WHOOSH, Dollar’s Purchasing Power Plunges in February as Inflation Spreads Across Services, Fed Still Pours Fuel on It

This doesn’t even include the spike in food and energy prices over the past few weeks. They’ll show up later.

By Wolf Richter for WOLF STREET.

It would be hilarious, if it weren’t so serious, how the Fed spent a year trying to pull a bag over everyone’s head about inflation being “transitory” even as it was spiraling higher and higher, and as everyone knew that something changed fundamentally in the inflationary mindset among businesses and consumers, after $4.7 trillion in reckless money printing in two years, all-out interest rate repression, and $5 trillion in deficit stimulus spending.

It’s a horror show, the inflation data released today. But it doesn’t yet include the bulk of the crazy price spikes we’ve seen in commodities over the past few weeks, including wheat and fuel; and it doesn’t yet include the bulk of raging housing inflation that the CPI will only gradually pick up. So this is going to get worse.

The broadest Consumer Price Index (CPI-U) jumped by 0.8% in February from January, and by 7.9% from a year ago, the worst since December 1981, according to data released by the Bureau of Labor Statistics today. But back then, inflation was on the way down; now inflation is spiking:

Inflation = loss of Purchasing Power of the Dollar.

Inflation is not a sign of growth, and it’s not a sign of anything positive. It’s just a sign of the loss of the purchasing power of the consumer’s dollar, including the purchasing power of dollar-denominated labor. And this is a long-term cumulative and relentless process that started to accelerate last year. In February, the purchasing power of $100 in January 2000 dropped to a new record low of $59.46. And this is why Americans are in such a sour mood:

Inflation is spreading across the Economy.

The “core” CPI-U, which excludes the now spiking and always volatile commodities-dependent food and energy components in order to measure how inflation has seeped into the broader economy, spiked to 6.4%, the highest since August 1982.

But there’s a huge difference: In 1982, the Fed was trying to crack down on inflation and short-term interest rates were in the double digits.

The last time inflation spiked like this was in 1978, by which time the Fed had pushed the federal funds rate toward 10%.

Now, the Fed is still fueling inflation by repressing interest rates to near 0%, and by just now ending QE after having printed $4.7 trillion in two years. And its massive pile of assets on its balance sheet – the result of money printing – is fueling inflation. Which makes this the most reckless Fed ever, after having committed two years of policy error after policy error:

Inflation in services has started to spike.

How deep has inflation seeped into the economy? Last year, the spike in CPI was blamed on supply chains, chip shortages, factories in China, used cars, new cars – meaning on prices of goods that spiked.

But now inflation in services has started to spike. The CPI for services spiked by 4.8% year-over-year, the highest since June 1991:

Inflation in durable goods and nondurable goods continues to spike.

The durable goods CPI – which includes new and used vehicles, consumer electronics, etc. – spiked by 18.7% in February, by far the highest in the history of the monthly CPI data going back to the 1950s. The prior record was set in 1975, at 14.4% (red line).

The nondurable goods CPI – which is dominated by food, energy, and household supplies – spiked by 10.7%, just a tad above November 2021, and the highest since July 2008 (11.0%), when crude oil was spiking (purple line):

Rampant housing inflation gradually enters CPI.

The single biggest component in CPI is housing costs, accounting for 32.4% of total CPI. They’re tracked by two different measures of rent – the cost of housing as a service rather than an asset.

Both measures started rising in mid-2021, after the pandemic drop, slowly picking up the actual increases in market rents. Both measures are lagging, which guarantees that even if rents were to stop rising in March, those two measures would continue to rise well into 2023. So we already know that the current spikes in market rents through February will put upward pressure on CPI well into 2023 (here is my discussion of this phenomenon).

“Rent of primary residence” jumped by 4.2% in February (red in the chart below). This is based on what tenants reported as their actual rent payments, including in rent-controlled apartments. It weighs 7.4% of overall CPI.

“Owner’s equivalent rent of residences” rose 4.3% (green line). This measure estimates the costs of homeownership as a service and is based on surveys that ask homeowners what their home would rent for. It weighs 24.2% in overall CPI.

Both measures are well below CPI and therefor are still holding down CPI, but they’re holding down CPI less than before, and they will hold down CPI even less going forward:

The actual costs of purchasing a house spiked by 18.8% year-over-year, according to the Case-Shiller Home Price Index, and spiked by over 25% and even over 30% in some markets. I show crazy charts of this raging home-price inflation market by market in The Most Splendid Housing Bubbles in America.

So here are juxtaposed, the exploding house prices as measured by the Case-Shiller index (purple) and the CPI stand-in for homeownership costs, the now slowly rising “Owner’s equivalent of rent” (red). Both indices are set to 100 for January 2000:

“Food at home” inflation spiked by 1.4% for the month and by 8.6% year-over-year. Major categories, and year-over-year inflation rates:

  • Beef and veal: 16.2%
  • Pork: 14.0%
  • Poultry: 12.5%
  • Fish and seafood: 10.4%
  • Eggs: 11.4%
  • Fresh fruits: 10.6%
  • Fresh vegetables: “only” 4.3% year-over-year, but they’re now taking off, with a month-to-month spike of 1.3%.

“Food away from home” inflation jumped by 6.8% year-over-year, the most since 1982.

