pressure” on Labor Market

The Fed finally sees it too.

By Wolf Richter for WOLF STREET.

For businesses, there is a good side to inflation: They can jack up prices and get away with it without losing customers because customers bought into the inflationary mindset and are paying whatever; and thereby companies can raise their revenues without having to actually sell more.

And there is a bad side to inflation for businesses: Their costs are surging, not just the costs of products and services, but also the costs of labor. And those surging costs are now squeezing margins.

Shares of supermarket conglomerate Albertsons Companies [ACI] got whacked down 8% at the moment after the company, which also owns Safeway, reported stellar sales growth of 8.4% in its third quarter, ended December 4, driven by increases in retail prices, incremental sales from administering vaccines in its pharmacies, and from buying and opening additional stores.

That’s the good side of inflation: the company is able to charge higher retail prices and thereby increase its revenues.

Then comes the bad side of inflation: Cost increases. Labor costs are now surging, as companies need to offer sharply higher wages and salaries in order to hire and retain employees amid massive churn as record numbers of workers quit their jobs to jump to new jobs for better pay and better working conditions.

Albertsons noted the effects of cost increases on its gross margins, which declined by 40 basis points to 28.9% due to an “increase in product and supply chain costs driven by the current inflationary environment.”

And its selling and administrative expenses were hit by “higher employee costs.”  It further clarified: “The increase in employee costs was the result of additional labor to support the increase in fresh sales, market-driven wage rate increases, and higher equity-based compensation expense.”

At the other end of the wage scale, the biggest Wall Street banks have had to raise their already huge pay packages to hire and retain across the board, from junior bankers and analysts to executives, and those increases make the wage increases at grocery stores pale in comparison.

JP Morgan Chase CEO Jamie Dimon said in a Fox News interview today that, for the first time in his life, there is “huge pressure” on the labor market. “The price of labor is going up, we’re going to have to deal with it,” he said.

And this is now everywhere the same song: There is enormous pressure in the labor market as companies are trying to hire people in order to meet demand that has been stimulated by over $10 trillion in monetary stimulus and fiscal deficit spending in less than two years in just the US alone.

But millions of potential workers refuse to be drawn into the labor market for a variety of reasons, ranging from not being able to find daycare to sitting on so much wealth from the Fed-engineered bubbles in stocks, cryptos, and real estate that they see no need to put their nose to the grindstone ever again – that’s what they hope. And many people have found the financial freedom to start their own businesses.

The labor market has changed because people got kicked out of a rut and started thinking about priorities, and how to do things differently, and those $10 trillion in monetary and fiscal stimulus are still floating around out there.

Under this enormous pressure, the price of labor has started soaring, which is a good thing, except it now provides further and sustained fuel for the already soaring prices as customers that earn more can spend more, and they’re paying those higher prices now that the inflationary mindset has taken over, and price resistance has collapsed.

This is a classic wage price spiral, with the worst inflation in 40 years. But it’s different this time because the Fed is still fueling inflation by printing money and repressing interest rates, after having wasted a year proclaiming, ridiculously, that surging inflation was temporary.

This most reckless Fed ever has had some kind of come-to-Jesus-moment late last year when it did acknowledge the problem it had set off. And now it’s trying to act way too slowly, way too late, and way too timidly to break up this spiral without causing the whole house of cards – the magnificent asset bubbles everywhere – that its money-printing and interest-rate repression created to come crashing down all at once.

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  175 comments for “Wage Price Spiral Takes Off, Companies Point at it: Albertsons Shares -8%, JP Morgan’s Dimon Sees “Huge Pressure” on Labor Market

  1. Finster says:

    Monetary policy that was appropriate for March 2020 – the midst of a deflationary crash – was still in place six, twelve months and even longer after. It’s no mere Monday morning quarterbacking to say that was patently irresponsible. You nailed it Wolf – the most reckless Fed ever.

    • Wolf Richter says:

      Finster,

      QE was NEVER appropriate. It just enriched the already wealthy at the expense of the working people that now have to pay more for everything, including housing. Check out my chart below as to how the 1% benefited and the bottom 50% got shafted.

      The government (Congress) needs to take care of the needy in a crisis. And it did that. But the Fed took care of the wealthy and made them immensely more wealthy at the expense of working people.

      The Fed should have just used repos to calm the Treasury market (which locked up and needed calming). Reducing short-term interest rates to near zero was OK for a few months because there was no inflation. Beyond that, it should have just let asset prices sort out where to go on their own. That’s what markets are good at if you let them. The Fed killed the market and just inflated all assets. That was truly and disgustingly nuts.

      • Poor like you says:

        Was it really a “deflationary crash”? If so, does that mean all that is ultimately preventing true deflation is Fed rate repression? I’m sure that’s basically what you’ve been saying all along, but I’m not very bright, so please be gentle. :)

        • Augustus Frost says:

          There is (and was) the belief that a deflationary crash was in process.

          Ultimately, central banks have created massive moral hazard through QE, ZIRP and “managing expectations” from which there is no escape without very negative consequences for the economy and financial system.

          According to FRED, real median household income and net worth have flatlined in the 21st century even as it took a 5X and 14X increase in the national debt and FRB balance sheet to enable the mostly mediocre “growth” in this fake economy.

          Now with inflation running the highest in 40 years by the government’s own data, there are only bad choices left.

          There is never something for nothing.
          This is the greatest mania in history and the most distorted economy ever.

          No matter what the FRB and US government do, the majority of Americans are destined to become poorer or a lot poorer.

          No, it isn’t different this time.

        • Sams says:

          August Frost
          There is no morale in capitalism, only a bottom line. It is all about profit in the end, by all means.

        • Finster says:

          In my lexicon it was a deflationary crash. There was a panic into cash … which drove its value sharply up. This was most evident in collapsing prices in financial markets that reprice rapidly.

          This is why, for a brief spell, I think the Fed was justified to buy Treasuries to put cash into the system and balance the demand shock. It was NOT justified to buy mortgages, corporate securities, or promise it would keep rates at zero for years.

        • cb says:

          Finster said: “In my lexicon it was a deflationary crash. There was a panic into cash … which drove its value sharply up. This was most evident in collapsing prices in financial markets that reprice rapidly.

          This is why, for a brief spell, I think the Fed was justified to buy Treasuries to put cash into the system and balance the demand shock. It was NOT justified to buy mortgages, corporate securities, or promise it would keep rates at zero for years.”
          _______________________________

          If there was a panic into cash, it was an opportunity for the prudently leveraged to regain some ground on the leveraged gamblers. The FED/Banksters/Wall Street couldn’t have that, so they did what they know —— continue to create money from nothing —– making the dollar and savings worth less.

          All the actions, whether buying Treasuries or Mortgage Backed Securities, or suppressing interest rates are done to inflate asset prices, both financial and tangible (housing), even to bubble prices. Disgusting, End the FED and make a lot of bastards start working and producing value for a living,

      • MyLadyHumps says:

        Your comment was almost as good as your articles. You state the cold, corrupt facts and there is no escaping it.

        Yet I’m curious, it seems you believe the fed will embark on some sort of tightening cycle.

        I don’t deny that there will be a temporary dip in the amount of bond purchases, but I think the Fed will never again stop QE (even temporarily). I was alive that last decade, it’s impossible for me to believe otherwise.

        QE and zero interest rate policy are permanent. The government will be funded and the Fed will provide that funding. Speculators will be enriched and savers will pay the cost.

        Even the government is reporting inflation of 7%, yet the Fed is persists with their pro inflationary policy, is this not clear to everyone. Powell is debasing the currency, there will be no tightening. Period, end of story.