Energy costs exploded by 3.5% for the month and by 25.6% year-over-year. They weigh 7.4% of overall CPI. Among them:

  • Gasoline: +6.6% for the month and +38.0% year-over-year. This does not yet include the price spikes over the past three weeks. They’re still to show up.
  • Utility natural gas to the home: +1.5% for the month and +23.8% year-over-year.
  • Electricity service: -1.1% for the month, +9.0% year-over-year.

And for your amusement, this is how Fed Chair Pro Tempore Powell reacted to the fiasco that he has been instrumental in creating via his money-printing and interest-rate-repression strategies, as captured by cartoonist Marco Ricolli for WOLF STREET:

Enjoy reading WOLF STREET and want to support it? Using ad blockers – I totally get why – but want to support the site? You can donate. I appreciate it immensely. Click on the beer and iced-tea mug to find out how:

Would you like to be notified via email when WOLF STREET publishes a new article? Sign up here.




  180 comments for “WHOOSH, Dollar’s Purchasing Power Plunges in February as Inflation Spreads Across Services, Fed Still Pours Fuel on It

  1. And meanwhile the forex dollar is rising. The US is resolving the national debt and it’s only going to cost you a little more at the pump, and of course if you own RE and rent you are on the garden path. Yes inflation is a bad thing, unless you are the vendor charging more for the same product and you can control your costs. Cheap credit is still going to be a panacea but it will come dearly.

    • Gattopardo says:

      And yet Bloomberg Opinion column today calling for Fed to delay tightening because of Ukraine.

      • Tony22 says:

        Look when this started, about a week after inauguration day as far as one can tell on that chart.

        WTF Batman! Ten dollars a gallon and fifty dollar hamburgers coming up!

      • Harrold says:

        Powell will delay until he is confirmed for another term. Not gonna screw up his chances by making dems mad before an election. The economy and retirees be damned.

      • Mud says:

        Billionaire owner = wake up

      • dang says:

        It’s like watching your child fail. Commercial Democracy, triumphal until the billionaires start cheating each other.

        Then there is hell to pay. A world war is not out of the question having first hand knowledge concerning WW1 and 2.

        Perhaps just a skirmish as long as the cost is greater than previous.

        • dang says:

          Life is too short to understand the truly excruciating irony of human stratigery. The cycle of friends becoming enemies or lovers, republicans trading positions with democrats.

          The Federal Reserve has been acting against the benefit of the majority of Americans and favoring a small minority of established wealthy people for at least since is was invented.

          Their traditional incompetence is a cover for their role in exploitation by the American aristocracy of everyone else. I remember when America spilled their neighbors blood fighting communism all across the world.

          Then we relocated our manufacturing capacity to communist China. To the benefit of the wealthy and the detriment of the median American and below.

    • historicus says:

      cleanest dirty shirt….tallest midget

    • Augustus Frost says:

      Ridiculous. most Americans are becoming poorer, not better off.

      • roddy6667 says:

        61% of Americans now live paycheck to paycheck.

        • LK says:

          Won’t satisfy some people until that is 99%. Then the 1% will truly be a category of their own.

      • The theory goes you own gold for the collapse, when people are using their gold to buy bread, but I think the other way. I want to be the guy selling a loaf of bread and taking gold in payment.

    • perpetual perp says:

      The dollar has been rising versus other currencies: It’s buying power is increasing in that regard. A mystery. Normally, a nation allows its currency to devalue in order to export more, not less. Thus helping its balance of payments. Again, something is missing. According to Wolf the dollar buys less because or inflation. Maybe the other currencies are declining even more? I’m not a fan of manipulating interest rates to influence the economy. Taxes and direct spending, without issuing debt, are more understandable and effective IMO. Unfortunately Congress has no clue how it actually funds its spending.

    • 91B20 1stCav (AUS) says:

      AB-would posit that cheap credit, who used it and who received it, has been the long-running, high-cost panacea since around 1980…

      may we all find a better day.

  2. Old school says:

    Seems like the Fed communication policy was to try to convince us that inflation was not a problem, so that it would not get anchored into our decisions.

    We all should remember that the Fed bought it’s last bonds right as inflation hit 7.9%.

    Government is on track passing budget with 7% increase in nominal spending financed at negative 6% real rate.

    If you believe what you read, everytime there is a huge spike in energy cost there is a recession.

    Read stagnation doesn’t last long because it is quickly followed by recession as consumers are squeezed.

    It’s difficult time to invest, but what’s new.

    • LK says:

      I suppose, as the saying goes, you could always invest in yourself.

    • Marcus Aurelius says:

      The FED was honest.

      They said 7% inflation was “transitory”.

      See, it was.

      The 7.9% is also transitory. (See how clever they avoided the number “8”?) It’s like when the gas price is $4.99. NOT $5. We are such fools.

    • wakarimasen says:

      And when recession comes inflation must come down too.
      So it just was temporary.
      You can not invest in this environment – you just can trade short if you are nimble.

      • Augustus Frost says:

        Inflation and recession are not mutually exclusive. That’s been the post WWI pattern in the US except for the mid 70’s and early 80’s recessions but it’s not an economic “law”.

        As the US comes to more closely resemble a banana republic and the USD loses global reserve status, having both simultaneously will become the norm as it has been elsewhere.