        The come-to-Jesus moment you describe is really a Powell-is-Satan moment.

        Speculate, it’s the only option Powell gives you. The Sociopath has handed you a quarter and told you to call heads or tails.

        The financial media refers to DogeCoin as an “investment”, it’s not even speculation – Thank-you Jerome! Well done sir.

        • Augustus Frost says:

          Wait until the DXY falls below 70 again. At some point when the USD is in freefall from QE and lax fiscal policy, a choice will have to be made.

          My prediction remains that the public and markets will be thrown under the bus in an attempt to preserve the American empire. There is no empire without global reserve currency status, as the US simply does not produce enough to pay for it out of domestic production.

          Other countries may or will coordinate monetary policy with the US to attempt a simultaneous devaluation but that’s theory. No coordination is going to produce something for nothing.

          Ultimately, the currencies where the country produces less and consumes more are going to decline substantially. On the one side are Asian economies who produce an increasing percentage of real goods and on the other countries like the US and UK which sell an outsized percentage of services with dubious or no actual value. The US isn’t going to run increasing trade deficits forever, not when it’s already at a run rate of $1T annually.

          Look at what’s already happened to the USD versus the currencies most want to hold for “store of value”. USD has lost 2/3 versus the Yen, around 3/4 versus the CHF, and probably a similar amount to a combination of the DM/Euro since the 1960’s. GBP is almost at parity with the CHF, down about 90% from the 1960’s.

        • drifterprof says:

          “…but I think the Fed will never again stop QE (even temporarily). I was alive that last decade, it’s impossible for me to believe otherwise.”

          Thinking something is going to continue because it is one’s experience in the past is normal and often predictive, but for game-changing events can be a huge mistake.

          Sometimes it’s better not to be locked onto current activity, like when I’m playing chess with the computer, focused on a duel, and suddenly a bishop zings in from out of the blue on the other side of the board with a decisive hit that defeats me.

          The Fed has done completely different things at different times, to the same effect of enriching the wealthy. They influence people to think inside the box, and operate outside of the box, exporting national capital, and hoarding the remaining capital / wealth to the detriment of the American citizens. A big question is, can they pull it off again this time? As long as things don’t get too bad, they probably will.

          Augustus Frost gives an excellent nutshell description of the big picture, concluding: “At some point … a decision will have to be made … in an attempt to preserve the American empire.”

          I have an uneasy feeling that the only thing the Fed (and oligarchs it represents) may have left in their toolbox at this point is fascism, and the accelerating decline of the American empire.

      • Eastern Bunny says:

        The tools we have involve affecting financial asset prices and those are the tools of monetary policy. There are a number of different channels – mortgage rates, I mentioned corporate bond rates, but also prices of various assets, like for example the prices of homes. To the extent that home prices begin to rise, consumers will feel wealthier, they’ll feel more disposed to spend. If house prices are rising people may be more willing to buy homes because they think that they will make a better return on that purchase. So house prices is one vehicle.
        Stock prices, many people own stocks directly or indirectly. The issue here is whether or not improving asset prices generally will make people more willing to spend. One of the main concerns that firms have is there is not enough demand, there’s not enough people coming and demanding their products. If people feel that their financial situation is better because their 401(k) looks better for whatever reason, or their house is worth more, they are more willing to go out and provide the demand.

        Bernank press conference sept 2012.

      • historicus says:

        Wolf…
        I didnt see any Senator put up that chart at the hearings.
        Do you know maybe why?

      • historicus says:

        QE never appropriate.
        July WSJ, 2009 Bernanke wrote an article how it was going to be temporary…..and he laid out how the balance sheet would just roll off…poof.
        I tore it out….I knew it was BS….
        Remember Bernake’s trembling voice when he spoke?
        Later, he said when unemployment dipped below 6.5% the Fed would normalize. Normalize would logically entail looking in the past and detecting what was normal. Normal was Fed Funds equal to or in excess of inflation. (my favorite chart) I guess Ben ……what’s the word?

      • paiute says:

        I do like this household wealth chart. I think it is a good measure. I am curious what it would look like if the y axis went negative to show debt. I can’t shake the idea that debt is now worth less and that most us are the same or better with this bout of inflation and that the real losers are institutions. it’s counter to how I want to believe, but is the real problem only the status of the dollar? Am I crazy? When I talk to people they are worried, but then they are personally doing okay.

        • Wolf Richter says:

          Here, wealth = assets minus debts. So to show debts, I would logically have to show assets instead of wealth. I could do that, I might give it a shot.

          The debts of the bottom 50% would be barely visible because they don’t have much debt in dollar terms because they have few assets they can leverage. The 1% have lots of debt and will benefit the most from inflation reducing the weight of debt.

      • Finster says:

        Believe me, Wolf, I emphatically share your overall view of the Fed and think there are few voices as eloquent as yours on the matter. You are doing a great public service here in calling it like you see it.

        I just differ from the conventional view that QE is a more radical monetary policy tool than interest rate targeting. Interest rate targeting gets a pass probably because it has a longer history and has acquired a “conventional” reputation. But it’s price fixing in the credit markets … an activity that would never be tolerated to this extent in any other market. It’s interest rate targeting that the Fed used to back itself into the corner from which QE emerged. Had the Fed refrained from rate targeting, the conditions which led to the extreme abuse of QE would likely never have developed.

        Price signals form the neural network of the financial system. By suppressing the transmission of data through this network, price fixing is the financial equivalent of sticking a penny in the fuse box. You might get the juice flowing again, but at the risk of burning down the house.

        • cb says:

          @ Finster –

          I think you are right about rate targeting negatively distorting markets. It was done to bail out a bunch of overleveraged asset holders. And it was ruinous, because the more interest rates were suppressed the more valuable it made leverage and the more it supported asset price bubbles. And it did lead to QE because the FED just couldn’t let their constituency (highly leveraged insiders) eat their own cooking. Much better to let assets go to the moon, further wealth disparity and create a rentier society.

      • cb says:

        Wolf said : “The Fed should have just used repos to calm the Treasury market (which locked up and needed calming).”
        ——————————–

        Why does the FED need to calm the Treasury market. Price adjustments would take care of any adjustments the treasury market needed.

        Why support an inside club where the imprudently leveraged, at the expense of the prudently leveraged, get bailed out by an entity that gets to create money out of nothing?

    • historicus says:

      Deflation….who has ever seen it?
      Retracing inflation, short term, is NOT deflation.

  2. nick kelly says:

    Nasdaq up 175 on ‘buy the dip’

    These people are crazy. Never thought I’d say this but listen to Cramer. He likes Deere (up 6 %) over a software co (down X %) Get this from Cramer: ‘it’s time to buy companies that make products at a profit. Concepts are out’

    Jeez, aren’t all SPACS concepts?

    When the markets first took their hit, a few percent, the omens were good. If the market could slowly descend, at some point after a month or so it might have adapted to higher rates. But if ‘buy the dip’ is going to prevent that, then after the 2 nd bump from the Fed, it’s going to make up for lost adjustments and drop 20 % in one session. Then we’ll have every shill screaming: ‘policy error!!’

    The policy error is buying the dip, preventing the most overvalued market in history from adapting until it’s too late and 2 or 3 bottled up corrections of 10% each happen at once.

    • DawnsEarlyLight says:

      Probably because the fed will keep the game going at any cost.

    • Troy says:

      There’s so much money in the system, where else are people/ investors/ funds going to invest them at this point?

      Until bond yields rise and fed fund rate rising to get money out of the system, I don’t see the market slowing down.

  3. THEWILLMAN says:

    Capital vs. Labor.

    Wonder whose side The Fed will be on?