    • historicus says:

      Ever notice how those who say inflation is nothing to worry about are either filthy rich or have inflation protected government pensions?

    • dang says:

      The economic system is operating in QE mode where speculation and technical analysis determine price,. Value is undefined.

      QE is a depression era tool that creates speculative asset bubbles and monetary inflation when applied to economies operating within normal standard deviations.

      Speculative bubbles are like infected boils, puncturing them is painful but necessary. The last thing the morons at the Fed are prepared to do is the right thing without explicit instructions from Jamie’s Club.

      • dang says:

        Since the banks are holding 5 T dollars of Fed funny money, their fake balance sheet, raising the interest rate by even 0.25 pct on reserves the gargoyle banks have been forced to ingest. Seems a sticky wicket.

        Paying 25 basis points on stagnant overnight reserves of say $5T is a liability on an already fragile industrial structure where failure is more likely than success in the short run.

        • dang says:

          Conservative strategies have been a loser since the FIRE industry became the dominant American product. The future requires technical prowess, just like the past. Will the economy that transformed itself into a middle man for the quick buck, be able to continue to bullshit itself ?

        • dang says:

          What seems important to forget is that the Bible is more cautionary story than an unbridled endorsement of the future. Of course, I’m often wrong.

          If I’m right doesn’t mean that I endorse Mitch McConell, the Senator from the description of the American economic failure.

          The real power in America: Maximize profits by maximizing slavery.

        • NBay says:

          Comprehensive Green New Industry NOW!
          Constitutional max net wealth NOW!
          One badass IRS NOW!
          And some statues of Founding Father Tom Paine would be nice…there aren’t any….ever wonder why?

          So much for my pipe dream……more than likely we’ll get a hell of a lot more “Law and Order” and damned soon.

          I will, however, kill myself if I have to take Bible School again, not that the universe will change much, other than all of you vanishing along with the universe.

        • NBay says:

          Yes, I do have the power to make the entire universe vanish, which makes me “god”….no worshippers, though, not that I want them, anyway.

  3. fred flintstone says:

    What’s the big deal……JP is pulling out his cannon and shooting out a quarter point rate increase. Sarcasm.
    What really cracked me up the other day…….JP had one of his updates in the middle of a bad market day and went from a half point to a quarter point increase…….before he increased anything…………expecting that crooked market manipulation crap to ignite a huge upside market move for his crooked friends……like its done every time in the past.
    It did very little, in fact the market continued down……because the market is smelling the problem. Rates up to a level meaningful…recession or worse…..rates down……runaway inflation. Inflation so bad that the consumer reduces consumption.
    All created by the dumbest/crooked fed chair and administrations in the history of the US. Since the 50’s not one worth two plug nickels.
    This market knows that bad times are coming…….
    Don’t try to help others when the boat you are in is sinking.

    • Frank says:

      Fred,

      I agree 100%; could not have said it better, or even as well, myself.

    • Old School says:

      I think the big lesson that the French proved during the 1700’s two times is you can’t solve the country’s financial problems but so long by printing money.

      Once the bubble gets so big, you can’t exit it without people rushing to get out of risky assets before they lose all value. We will see if it’s different this time.

      • Catxman says:

        Less risky assets = prime real estate. Common real estate, like the student housing outside your local campus, just will not do.

        • Tony says:

          Especially prime real estate in exclusive areas, far away from the angry masses, such as those here on Wolfstreet…

        • Enlightened Libertarian says:

          “Common real estate, like the student housing outside your local campus, just will not do.”

          Why not? I was thinking young people will always want/need to go to college. Seems like a great RE investment. Better than commercial or family residential housing. Maybe not as good as farm land, if you know how to farm.

      • DawnsEarlyLight says:

        Bar the exits. You deserve to lose. After all, you’ve been playing the game.

    • historicus says:

      1/4 pt.
      WHY BOTHER?

    • Frostbitefalls says:

      Easy now. With what the price of nickel what it currently is…

  4. Fluxite says:

    what a mess

  5. Kevin says:

    in your purchasing power chart the only time it’s not in decline is 2008 – not a great year or model for how we want economy to work. so what’s your preferred outcome? curious your policy assumptions as you share info on what’s “bad” or “good” policy.

    • Jake W says:

      it was only not a great year because the collapse from a bubble being blown is always painful. 2008 wouldn’t have happened had the mistakes from the mid 90s through 2007 not been made.

      • Kevin says:

        Sure. But purchasing power is declining every year but the Great Recession. So just doesn’t seem like a great metric to look at. Inflation is nearly always above zero which is another way of looking at purchasing power chart.

        The “better” question for most people is do they get wage increases above inflation each year.

  6. 2banana says:

    Two weeks to break the curve…

    Safe and effective…

    Transitory!

  7. Not to repeat again, but government will continue USD devaluation until sellers stop accepting it. These posts get eyeballs but no one in charge cares.

    The $100 bill is now the new $20 bill. Don’t even know why metal coins are still being made. $1 bill is just change now.

    • Swamp Creature says:

      Wells Fargo now has a button on the ATM machine to withdraw $1000 cash all in $100 bills. This is only 1 year after installing a button for $500 cash withdrawals. Next look for the Treasury to start minting McKinley $500 bills or Grover Cleveland $1000 bills.

      • Wisdom Seeker says:

        The Franklin $100 is as large as it gets and the USA won’t be printing larger-denomination bills. If they wanted to have a functional paper currency, they already would be printing $500 and $1000 bills like they used to. But they stopped “because criminals”. And now $100 doesn’t even buy groceries.

        The inflation will make paper money worthless, but the underlying intent is to make paper money useless. The digital overlords want to monitor and control your spending.

        Privacy is dying and too few of the younger generation even realize that they’re giving away a fundamental human right. It will cost us all dearly.

        • Jake W says:

          the younger generation isn’t the one that caved to the $10,000 cash rule, to the stupid 6 withdrawals from a savings account per month, and so forth.

  8. Zark Muckerberg says:

    Back to the 80s yeah! I want to wear an orange puffer vest and high top sneakers to celebrate it

  9. Xavier Caveat says:

    I’d decided awhile back to invest in oil before the price went up and have done well so far, but there is only so much you can put in a safe deposit box.

    • BuySome says:

      Don’t fret…if you go back a couple of articles, when taking any oil out of the box there is a good chance that it will just refill over time. No need for Barney’s poop to be processed…it’s a miracle like jelly filling turning up in donuts!

    • Ted says:

      I wouldn’t recommend putting oil in a safety deposit box. You should put it in a can or something.

    • Wolf Richter says:

      LOL. Worried about oil leakage?

    • Mud says:

      Safe deposit boxes not safe ask my grandma

  10. Jung says:

    Is there a composite index of inflation which reflects median consumer expenses were commodities to be purchased at current rates (including “asking rents” etc.)?

    • COWG says:

      Jung, if you haven’t done it, take a stroll through the archives ( click on the Wolf tab) from about mid 2019 ( or even sooner if you like), it’s pretty eye opening on how smart the people are here…

      There should be many articles that tickle your fancy as well as comparisons to then vs now…

  11. Mendocino Coast says:

    Whether or not the Fed Raises the Rate , lowers the rate to zero or does nothing makes no difference at this point .
    Its too late :
    Fed :
    If the can’t Make Money on it they don’t care / same with the Government the president Etc .They are all the same and care about making money for themselves at ANY COST take the loss of life going on WAR as example .Printing more money to help with the War? watch your money drop and drop in spending power . This is pulling us into War everyday. If they really wanted to do something they could stop the Gas Tax at the Pump,Raise the interest Rate 4 Pts by end of the year
    Seize all the Accounts and property of those accused of crimes ( like trump ) until Court Rulings have been satisfied . Create Government Jobs that Provide Homes for employees . End this Stupid Medical System in the USA and put your GP right in the drug store a 1 stop shop.
    Place Drug Prices at 1 price only dump the coupon crap not $16.50 with coupon or $395.97 without / Laws about markup

  12. KGC says:

    Wolf, the cartoon is all wrong. Powell isn’t freaking out, he’s in denial. It’s not his fault. It never was, and it never will be. And the current administration and Congress believe him. They want him to stay another term. By which time the dollar will be worth 10 cents, and the worldwide depression we’re going to see, helped along by Russia’s economic collapse and China’s banking insolvency, the costs to rebuild the revised energy infrastructure, and the weaponizing of refugees.

    The 1930’s are going to look good.

    • phleep says:

      I agree on Powell. I’m reading Trillion Dollar Triage, released this week. It is the biggest batch of excuses for a public figure I have ever seen. Yet, reading between the lines, Powell’s rarefied cloistered world is obvious. It’s a waltz from country-western dancing with the wife, to Davos, to hikes in Wyoming in between elite meetings, etc. It’s all play money, it seems.

      We are so far down this road.

      • Anthony A. says:

        Sounds like it’s a great life when in the Club

      • Duke says:

        Sounds like the Soviet leadership in the 80s. They too didn’t know or care how the little people lived. Hypernormalization. That ended very abruptly.

      • dang says:

        Powell is a Trump appointment that replaced Janet Yellen as chairman of the federal reserve. Powell is an Ivy lawyer (Yale) from a conservative think tank with no expertise, of any kind, in the importance of the economy by people who have entrusted him. Turns out he’s the hack he was appointed to be. Biden reappoints him. Heck of a job Browny.

        The generation that forgot where they came from, forgets where they came from. The boomers, definately,

        • dang says:

          As victims of the rapacious rich, the poor people screw each other, whenever they can, while they themselves are not being adjudicated by life.

          The rich can’t understand why the poor people understand the concept of love for all mankind.

          Love for mankind is an economic luxury.

        • dang says:

          QE has been in place for 20 years or so, 15 , whatever, too make whole the gambling losses that their evil child, the recently liberated banks. by virtue of the repeal of the banking laws by Bill Clinton who was not being blackmailed with el flangrante video and audio.

        • dang says:

          Dad was a WW2 veteran, bronze star officially, possibly a silver, and the purple heart. Shot in the face by a sniper while driving a tank destroyer in Germany, 1944.

          The anchor of America.

          Born in the time that created the great depression, the time between the first and second world wars, the dust bowl, and today.

          He came back and worked as a teamster, selected to represent them as a shop steward, after a number of attempts at other professions including being a cop.

          With a sixth grade education, he predicted that the Ivy League economists were full of shit. He was right, not symphatetic to fascism., but not left either, he was a terrible rascist until he was old and glimpsed the golden chalice of redemption, which only fools deny.