    • Wisdom Seeker says:

      The Fed serves capital but their power remains limited to creating inflation and deflation. That’s a great power, but there are greater ones.

      The labor resurgence vs. capital is a decades-in-the-making demographic thing that is stronger than any central bank. China was the last major reserve of surplus labor and it’s now through its easy-growth phase. Going forward the reality is steadily-aging populations in all major economies going forward.

      The 30-year-long labor glut is now, finally, becoming a labor shortage worldwide. That means rising wages, tighter profit margins and an inevitable clipping of capitalists’ wings.

      Basically, there are more mouths to feed, fewer workers, and thus more economic power for the workers.

      This is a long slow cycle that has been building for decades and cannot be reversed by anything other than maybe a major pandemic that slaughters unproductive unhealthy resource-draining retirees while leaving children unharmed. Hmm.

      • Brian says:

        The Fed has no control over inflation..nor employment..never had ..never will

        • Wisdom Seeker says:

          Brian I meant the inflation and deflation of the money supply, not consumer prices. The Fed absolutely controls monetary inflation. Sorry for the confusion!

      • Augustus Frost says:

        Much, most or all of the labor shortage is due to fake growth from lax fiscal and monetary policy. This policy won’t produce recent results forever.

        There is demographics but since there is no birthright to minimum living standards, many who have and will retire will be forced to un-retire (if they can even find a job), regardless of their age.

        Otherwise, their living standards will decline regardless of what the government and FRB do or don’t do, as neither have access to a “deus ex machina” to magically generate increased prosperity.

      • Motorcycle guy says:

        Wisdom Seeker,

        “other than maybe a major pandemic that slaughters unproductive unhealthy resource-draining retirees while leaving children unharmed. Hmm.”

        Interesting comment. Here’s some recent statistics that go along with it.
        Dr. David Martin began pointing out about six months ago that there was something fishy about the year 2020.
        That year the….what ever you want to call it was raging without any (permissible) way to treat it. And yet the “excess deaths” as reported by the life insurance companies were no where to be found. (Interestingly the average age of those who died of the ailment in the USA was eighty years of age).
        Then, starting in the third quarter of 2021, life insurance companies which primarily sell term life insurance to employers as a benefit to the employee (and their chosen beneficiary) began reporting a forty percent increase in “excess deaths. And this is among the working age population. I wonder what significant change to place between 2020 and 2021 that could account for this…. this…unusual circumstance?

      • LK says:

        This pandemic does feel like it is all part of someone’s plan, in the absence of any other culling mechanism.

        • nick kelly says:

          And in the Middle Ages if your cow stopped giving milk it was become the wicked old lady next door gave it the evil eye.

          Why is trying to explain a virus ( which was detected but not viewable until 1934 with the new electron microscope) like trying to explain electricity to a stone age tribe. The difference is their ignorance is excusable.

          Why would you fly on a plane at night, sit back with a drink at 35,000 feet, 40 below outside, the plane only knowing where the airfield is because it sends out radio waves and detects their reflections… if you think science is BS?

      • Senny says:

        👏🏾

      • cb says:

        Wisdom Seeker said: “The Fed serves capital but their power remains limited to creating inflation and deflation. That’s a great power, but there are greater ones.”
        —————————————–
        A great power the FED has is that they assist in the allocation of assets and concentration of wealth. They assist in the creation of a rentier society.

        • cb says:

          The FED creates debt slaves and wage slaves ……………
          “Bravo” for the bastards ………

    • Catxman says:

      If they’re like the typical government agency, they will try to please all comers while satisfying none.

      • Enlightened Libertarian says:

        I bet they are trying to decide who to throw under the bus.

      • Truckman says:

        This was explained to me by my geography master as the standard for Government. He called it the Great British Compromise, since the British were famous for doing it.

        The trick is to make everybody EQUALLY unhappy ;)

        There’s ample psychological evidence that this works.

  4. Yort says:

    Get back to work Boomers, the rich elite demand it!

    Billionaire Bloomberg was ratting out the Boomers today (article exert below), and I immediately called my parents RVing in Florida, and told them to get their asses back into the work force immediately as Boomers don’t deserve to retire unless the super wealthy elites are happy and allow it…(sarcasm)…HA I laugh daily at the elites and mega corporates crying in the media every day about retirees “retiring” and thus hurting their luxury parasitic lifestyles…crocodile tears, LOL…

    Overall, there were 3.3 million, or 7%, more retirees as of October 2021 than in January 2020, a number that exceeds the expected demographic shift of the large baby-boomer cohort out of the labor force.

    • Rowen says:

      Boomer retirement is leaving a giant hole in the skilled technical/industrial labor force.

      Just a multitude of factors: de-emphasizing vocational work, increased prestige of law/medicine/finance, real estate construction boom, lack of apprenticeships.

    • Kevin says:

      larger than expected now after delaying for years before. Covid pushed a lot of folks holding off on retiring to do it and some who would have gone later to go earlier creating a bubble but of folks who hopefully would have retired anyway. It’s crap to cry about them going back to work.

      and god forbid we have a tight labor market and let wage rise.

    • RedRaider says:

      It’s not only the baby boomers themselves. How many boomers started giving their grown children their inheritances early?

    • RedRaider says:

      I thought everybody hated the boomers. But deep down they love us.

      But I’m not changing… I’ve been practicing years at being a curmudgeon.

      :-)

    • Ron says:

      3.7 million babies were born in 1957, 64 years ago.

  5. Old school says:

    Bottom line will be US government will most likely be found complicit in causing the crisis, covering up the crisis and then mismanaging the crisis causing a damaged economy and lower standard of living.

    • Anthony A. says:

      Nah, read Yort’s post above. We boomers and “older than boomers” will be blamed for not working long enough. We are an easy target to blame.

      • Jarhead John says:

        Anthony…
        As a boomer, I’m waiting to be blamed as the “unjobbed” or an “anti-jobber.”

    • Brian says:

      Be more specific in your charges,.US Government?..ok..who within the government should claim responsibility? That’s easy..the elected officials of both parties in all branches government
      Do you belong to a political party?..have you ever voted one into office? Look in the mirror first

      • Wolfbay says:

        “ democracy is the theory that the common people know what they want and deserve to get it good and hard” HL Mencken

        • Brian says:

          An HL Mencken blast..that’s a first for me ..you must live at Epcot Center or a Disney back lot..good luck

  6. TradeG says:

    Just in one week 30 years mortgage rate increased to 10.64% an increase of .36 % from 3.29%. The average rate on the popular 30-year mortgage hit 3.64% on Monday morning, after rising sharply last week, according to Mortgage News Daily. On Friday, the rate was 3.5%, and last Monday it was 3.29%.

    This shows a sign of Federal moving slowly towards rate hike in coming days as it slightly moving other items slowly.

    • Franz Beckenbauer says:

      So much for the flippers and the people using their houses as ATM’s.

      Guess they’ll have to buy some Bitcoin then and pray.

    • Jackson Y says:

      Not nearly enough to pop the bubble.

      In San Francisco, homes are still selling 20% above list price within days. It’d take 10%+ mortgage rates to pop this.

  7. Cynical Engineer says:

    I think this has less to do with the Federal government giving money away, and more because wages have stagnated for the last twenty years.

    Workers are waking up, realizing they just can’t pay their bills and demanding more money.

    I’ve seen this personally: I’m currently making 30% more than I made 20 years ago, but my housing costs are 200% higher, health care costs are roughly 600% higher, food 200% to 300% higher, energy costs are 200% higher, and transportation costs 150% higher.

    It’s going to take one hell of a pay raise to catch up with all of that.