        • Swamp Creature says:

          dang

          Can you believe there is one issue that Trump and Biden agreed on 100%? The appointment of this moron, J Powell as chair of the Fed (4th branch of the Fed Government). Taking this country into a second Weimer Republic s#ithole. Congrats!!!

  13. Hal says:

    I buy meats in bulk, trim/cut myself, vacuum pack and freeze to slightly tame that “Food at Home” inflation. With beef up 16.2% and pork up 14% (I eat a lot of both) I’ve been buying a lot more pork — not because it’s up 2.2% less, but because it’s a lot cheaper to begin with.

    When $20/lb beef tenderloin goes up 16% it’s a little more eye-popping than $2/lb pork loin going up 14%.

    • Xavier Caveat says:

      I’ve been doing my own haircuts & dentistry since Covid hit, but butchering seems a little messy, how do you get the pigs to slow down so you can catch em’?

      • VintageVNvet says:

        feed them a bit extra, XC,,, works every time to distract them while ya put the collar/leash on em
        easy peasy pork pie, eh

      • Hal says:

        They become somewhat lethargic once reduced to primal cuts.

      • COWG says:

        “… how do you get the pigs to slow down so you can catch em’?”…

        Easy…

        Just hang a sign at the end of the pen with “Federal Reserve” on it…

      • ElbowWilham says:

        I know that its a rhetorical question, but when the locals catch a pig around here, they cover their food with cheap Vodka. The pig doesn’t really like it, but it will eat it. When the pig passes out, they cut its throat. Dies peacefully in its sleep.

        So the lesson is more cheap vodka and you won’t even know the economy is dying.

      • Cem says:

        Haircuts? Cool, same.

        …Dentistry?

        • Xavier Caveat says:

          I’d still go the dentist for a root canal, but drill baby drill, otherwise.

    • Swamp Creature says:

      I’ve figured a way to save money at the pump. I only put 1/2 a tank of gas every time I go to the pump. Thus, the cost is the same as before the spike. I try to drive less to stretch out the gas for a week or so. If everyone does this the demand would fall and so would the price.

    • Nathan Dumbrowski says:

      Jut got back from the store to buy bulk meat for my son and I this weekend. Chicken is between $7-10/lb for breast cuts. I went bulk to get the price down to $4.99/lb. We will be eating chicken for most meals.

      Can’t recall last time it was ~$10/lb

  14. unamused says:

    Lenin is said to have declared that the best way to destroy the Capitalist System was to debauch the currency. By a continuing process of inflation, governments can confiscate, secretly and unobserved, an important part of the wealth of their citizens. By this method they not only confiscate, but they confiscate arbitrarily; and, while the process impoverishes many, it actually enriches some.

    John Maynard Keynes
    The Economic Consequences of the Peace

  15. SpencerG says:

    If inflation is showing up in Services then that means it is beginning to spiral higher. Excuses from the Fed won’t cut it now… your barber doesn’t raise his prices unless he is forced to in order to make ends meet.

    • Xavier Caveat says:

      Doesn’t a barber make ends meet?

      • DawnsEarlyLight says:

        You are on a roll today!

      • Palindrome says:

        When the customer asked the butcher why one side of the sausage was made out of cereal, the butcher replied “Because these days it’s tough to make both ends meat.” BaDaaBump! and a return to a six year old’s humor repository…

  16. Marcus Aurelius says:

    OK. Take a deep breath. I have been shaken all day, and I am not easily shaken. I just returned to my office, and thus my computer. (I hate using my iPhone for anything other than phone calls and thus don’t comment on blogs with the iPhone).

    I went to my personal bank. It is not one of the big 5 buy you all would recognize the name.

    I have mentioned before that I am a nut-job and such, and I take out about $2,500 a month from this account as a hoarding, prepping, “end of the world”, conspiracy nut-job.

    The amount was $2,800. I asked for $100’s and $20’s. The teller looks at me (and knows me from the numerous times I have been in this bank) and says:

    “We don’t have any $100’s…………………………………………

    I say: “Really”?

    She says: “You are not the only one coming in here now”.

    This was around 1 PM today. The last time I was in to take our cash, was last month. I mentioned most of the $100s were the old ones and said, (here), they must be recycling them since they can’t keep up with the demand.

    Is the bank run (we nut-jobs have been warning for 40 years) starting?

    • Wolf Richter says:

      Your bank still has an open branch??? LOL

    • Xavier Caveat says:

      Doesn’t a bank run require a certain level of fiscal fitness?

    • Pea Sea says:

      No.

    • Zark Muckerberg says:

      Maybe all the nutters are hoarding the hundred in your area. Beside, aren’t you better off with lower denominations? You don’t want to end up bargaining for bread and the seller tell you “I don’t have change.”

    • Swamp Creature says:

      Marcus Aurelius

      At least your branch was open. Around here they closed a few Wells Fargo Branches because they couldn’t find any employees to staff the branches. The ones that are open usually have only one person doing three jobs at the same time while tending the drive up window. They are now requiring 2 id’s to do the most routine transactions.

  17. Volvo P-1800 says:

    Speaking of inflation in housing. A block from where I live in central Stockholm, someone just paid SEK 233 000 per square meter for a two-room apartment. In 1993, I paid SEK 11 000 per square meter.

    • GSH says:

      Hmm. So that is $2.4M for a 1000 square foot apartment. Kind of what I think New York/San Francisco prices are. Stockholm is obviously catching up.

  18. Book Publisher says:

    I am a small book publisher. In the past, it was easy to get a new print job quoted and completed. I could get multiple print quotes and even negotiate a little. Usually from the time the printer had the print ready file, I could have books in 30 to 45 days. Now printers are quoting 180 days or longer. Some are even declining to bid on the print project altogether. One printer I work with is completely out of some of the most common paper used – House White Offset. Statements like “please anticipate that your final costs will be higher than the initial quote” are used.

    • VintageVNvet says:

      We ran into similar shortages in ”better” quality construction/remodeling products in mid 1970s in SF bay area BP: Types/choices of ”deco” obscure glass available went from approx. 35 to 6 or 8; ”B & Better” Douglas Fir paneling became C & Better; WIDE variety of structural lumber became very limited; no more choice of VOHC (Void of Heart Center, AKA FOHC, etc., etc.
      AFAIK, NONE of those product choices ever came back to where it had been.

      • JoeC100 says:

        I am having some substantial renovation work done on an old farm house in the Maine mountains this coming summer. The contractor is local and runs his saw mill through the winter. So no challenges getting the needed lumber for this project.

    • a reader says:

      Quoting from BNN Bloomberg:

      “Soaring gas prices are hitting other energy-intensive industries, with paper makers Norske Skog ASA and Pro-Gest SpA halting mills in Austria and Italy this week. Pro-Gest said that the selling price of a ton of paper was lower than the cost of the energy required to make it.”

      • Book Publisher says:

        In the USA, paper mills have been closing to focus on higher profit items. The mill in Calhoun, TN where my printer received Offset Paper stopped paper and pulp operations in December. The mill is owned by Resolute Forest Products (RFP)…but their stock is up 41% YoY. From the Toronto Star, “It expects the move once completed will improve its overall operating income by US$35 million to US$40 million.”

  19. Richard Greene says:

    Price up 38.5%
    Our lawn mowing service had been charging only $26 per cut for quite a few years. We have an acre to mow — that’s a low price. I Just got the new 2022 contract in the mail today. They want $36 a cut in 2020, up $38.5%

    Price up 82.6%
    My dentist was getting only $69 per tooth cleaning from my insurance company twice a year. A 45 minute cleaning, not some 20 minute rush job. A very low price. I paid another $69 each out of pocket for two additional cleanings (meaning 4 a year rather than 2)

    At the end of last year I was told the new 2022 dental insurance contract per cleaning was $126 (up 82.6%), so I’d have to pay $126 out of pocket for each extra cleaning. I decided to go back to a tooth cleaning every six months, paid for 100% by my insurance.

    • RobertM700 says:

      Invest in a waterpik and use it once a day. Also a tongue cleaner. Your dental hygienist will only need to see you once per year.

  20. Cookie says:

    Inflation is Putin’s fault (sarcasm)

  21. Richard Greene says:

    Great article and best charts in the business.

    I’d sure like to see one additional chart showing the declining value of the purchasing power of the 1913 dollar since the Fed was formed in 1913 — I believe it’s just under 4 cents in 2022 currency.
    Good job Fed !

    I’ve read that “$1 in 1800 is equivalent in purchasing power to around $22.13 today”
    but I don’t know how accurate that claim is.

    • Xavier Caveat says:

      $1 in gasoline purchases in 1962 is equal to about $22.12 today. No need to go back to 1880!

      • Marcus Aurelius says:

        Correct.

        In 1962, if you paid in one Silver Dollar (that everybody used without thinking in Las Vegas Slot machines……) that same Silver Dollar sells for around $35. Average condition.

        If you had 30 cents in 1962 dimes, you could get around $2.40 each today. So, 3 x $2.40 is $7.20….Gas today is, nationwide, around $4.50 so it is CHEAPER TODAY for gas.

        Start complaining when it hits $7.50.

        Here is another way to look at it. Imagine you live in England. I hear gas (petrol, benzene) is about $9 per American Gallon? So, imagine how happy drivers England would feel if their prices dropped to $4.50 per gallon, like we pay? They would go nuts with joy. Well, maybe not that much joy…stiff upper lip and all that.

        • Xavier Caveat says:

          Imagine how happy Americans would be if they all had health insurance like the rest of our peer nations?

        • Mud says:

          Buy a bicycle f … them oil companies

        • phleep says:

          I would accept 2% inflation. Wasn’t that the “target”?

        • Bubba says:

          I guess what you’re saying is that currently silver is overvalued compared to what it can buy. Those 3 dimes need to fall in value to $4.50 to be fairly valued in gasoline terms. Spot price is one thing, but I wouldn’t even try buying bullion right now at ripoff premium prices from online vendors. Try selling back to one, and see what they’ll offer.

    • Apple says:

      Back in 1800, only the wealthy people shopped at the Dollar store.

      • Jake W says:

        back in 1920, only the wealthy people had cars, but everyone had horses. today, only the wealthy people have horses, but everyone has cars.

        oh, how the stables have turned!

    • Brant Lee says:

      Why does everyone seem surprised or shocked at the ever-lower purchasing power of the dollar? It’s been in high gear since 1970. Answer why and you will know what to convert your dollars into.