    • Wisdom Seeker says:

      AND the workers finally have the negotiating power to get those raises, because finally the asian labor glut has been depleted and now there aren’t enough workers.

      • Sams says:

        There are not enough cheap workers. ;)

        On the other side, by 2050 Nigeria will have a population the size of China if the trend continues.

        Crap cheap Chinese products, just wait for the Nigeria thake their place as the manufactureing country for chap products.

        • nick kelly says:

          If the past trends are a guide, Nigeria may not exist by 2050. My X ( still a bestie) taught there in 80’s. The nearest town, sounds like ‘My Doog ree’ has seen a lot of trouble. The world’s most famous travel writer Paul Theroux, went back to the school where he taught: vacant, looted. Vast oil wealth stolen. Tribe still a main factor in government.

          2 Anecdotes from my X: as a new teacher she gave a little party. She uncapped various beverages on the table. When she came back no one had touched one. You always uncap your own beer, lest you be poisoned.

          Pierre Trudeau, Canadian PM, made state visit to Nigeria. He heard there were Canadians teaching not too far away and told hosts he wanted to go there. Nigerian leader went along. So they get there and Trudeau is mobbed. that’s where Lynn my ex kisses Trudeau. The Nigerians were amazed that the PM would let ordinary people approach him.

          There is a low- level civil war in parts. Nigeria is where Islamic militants kidnapped a bunch of girls. There are US State dept warnings about travel, even to Lagos the capital

    • Kevin says:

      YES!! all this crying about inflation because wages are finally increasing after decades of stagnated. The fed has recognized that wages needed a hotter economy to rise. and a tight labor market is good. people have jobs are and are able to switch. all leading to more leverage in bargaining.

      and so far corporate profits are still exploding. let’s see profit margins come down before crying about wage inflation.

      • Wolf Richter says:

        Kevin,

        The problem in this wage price spiral is that prices will over time rise faster than wages. There might be a burst in wages at first, and then price catch up and surpass wage gains. Workers are not coming out ahead in this inflation game.

    • Augustus Frost says:

      The ability to obtain higher wages has little if anything to do with what people want or (supposedly) need.

  8. Fred Flintstone says:

    Admiral Powell…….the Japanese have attacked Pearl Harbor.
    His response…….Well……after we meet about the attack in the next several months…….we’ll start to formulate a plan to address this attack. Perhaps…..we will decide to build naval and air assets….however….we will move in a very deliberate manner to address the threat.
    By 1944 we expect to be ordering more steel so that the ships we might need to build will be finished by 1950 or so.
    If other nations move faster than us…..shame on them for being preemptive. Let no one misunderstand…..if the Japanese conquer Chicago we will act in due haste.

    • Motorcycle guy says:

      Fred Flintstone,

      I love it.

    • JeffD says:

      Exactly.When the house is on fire, you don’t casually walk over to the shed to get the fire extinguisher, taking a smoke break before you dig for it. This is all intentional. They know exactly what they are doing. The want the insurance money so they don’t have to keep living in the dilapidated, mold infested, rat trap.

  9. MsASmith says:

    Wolf, I appreciate your calling out excesses in all quarters from Wall Street to Washington DC.

    But let’s not forget there were lots of families/ children/elders on the edge of poverty and over, not harvesting $ from investments, who needed help. Through no fault of their own suffering while income gap widened and economy faltered, Congress and the Fed stepped in.
    Yes, we’ve “stayed too long at the fair” but don’t lose sight get of why this began.

    Something will happen again; how can we do better next time?

    • Wolf Richter says:

      MsASmith,

      Yes, it’s Congress’s job to step in to help the needy in a crisis, and it did that (though Congress did a lot more than that, handing out over $1 trillion to businesses most of which didn’t need it).

      But the Fed did the opposite: it stepped in and helped the already wealthy — and hugely so — at the EXPENSE (through inflation) of the needy. Don’t get government and the Fed confused.

      Here is per-household wealth by wealth category. It doesn’t even show the needy. It shows the bottom 50% (green line at the bottom) v. the 1% (red line at the top), and how they fared since March 2020. This is what the Fed accomplished with its policies since March 2020: the worst wealth disparity ever (wealth data by category is from the Fed itself):
      https://wolfstreet.com/2021/12/27/my-wealth-effect-monitor-wealth-disparity-monitor-for-the-feds-money-printer-economy-december-update/

      • historicus says:

        “Pulling up the ladder” I think they call it.

      • Enlightened Libertarian says:

        Wolf, is that the average or the median for the one percent%?
        I think the median might be about 20 million or less.
        The average is skewed by the 1 billion and up group.

        • Wolf Richter says:

          Enlightened Libertarian,

          That’s the average. I can figure the median only if I get the entire list of 136 million households by address, but the Fed won’t give that to me. And it may not have that kind of list either.

          The difference between average and median here is not that much of a factor because the 1% by definition is already a very narrow group. So you’re looking within that group. And yet it’s a big group 1.3 million households. A few hundred billionaires, among 1.3 million one-percenters don’t shift the average by all that much in this wealthy bunch.

      • MsASmith says:

        Thanks Wolf! You addressed and answered my concerns with policy, while educating 👏
        Noted: the Fed is not the government.

      • Yort says:

        The Fed is following the same playbook that it did after the housing crash, bid back up all risk assets…

        What I find mind blowing is the Fed got risk assets back to the same level in about five months, not five YEARS…as can be seen in your chart.

        When you inflate the asset balloon slowly, the bottom 99% don’t seem to notice. But blow that balloon instantly, and it gets everyone’s attention. The Fed should be wise enough to not enrich the wealthy too quickly and make it transparent to the entire population, which leads me to believe they had absolutely not clue how fast the asset inflation experiment would take, and thus no clue when to shut it down.

        I still have no solid theory of why the Fed didn’t start shutting down the “Everything Inflation” back in early 2021 when even the billionaires, getting insanely more wealthy, where telling him to stop the madness. At this point, there must be a new experiment they are attempting to force on the citizens…be it inflating away the debt, moving society towards the (M)agic (M)oney (T)ree fantasy, forcing the world out of private crypto and into Fed backed Digital Currency, etc… are they perhaps up to some convert monetary/fiscal goal???

        If not, then something isn’t right with our Fed as it is obvious to most this is going to end poorly…

      • ru82 says:

        Almost every business sector is becoming a monopoly. The few executives will make 100x to 300x as all the other workers.

        Then you have the hedge funds how take a cut out of everyone’s 401k….just because they can.

        The Government needs to step up and start helping small businesses. Give them the no sales tax benefit like Amazon and other internet companies had 10 to 20 years ago.

        I would say create a law that gives you a no sales tax exemption in state your headquarters is located. That way the benefits go to local companies. Maybe even give them some federal breaks too like a lower tax rate.

        Limit the number of stores a company can have before the tax breaks go away.

        The more mom and pop businesses you have the better the community performs and survives. The mom and pops are the ones who donate money and time to the local community. In addition all the profits stay local instead of going to Bentonville Ark or Seattle Washington.

        • Swamp Creature says:

          ru82

          You’re dreaming. The goal is to have 6 large monopolistic corporations running everything in the country. Then offloading all the governmental functions to these 6 large vertically integrated corporations. Its already happening right before your eyes.

    • Augustus Frost says:

      You’re describing long-term social decay. That’s my explanation for the 5X increase in the national debt and 14X increase in the FRB’s balance sheet since 2000. To keep society from “falling apart” combined with a belief of something for nothing through fake wealth (an asset mania) and fake economic “growth” through the loosest fiscal policy ever.

      In a society (any developed economy) where it’s almost always only the taxpayer who is financially accountable for cost of the public good, just throw money at the situation. The politician, voter, government bureaucrat, and benefit recipient have no accountability to anyone and can spend their own and the taxpayer’s money however they please.

      The elites are at fault for plundering the country. Concurrently, the masses don’t have any birthright to minimum living standards either.

    • Bobber says:

      MsASmith, you need to explain why you think the Fed helped the needy, cause everybody else is seeing the opposite.

      Please don’t confuse spenders/debtors and speculators with the “needy” in your explanation.

    • MyLadyHumps says:

      I didn’t lose my six figure income job when the pandemic hit. Do you include me among all of those poor hapless souls who could never possibly save for an emergency?

      If I’m not one of the poor suffering fools you describe, please provide justification for the government sending me $4200 in stimulus.

      The government used the “crisis” as an excuse to throw a massive stimulus pity party, and Americans behaved like hungry pigs at the trough.

      Sorry but those are the facts.

  10. jon says:

    Whenever Powell Jawbones, the market goes up.

    I really doubt if Powell has any intention of taming the inflation. Inflation on the ground is 20% or so. I wonder what 4 rate hikes ( to 1% total ) would do to clamp the inflation.

    Also, most the the salary hike is not able to catch up with inflation.

    • MyLadyHumps says:

      Powell wants high inflation.

      The government needs high inflation.

      The investor class borrows huge sums (shorts the dollar) at ridiculous, negative real rates and buys up assets hand over fist only to pay back the debt with debased currency – they love high inflation.

      So everybody that matters like high inflation. Powell is not going to fight inflation.

      The suggestion is absurd.

    • Swamp Creature says:

      jon

      Rate hikes will not do much to tame inflation. In fact, they may make it even worse over the short term.

      David Stockman puts inflation at 13.8% overall. Depending on your personal situation inflation can range from 3% to 20%. I’m on the low side, closer to 3% because of my lifestyle. But most people who are not empty nesters are closer to the higher figure.

  11. Kunal says:

    “The Fed finally sees it too.”

    Its wishful thinking. “Fed sees it” is true but whether they will do anything about it or not is very clear, they talk but do nothing. Fed will let dollar crash but not the market. Both sides of the party works for rich and Feb obviously work for the rich. So unless there is a revolution at the ground level, all this Fed raising rates to contain inflation and crashing the market is wishful thinking.

    10 yr yields are back down today. It will keep oscillating in a band that does not crash the market.

    • Wolf Richter says:

      Kunal,

      “10 yr yields are back down today. It will keep oscillating in a band that does not crash the market.”

      Long-term yields cannot meaningfully rise until the Fed stops buying long-term Treasuries and MBS. The Fed slowed its purchases, but it’s still buying. And even after it stops adding to its pile (by March), long-term yields still cannot rise meaningfully to meet the rate of inflation unless the Fed starts reducing its gigantic pile.

      And throughout all this, yields will always go up and down from day to day and minute to minute because that’s how trading works.

      • Kunal says:

        True. I’m glad you agree.
        I thought yday you and folks said mortgage rate will hit 5% by March or April. That’s not gonna happen ever. It’ll dance in the 3-4% band till next sell off when it’ll go down further.
        Feds only mandate is to keep propping assets. Everything else is a lie.

        • Captain Pedantic says:

          the Fed has two mandates
          1) inflate asset prices
          2) fund the bloated government

        • Wolf Richter says:

          Kunal,

          I personally said mortgage rates already hit 3.5%, and the Fed’s interest rates are still at 0% and the Fed is still doing QE.

          I doubt mortgage rates will go to 4% by April. That would be fast.

          But once the Fed gets the balance sheet runoff going at full operating speed (late this year or sometime next year), all bets are off.

          And “not ever 5%” is not anything I would bet on.

          You cannot compare this to 2018 (when mortgage rates did go to 5%), because there was little inflation back then. Now there is raging inflation, worst in 40 years, and comparisons need to go back 40 or 50 years, not to 2018.

    • historicus says:

      Powell said
      “If inflation persists at high levels longer then expected……”

      It has already lasted longer than expected (transitory) and is higher than desired (2%),
      So, by Jay’s definitions, it has already accomplished longer and higher.
      Can any Senators think on their feet and follow up on that?

      And thank goodness that Fed Govs cannot trade stocks anymore…..no mention of Index Futures or advising others.

      And finally, Jay said that the government hasnt had any problem borrowing at these low interest rate levels.
      Did any Senator point out that the Fed now owns 5.6 TRILLION in treasuries, (20% of all Treasuries) and what might the interest rates be if they hadnt supported the market? Not to mention now owning 25% of all residential mortgage paper.

      • historicus says:

        can they still trade bond and note futures?
        This is a legal matter and language matters.
        I think Powell did a dodge there.

      • Swamp Creature says:

        Richard Clairida had decided to retire 2 weeks earlier than originally planned. He is salivating over the big bucks he has made in his own private trading account while serving as Fed governor, and now will double down on his trades and seek a high position in a private equity firm. He is glad to move on from his low government salary but is happy that he was able to serve the country with honor and distinction.

  12. Greg says:

    Can cause problems for exporters and any company based in america that competes with imports! Sheeesh! and with labour costs skyrocketing could that mean less $$$ for stock buybacks that fuel stock price appreciation that leads to hundreds of billions in bonus’ for company excecs? Just recently Tim Cooke joined the billionaire CEO club along with Diamond and they complain that their employees demand a few thousand more annually! So sad!

  13. SocalJim says:

    In the high coastal zip codes that I watch, real estate has never been hotter. Nothing like this has ever happened in my lifetime.

    • historicus says:

      As long as speculators (and others) can borrow a full 4% below inflation to buy a house, they will buy houses.

    • Jon says:

      This too will change. Just hang in tight! I thought the same in 2007-2008.
      real estate prices are most sensitive to interest rates.

      • SocalJim says:

        In 2007/2008, inflation was low. This is a different environment.

        • jon says:

          This time is indeed different :-)

        • Wisdom Seeker says:

          LOL in 2008 oil prices were nearly double what they are today. Ditto natural gas.

          Actual inflation and reported inflation are very different things.

      • Rowen says:

        Bernanke might have lit the spark with his rate increases, but the crisis morphed beyond interest rates and into liquidity/solvency. I think the FRB will go full BoJ before it allows that to happen again.

    • Pea Sea says:

      Housing bubbles have happened in your lifetime, Jim.

      • SocalJim says:

        In the areas I watch, people that bought in 2007 with 20% down look good now. Imagine someone who walked away and ruined their credit when all they had to do was wait it out.

        • Jake W says:

          yes, because the government cured the popping of that bubble by inflating another one. i don’t know when, but at some point, the government, including the fed, will be out of runway.

        • Pea Sea says:

          Precisely. And I’m not sure what game plan they had for when the new bubble got out of control…but it’s out of control now so I guess we’ll see.

        • Gattopardo says:

          Dude, that was a long wait in most areas! Including (and especially) SoCal. Breakeven hit right around 2015 for most areas of LA/OC/SD. Hell, the highest end area of SD didn’t reach it until last year (yeah, 13+ years).

          MANY of those who walked away had their credit back in shape quickly, if that even mattered, and didn’t need to worry about pouring payments into negative equity all those years. Instead they rebooted at a lower price, and are way better off than if they had plugged along (probably not Petunia, given her posts). Sad, but true.

        • SocalJim says:

          Gattopardo, breakeven in my area was 2014. However, keeping the house from 2007 handily beat the SP with 20% down. Why would you throw that away? Keeping the 2007 buy and buying a second home was the optium move.

    • Seneca's Cliff says:

      Whats a “high coastal zip code?”. Is that where most of the inhabitants are stoned surfers?