      • historicus says:

        Why do people accept the Fed promoting ANY inflation?

        Inflation is a THIEF…..and a RACE TO THE BOTTOM.

      • BuySome says:

        Frozen yogurt? Coffee beans? No wait, I’ve got it…100% pure cotton Levis. Then you can get a pick axe and go out to dig for ore! Or, Ore-Ida if you prefer taters.

  22. lisa2020 says:

    https://www.usda.gov/oce/commodity/wasde/wasde0322.pdf
    Just how much of a disconnect will develop on foodstuffs based on pricing VS demand?

  23. Bernard says:

    So maybe elections do have consequences………

    A bungled invasion so far that should have never happened and an even bigger bungled response by the USA and the West.

    Nothing good will result from either of these actions with both racking up detrimental results.

    Just looking at what is going on in the USA and West:

    1. The US dollar will be shunned by a larger and larger number of countries and central banks thus reducing the ability of the USA to spend like a madman.

    2. Interest rates will have to increase and result in higher costs for the US government and people in the country.

    3. Inflation is going to soar even more as a result of the various sanctions put in place affect not only the real market for goods and services, but the financial aspect of commodities.

    4. Energy costs that have increased recently have yet to be factored into the inflation numbers and product prices throughout the economy. More and higher inflation numbers are going to be the norm. The more that sanctions affect the market the higher the costs will be.

    The bigger shoe is yet to drop which will be if Russia cuts off natural gas supply to Europe and given the current set of circumstances it looks more than likely.

    5. Unfortunately for most people in the world including the USA food prices are going to soar as poor harvests in several countries (China, Brazil, and other South American countries) affect the supply. Will there be any supply coming from the Ukraine this year?

    6. There will also be reduced output as a result of increased costs for inputs (energy machinery, fertilizer), but an actual lack of inputs. Russia just announced a ban on the export of fertilizer to “non-friendly nations.”. Price is meaningless if you can’t get the inputs.

    7. More mass hysteria and a further reduction in rights. People and governments never learn. What’s next? Rounding up all people with Russian names or background and putting them in camps? Compelled speech in order to live and work?

    And this just touches what is going on in the West and not the tragedy in the Ukraine.

    • Augustus Frost says:

      You could have just said the majority of Americans are destined to become poorer or a lot poorer over the indefinite future.

    • Bobber says:

      So you think Republicans offer a different future than Democrats? You lost me. Voters have no real choices.

      • Jake W says:

        nope. the problem is not the politicians. the problem is us. we, collectively as the american people, believe in something for nothing. we believe we’re exceptional and that everyone is “entitled” to everything needed for a comfortable middle class life.

        no one is entitled to anything. our collective economic output must support this lifestyle. and it doesn’t. it doesn’t even come close. meaning the only way to maintain the illusion is to play financial games and borrow. that’s it. once the illusion is discovered, the jig is up.

  24. JeffD says:

    Sorry, but those food inflation figures need to be about 20-30% higher before having a chance of approaching reality, at least here in southern California. On top of everything, product portions are getting smaller.

    • The Falcon says:

      Shrinkflation. It’s become so absurd that I literally laugh out loud at the grocery store when i pick up some items. My daughter called the last bag of tortilla chips i bought “Air Chips”. It does have a certain ring to it.

      • SK says:

        In reality I think inflation has been happening for many years. Shrinkflation – unit size and packaging has shrunk. Air and water were mixed in with food products. Manufacturing was offshored to countries with cheaper labor and fewer regulations. Products were made with cheaper materials and cheap plastic parts and planned obsolescence.

        Guess they can’t make things any smaller or cheaper, so the prices have to rise.

      • Cookdoggie says:

        I think this is a great time for companies to “reset” against the constant shrinkflation. After all, you can’t go to negative sizes. Why not increase the size and really increase the price now, blame it on inflation, then you have more room to continue shrinking in the future.

  25. gorbachev says:

    And the reason the market will not
    crash is because of inflation.High-interest rates though
    will take a large bite out of the market because
    then there would be an alternative to dividends.

    • Augustus Frost says:

      TINA is by-product of the mania and will not survive its end, regardless of how low interest rates fall.

  26. historicus says:

    Such a joke the Fed uses a survey instead of hard core data from Case Schiller…

    Powell says he doesnt want to have happen today what Volcker did in 1980.

    Here’s a tip for you Jerome. Volcker didnt want to do it either….BUT IT WAS HIS DUTY AND HE HAD THE BALLS TO DO IT.
    You hope you dont have to…..but that is not how it is going to end. Powell, you are shirking your duties, ignoring your mandates, punishing the citizens and businesses of this nation…to save what appears to be your comrades…..your venture capital guys with big debt floated, and a federal govt that cant stop spending (Pelosi’s 2700 page 1.5 Trillion Bill last night) You Sir are the great enabler….and destroyer.
    Do your duty….re read your 1977 mandates…..take a look at the Rules of Monetary Policy. OR, quit

  27. Just a modest bump on the way to economic nirvana.

    What percentage of inflation is excess demand versus failures of supply?