    • Petunia says:

      Socaljim,

      I saw a listed house in Newport Beach, a very nice 3/2 on cliff with ocean view, $10M. This is Wiemar hyperinflation, just in case you weren’t sure.

      • SocalJim says:

        Something is not right when prices rise so fast. This is out of control. Some of us think prices around here are now rising $200,000 per month … I am watching this like a deer in headlights.

        • Jake W says:

          yeah, it’s called a crack up boom. and no, america is not exceptional in that it can avoid the fate of every other empire that has tried printing money.

        • RedRaider says:

          … like a deer in headlights

          People think the deer is dazed because it’s mesmerized by the headlights. In reality, the leader has already crossed the road and deer are hard wired to follow. When it sees the headlights it wants to pull back but it’s hard wiring won’t let it.

          I wonder what our hard wiring is.

      • Old school says:

        A lot of people don’t get the carrying cost if that kind of luxury good after the bubble pops and incomes go down. Interest, tax, maintenance, insurance going to run about $625,000 per year after tax or round off to $1 million gross.

        A lot of athletes and entertainers find out it’s a millstone after the income stops flowing or the wife kicks you to the curb.

  14. Duane says:

    Like Fox Mulder “I Want To Believe” that J-Pow will raise interest rates (meaningfully) even as that act would destroy their most valuable creation, asset price inflation. But I just don’t see it happening. Our main economic engine is now financial speculation, shipping boxes, and social media influencing (in that order). Our retirements are dependent on equities. The stock market is “The Economy” and key to any politicians re-election. Corporate media talking heads would run around with their hair on fire if the stock market started to fall. “Lower interest rates grow the economy” would be the common refrain. Hard to see anyone with the courage to go up against all that and raise interest rates. If they try it they will quickly reverse course and get back to zero.

    • historicus says:

      “Corporate media talking heads would run around with their hair on fire if the stock market started to fall”
      Oh no!
      So spiked prices MUST be defended? And tomorrows, and tomorrows…
      And what of all the 32 yr old stock brokers who have never seen a Bear Market…..what then? Safe rooms?

    • Old school says:

      I have listened to three different former central bankers say that current central bankers are in an extremely difficult spot. They took the easy decisions too many times and now they have no good choices.

  15. Anthony says:

    I think that not enough people are worried enough about inflation. For some reason they think they can wait it out.

    Let me tell you about buying beer in England in 1973 in England when I was 17. It was around 10 or 11p a pint. (imagine 10 cents a pint). Within a year it was 20p a pint and by 1976 it was 30 to 50p a pint. Try living with true inflation, which is never uniform and see what happens. I think many are in for one (heck) of a shock.

    ps we can drink in the UK from 18, not the rather strange 21 that you have in the US.

    • Anthony says:

      oops, repeated myself a bit, now where is my pint?

    • historicus says:

      The inflation hasnt even started yet, IMO.
      And the bottlenecks are from purchasing agents reaching for inventory BECAUSE of the inflation. The bottlenecks make it worse but they arent the cause. Was there a mention of the money supply being jumped 30% in less than two years by any Senator?

    • Petunia says:

      I just spent $60 for an ink cartridge for my printer and $42 to repair a pair of shoes. I experience sticker shock almost daily.

      • historicus says:

        bottlenecks they would tell you…

      • The Real Tony says:

        Buy knockoff ink cartridge’s at Amazon. I’ve had a lot of luck with the F FINDERS&CO brand. My sister must have blown over a million dollars getting brand new shoes and brand new boots quote “fixed” over the past couple of years. She just buys everything for the sake of buying them and then gets everything altered to fit perfectly. She only buys designer brand names. The same with clothes and everything else.

      • Cookdoggie says:

        I’ve been buying remanufactured ink jet cartridges online for over a decade, about $2 each and they work just as well.

  16. There is an historical comparison to the 50s and 60s when the Fed ran negative real rates. They worked themselves out from under a pile of WW2 debt. There were competitive reasons to work on the debt this time around not so sure. They also implemented yield curve control. In that case Europe was a burning hole in the ground, Japan and there was no China. This time the US is being challenged for reserve currency status. China’s sovereign bonds will draw more investment than US Treasuries. Nobody really believes the dollar is going to keep going higher. The Fed is stuck in a stagflationary sinkhole. The spending bills in Congress will get clipped, and the US is stuck servicing nonessential debt.

    • Jon says:

      Honestly I don’t see any thread to uSD as a reserve currency for few decades.
      Just look at the numbers usd is still quite a dominate reserve currency as there is no other viable alternative.

      • Jake W says:

        why does there have to be a reserve currency at all? why can’t the producers of the world demand real assets for their stuff?

        the threat isn’t to the usd as the reserve currency, but to the concept of reserve currencies in general.

        • COWG says:

          Petrodollar…

        • Sams says:

          COWG
          PetroRemimbri…
          China have started to pay Saudi Arabia in Remimbri for the oil. Iran take whatever currency they get for oil. Including tea leaves.

          US sanctions may be the most significant factor undermining US dollar as the world reserve currency.

      • Yort says:

        A combined multi-country currency might replace USD, but hard to see it in less than 10-15 years. Depends on how much faith the world has in US govt/fed/social future. I’m guessing some of the “events” of the last few years created less confidence for the world in how the US operates. Perception versus reality is important…

    • historicus says:

      AB
      “nonessential debt.”
      But such debt is good according to MMT.
      I agree, the fake low rates subsidized the creation of debt….and it still goes on with 30 yr MBSs purchase 4% below CPI.

    • historicus says:

      WWII debt…
      When they had to sell war bonds instead of printing…..
      look how far we have come
      How many Afghan war bonds would they have sold?

    • The Real Tony says:

      The ironic part is Powell will also be blamed for the U.S, losing its’ world reserve currency status if inflation turns to hyperinflation in America. The only way to end hyperinflation would be to end the U.S. dollar as the world’s reserve currency since everything worldwide is based on the U.S. dollar exporting hyperinflation to the rest of the world.

  17. Biorganic says:

    Wolf!
    First of all, Thank you for all your work! This website is an amazing resource and between your data/analysis and the comments I have learned tons in the last two years.

    Have a quick question thats been bothering me for a bit. It seems like there is a bit of double counting going on here.

    “… demand that has been stimulated by over $10 trillion in monetary stimulus and fiscal deficit spending in less than two years in just the US alone.”

    Doesn’t the monetary stimulus, buying long term treasuries, basically fund the govt spending? I can see how buying MBS allows sloppy lending in housing and helps inflate that assert class, but maybe I don’t understand how the long term bond purchases are different than the deficit spending.

    Excuse my lack of knowledge here, I’m a Chemist by trade, not an economist.

    Thank you!

    • COWG says:

      B,

      Simplified…

      Think of it as different hand grenades thrown in different directions to blow up different things at the same time…

    • Prophet says:

      “Excuse my lack of knowledge here, I’m a Chemist by trade, not an economist.”

      You got that backwards. Here, I’ll fix it:

      Excuse my lack of knowledge here, I’m an economist by trade, not a chemist.

    • Cookdoggie says:

      “Have a quick question thats been bothering me for a bit. It seems like there is a bit of double counting going on here.

      “… demand that has been stimulated by over $10 trillion in monetary stimulus and fiscal deficit spending in less than two years in just the US alone.”

      It is double counting but the commenters prefer the exaggeration. Well done sir, you get it.

  18. Ma Sola says:

    Consider that a declining population is deflationary. This will make the Fed’s attempt to inflate away the national debt more difficult than the previous attempts in the 20th century. Congress could raise taxes and cut spending. NOT and get reelected, or your inflated pay will not keep up with inflated consumer prices. The declining birth rate is the wild card.

    • jon says:

      Declining population in USA can be easily overcome by mass immigration. This is already happening to some extent for last few decades. Believe me, there are billions of people in the world who would love to come here leaving their native country.

      • David Hall says:

        I read a million people a year immigrate to the U.S. Most of them enter legally. Mexico and China are top sources of immigrants.

        A declining population without fiscal and monetary controls may expect inflation.

      • The Real Tony says:

        The problem at least in Canada is everything comes from the third world hoping to bilk the entire system and then to make matters even worse they get all relatives to come here who are near death and end up costing the taxpayers a fortune because of the free healthcare system in Ontario, Canada. All the rich Chinese have already emigrated to Canada. Now everything is from the third world. Presently Trudeau is taking in amass Nigerians. This is why there’s no wage pressure in Canada and these people do nothing but lower the standard of living.

        • Jake W says:

          that’s largely the same situation in america.

        • Julie Ali says:

          The people you speak of clean the bums of the first world citizens in the continuing care system in Canada; they also provide medical attention as doctors, nursing staff and personal care attendants in the medical system. They are engineers on projects. They are IT professionals. Sure some of them may not have degrees but a lot of them do and they all contribute to the society.

          Unlike citizens who are born in Canada, they have to earn their way into Canada. They have to justify their entry into Canada. Once in Canada some of them even provide jobs for other Canadians; they start corporations and create value.

          Demeaning the contributions of immigrants seems rather insecure on the part of those who abhor them. Immigrants aren’t taking jobs away from Canadians. They are often doing work that Canadians don’t want to do.

          Without immigrants, I doubt there would be any real economic growth in Canada at all.

          Blame the lower standard of living as I do –on the failures of Conservatives who have danced according to the music of corporate donors for decades and stripped the coffers of cash to stay in power. Mind you the Liberals also seem Conservative now so it might be that the politicians are simply more concerned about the requirements of their rich donors than the needs of the poor and homeless. I was frankly surprised when the Liberal government provided for the needs of citizens with the CERB assistance but I guess they had to after propping up big business as well.

          It might be productive for folks to actually talk to immigrants and volunteer at organizations that help them with their integration in our society. It’s pretty eye opening what they have been through and they don’t need more grief from Canadians who don’t want to see them as citizens who will be essential for the economy of Canada.

          Of course if Canadians increase the current birth rate maybe they won’t be needed. But I doubt there will be an increased birth rate by Canadians and thus we will be importing labor to pay the bills of our society. We are lucky to have a pool of third world folks willing to be denigrated by Canadians in the way you have just done so as to escape war, strife and poverty. I am happy to take as many future Canadians through immigration that Mr. Trudeau will allow into Canada.

          Also blaming Mr. Trudeau for being sensible about labor requirements is counter productive. He’s a good PM and knows what he has to do to make Canada productive. He’s bringing in hard working immigrants to do the work that native born Canadians won’t do.

    • historicus says:

      Declining population is deflationary…..
      Tell that to the Swiss…

      Have you seen it somewhere in real life or are you making this up?

      • Ma Sola says:

        Wikipedia. And you can do a web search. It is a bit more complicated than the short statement that was made.

    • Wolf Richter says:

      Ma Sola,

      1. the population in the US is NOT declining. It’s growing more slowly.

      2. Even in Japan, where the population has been declining, there is no deflation but real price stability — not the fake “price stability” that we had in the US. See chart below of Japan’s CPI.

      3. Even in Russia, where the population has declined for three decades, there is raging inflation. There are other examples of this type, such as Italy.

      So you can throw your theory out the window, no problem. It has been shredded by real life year after year for many years.

      • Jake W says:

        the theory is nonsense on its face. if you have more people, you will have more demand, but you’ll also have more production. i don’t know where people come up with this stuff.

        • Sams says:

          Central bank economics narrative.
          With stable or declining population the value of work may rise. That is a problem to rentieers.

  19. sunnny 129 says:

    Mr Powell said ‘ I will tame the inflation by raising the rates ( when & how soon?), will align the supply with demand (how?), will do quantitative tightening (when? – stll buying until the end of March).

    This is a pure ‘jaw boning’ for the benefit of Congress. But the indexes took off on his word! Wow!

    Wonder what will be the inflation number tomorrow am?

    • Jake W says:

      i wouldn’t read much into the indexes. i think it’s more simply algos going crazy.

      • sunny129 says:

        Jake W

        Then how do you follow or read equity mkts? Passive indexes like DIA, SPY and QQQ are the instruments, adopted by the retail including buy the dip folks!

        i follow them b/c of my ‘option’ trading both long and short on them. The spread for call optins on DIA is quite wide compared to SPY or QQQ. So large caps are the BFTD /Hedge funds . Since HOPIUM is very high (? toomuch faith in Fed? QE tapering will follow another set of QEs?) So with puts as hedges (as long hopium is up in air) money is in bouncing call options. Proven all 3 days this week, including today. Inflation # didn’t shake any of them. Palovian training ( Buy the dips) by Fed is deeply ingrained!

        Retail and Hedge funds bought the dip (zh)

  20. MiTurn says:

    I’m all for raising wages, being a ‘workin’ man’ all my life.

    But to some extent, isn’t that inflationary?

  21. Swamp Creature says:

    “Safeway, reported stellar sales growth of 8.4% in its third quarter, ended December 4, driven by increases in retail prices, incremental sales from administering vaccines in its pharmacies”

    I’ve been shopping more and more at Safeway lately, because the main competition, Giant Food, is having a serious supply chain problem. Stores here are out of everything. Safeway has higher prices but they have the goods I need so I go there and pay the price. No supply chain problem there. I’ve also used their Pharmacy for vaccinations.

    • Wisdom Seeker says:

      If I owned a supply chain I’d be mighty inclined to short deliveries into the Swamp myself, in order to make sure that the more-productive parts of the country were able to keep running.

      And besides, nothing convinces policymakers of inflation and supply issues than seeing it right in front of them when they (or their minions) go shopping there in the Swamp…

    • Cookdoggie says:

      A box of cereal I buy at a local no frills nonunion store is $2.50. At the local Safeway it’s $6.50.

      Also, amazing nobody yet has commented on the part of the Safeway press release where they state admin expenses are up in part because of “equity based compensation”. Don’t worry, the execs and private equity owners of Safeway are still doing ok.

  22. LordSunbeamTheThird says:

    I don’t know what the zeitgeist is in the states but I’ve tried pointing out that what appear to be good salaries just wage inflation in the UK, and its an idea thats very broadly rejected. People want to believe how well they are doing.
    You can point out the necessary data, in the UK an average of 3.5% for twenty years (a neat doubling of salaries) and suggest that this would mean that anything that wage receivers want to bid for, could be expected to have also doubled, also rejected. Asset prices, houses, are just an amazing well conceived idea.
    I can imagine that at the moment in the US there are many that just imagine how great things are. Thats certainly how it appears from google trends, no increase for “wage inflation” whats actually trending is a “worker shortage”.

  23. Cobalt Programmer says:

    (No mention about my past or current importance)
    1. I wish this inflation trickled down to little people like me. The price raise is coming down but the salary rise is not trickling down.
    2. Yes, Safeway has no milk or produce. So does most shops in swamp area they said. Probably produce is still stuck in the snow covered I-95.
    3. Safeway is a nice place to shop little costly but yes manageable.
    4. What an year. I mean 2022. Snow days, traffic came to stop, temperature in teens and shortages. school closings because of drivers are absent. National guards might step in…

  24. Depth Charge says:

    “The Fed finally sees it too.”

    The FED is a financial rapist. They are financially raping the poor and middle class and giving the spoils to the already sickeningly wealthy (you try using three words ending in a “y” in a row, I dare ya’). And when things blow out as they have, they sit back and deliver soundbites about how they see the problem and they’re going to get right on it, etc.

    The FED is full of shit. They haven’t done a single gosh danged thing to stop this rampant, out-of-control inflation. In fact, they announced they would continue printing for another 3 months, at which time they would, scouts honor, do something. Maybe a chintzy quarter point rate hike to chuckle about with their buddies during happy hour, as they compare personal balance sheets and laugh at the downtrodden living in tent cities across the land?

  25. historicus says:

    DC
    Yep….and we shout the truth to each other.
    Whom do we call?

  26. DR DOOM says:

    Powell likes to talk about his tool box. I bet it is ship shape and Bristol fashion. His vision has cleared and he can see the wage thing. He is ready to go. He is really ready, chomping at the bit. He can not let the entrenched inflation get more entrenched. He is going to open a can of 1% in 1 year can of whoop ass rate increases on 7% inflation. That’ll get’er done. If necessary he will start dumping the balance sheet on a 10 year plan to take’er down to 6 Trillion. That’s a mind numbing 20 billion a month. Powell sightings are surely in the near future in New Hampshire. He will be picking out the granite slab for his statue in the atrium of the Fed.

    • sunny129 says:

      ‘If necessary he will start dumping the balance sheet’

      Wow!

      No he is just jaw boning. Hard to do in the mid term election year. His talk will be wishy-washy, promising ANYTHING for Sleep Joe & Dems what they want to hear. He is beholden to the Banks!

  27. ru82 says:

    I have a couple of rental houses. I still get contacted all the time for people wanting to buy them. It used to two or 3 of the following each week: call, text message, letter.

    Now it is how many letter do I get each day. I got 3 letters just last Friday. I probably get 5 letters a week with people wanting to buy my rentals.

    There is still money chasing housing. I guess it wants to lock printed money into assets that are inflating?

  28. Concerned guy says:

    There is too much of BS going around. In the minutes of meeting, it was said that they will do QT sooner and faster and rely on it rather than rising too much short term interest rates. But in todays confirmation hearing, it was said that they might do QT later this year and they will increase interest rates if they have to. So basically using the approach other way around as compare to what was said in the MOM. All this flip flopping says that either they are not serious or they are just buying time for inflation to go away on it own.

    Bottom line is too much of BS, mental gymnastics even if something is done it is too little too late.

    • historicus says:

      Powell said the Fed will act if Inflation runs longer and higher than expected.

      Well, Jay, check both those boxes.

      You said “transitory” was your expectation……and now that is not accurate.

      You said 2% is acceptable…….now around 7%.

      Is there no Senator that heard the cringing hypocrisy of his statement?

      • sunny129 says:

        B/c they ALL are in that ‘sweet lies’ mean while their portfolio is growing to the Moon!
        Kool aid distribution to masses via MSM!

  29. Wisdom Seeker says:

    There is another, hidden source of financial stimulus: excess mortality due to COVID.

    This has resulted in a lot inheritance transfers, from the dead old non-spenders to their surviving spouses, children and grandchildren. And the younger inheritors have a greater propensity to spend.

    Put a different way – stocks are primarily owned by the old (retirees) and now all that market cap is spread over fewer people, making survivors wealthier.

    There are also potentially hundreds of billions in life insurance payouts, given the widely reported excess mortality among working-age folks.

    Defined-benefit pensions, on the other hand, will be somewhat less insolvent overall.

    The Fed most likely dwarfs all of these effects, but they’re not insignificant either.

    • Bobber says:

      Isn’t the bulk of the inheritances effectively transferring money from wealthy 85-year olds to wealthy 60-year olds, so the wealth stays within the saver class?

  30. Trucker guy says:

    Walmart in Bozeman, Montana advertising 18-21.50/hr for associates.

    Hmmm. Seems more and more like I should think about getting off the road and working a zombie shufflers job with dead eyes and catatonic motivation.

  31. Anthony says:

    Brent Crude up to $83.66

    • Swamp Creature says:

      Gas prices are heading up to $7/gallon as Trump predicted. $250 to fill up that gas guzzleing SUV. Enjoy!

      • Cookdoggie says:

        That’s just one prediction, but I want to hear what Britney Spears thinks before I make up my mind. Oh, and Bart Simpson.

    • Swamp Creature says:

      What will the price of gas at the pump be when oil hits $100/gallon? Back in 2008 Gas was what it is now, when oil was $140/barrel. I know because I was on TDY commuting to Dulles Airport and back every day and running up a $400/month+ gas bill just to get to work and back. I see gas going to $7.00/gallon or more. SFO is leading the country in the gas price spike. It’s being reported that the price there is already $6/gallon.

  32. Jhole says:

    Jackson WY starting hourly wage teller at new Chase branch $24. About the same as framer, laborer etc. Those poor jpm shareholders. Bwahaha.

    • Lynn says:

      There is no working class housing available in Jackson Hole Wyoming. None. I mean none. Their workers live in tent and car communities on BLM land and take turns camping in the National parks for showers. At least at $24 an hour they’d be able to afford a used 4WD vehicle for those slick dirt roads. And maybe some pepper spray for the bears.

      Plus, Jackson Hole treats it’s workers like absolute crap.

      • Trucker guy says:

        Tell me about it. I work regionally servicing the hoity toity rich people’s 2nd home areas and touristy spots in MT and WY.

        The snobbery and elitist attitude is utterly insane. Especially towards lowly working class peasants. I don’t like west coast people all that much in general but epicenters of smarmy rich assholes like Whitefish and Red Lodge will make you want to knock someone out with a pipe. I don’t know how people willingly live out of vans to work crappy service jobs. The scenery is nice for a few months, then it just blends in.

        Most of the beautiful places in this country are inhabited by the most insufferable people ever. Oregon is the most naturally beautiful state but it has the absolute worst people ever. NorCal is the same way. Western CO is the same way. Etc. etc. You go to the most miserable nothing burger towns and states and the people are great. Like, Minnesota sucks, but the people are easy to deal with. Think about Kentucky, what does Kentucky have going for it? Basically nothing but the people are hospitable and treat you with a base line modicum of respect.

  33. SpencerG says:

    I wonder how much the Fed will lower its Balance Sheet by. Last time (2017-2019) they dropped it by 13% in two years. They say the monthly AMOUNT dropped will be faster this time but the Balance Sheet itself is also MUCH larger.

    By comparison the Bank of Canada dropped its Balance Sheet by about 17% in just TWO months in early 2021. I suspect the global markets would have an absolute heart attack if the Fed tried that.

    PS: As I type this CNBC is reporting that the BLS is saying that inflation grew by over 7% in December… I cannot tell from my first read if that is 7% in December alone or 7% over the course of the year.

  34. WageWatcher says:

    According to the Chamber of Commerce the way to combat inflation is to import more workers. So don’t nobody get to excited about those wage increases. This is America the land that screws it’s work force. We import workers and export work. There already here working for tons of companies off the books in the service sector, illegal immigrants that dont have to have to pay taxes, be covered by workmans comp. But they are first in line for the benefits they collect food stamps, education(which is now having to be dumbed down so they can pass), health care. Then on the other side we have the legal immigrants that come over on visa’s to take your tech job, healthcare job, etc. This is just a blip in wage increases and surely is not enough to keep up with real inflation which has outpaced wage inflation for 50 years. Oh unless your a exec or a politician. There coming over the border to steal your job at record numbers, dont think for a second there not.

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