  28. Kunal says:

    According to few smart but honest people like Peter Schiff, George Gammon, Robert Kiyosaki, Fed is such a criminal organization. They are blatantly robbing hard working ordinary US citizens and enriching the wealthy. I wonder why there is no uprising against them yet in the USA. They have blatantly violated their mandate to keep inflation within 2% and that too in spite of govt lying and depressing the official inflation figure with the rigged CPI formula.
    Knowing how pathological the rich and political class are, this day light robbery will continue till the sheeps get either fully fleeced or wake up. Nothing else will stop them. Media, Govt. agencies, Big Corporations, Big Tech, Oligarchs are all together on this.

    • Escierto says:

      Nearly all Americans are dumb as dirt. They wouldn’t know the Fed from a hole in the ground. They deserve the screwing they are getting.

    • Jake W says:

      their mandate is not to keep inflation within 2%. their mandate is “stable prices.” they created the “stable means 2% increases” on their own.

  29. Joe in LA says:

    This inflation is the final mopping up phase of the class war that most Americans have already lost.

    • phoenix says:

      Yep, but just vote for the other team and everything will be fixed according to some on here

  30. OutWest says:

    Red wine for me…

    I haven’t noticed very much inflation in the wines I buy from a few local stores. I can easily find wines from up and down the west coast and from all over the world for $5 a bottle. I’m not talking about two buck chuck. I’d challenge any wine snob to a blind taste test camparing what I get to $20-$50 bottles.

    I can only assume that wine prices will spike soon.

    • gorbachev says:

      names please

    • Gattopardo says:

      You would lose that taste test.

      Trust me. We have tried to save money many times and blind tested….

      • The Falcon says:

        I might – MIGHT – use a $5 bottle of wine for cooking. Only if it was my in-laws coming over.

    • Whatsthepoint says:

      It’s not the blind taste test, it’s the blinding hangover the next day from the cheap stuff…

      • VintageVNvet says:

        NOW you’re getting to what the point IS!!!
        Best wine ”value” ever was the old guy, the last driveway south of Healdsburg before the 101 became freeway in the late ’60s/early 70s who would steam clean and fill up your gallon jugs for a dollar from a 5,000 gallon tank his grandfather had started… he advised you had to open the jug and let it ”air” for at least an hour,,, and it was GREAT stuff.
        Other than that, the plonk parading as wine in California and the rest of USA is disgusting; but only until you get to the ”real” wines by each and every winery. AFAIK, every one of at least the old line Napa valley wineries still made something decent, usually starting about $30 these days, but the $50 level is where they get worth sipping instead of holding your nose and going for it…
        Many of the newer wineries, say those since about 1970, also make decent stuff, but most of them don’t bother with the plonk level at all.

  31. Moosy says:

    (1) Credit card spending yoy up 15%.

    Credit cards are not used for big items and rent and on average people are not buying more stuff, especially during a year of covid hunkering down.

    So is this not another proof that inflation is higher than that 7.9%. More like 15%

    (2) Minimum wages
    Why did they not ask for a minimum wage of say 4 gallons of gas?

    (3) Not complaining.
    Those poor people in Russia, that country whose leader is elected by who is doing the counting, not who is voting, 20 year ago it was 7 rubles to the dollar and a month ago and still before all havoc now, it was 70 rubles to the dollar. That is what a 20 year inflation of 10% does.

    We complain after just one year and they have been putting up with that inflation and that Putin guy for 20 years. Are we not spoiled whiny brads?

    • Eugene says:

      True.10% inflation in Russia is reconsidered OK.Now russians want to nationalize the wealth of oligarchs (95% are jews),who privatized those properties in the 90s for pennies and keep the profits in the west.Putin will do that to please his voters.

  32. Zark Muckerberg says:

    Y’all knew sht has hit the fan when Dollar Tree charge an extra quarter, y’all knew!

    • Petunia says:

      The “discount” stores are now selling designer handbags for their original retail prices, not at a discount. Who would spend $2K for a handbag at a discount store?

      • Jake W says:

        because there is such excess demand for them from ridiculous monetary and fiscal policy that they don’t have to discount them.

    • BuySome says:

      Bit late. Inflation is invasive and perversive and begins before most notice it is in the garden. Even before this vessel had a covillision with a priceberg, it was happening. Packs of paper plates had dropped from 50 count down to 40, a 20% drop in quantity for that buck. Sheet protectors went from 25 to 20, and then seemed to disappear altogether. White gift tissue packs went down too around that time. Warnings were in the air but sources like WSJ don’t pay attention to this stuff any more than CEO’s know what’s really going on at the base of their own employee pool. Substitution of fabrics with material equal to recycled garbage bags has been a trend for several seasons. Red flags abound if you watch closely in advance.

  33. Swamp Creature says:

    I saw a picture of a gas station in LA that posted a price of $7.95/gallon. What’s this all about??

  34. Taylor says:

    What was the “experts” estimate for how much CPI-U increased for Feb? I always enjoy seeing them underestimate it every month.

  35. TheRealMRDyno says:

    Dodge bearings just told us they are increasing their prices by 45% immediately. We use a lot of bearings.

    We are now buying chips from foreign country brokers, because we can’t find any at all here. Prices are 4-10 times normal. Some chips we have to buy in demo boards and de-solder them, price is about 3 times normal chip price, plus extra labor.

    Milk duds are now $1.39, vs $0.99.

    Diesel today is $5.399.

    I can’t believe inflation is actually less than 10%.

  36. TeacupDragon says:

    Ran into our landscape designer at Costco today buying bags of fertilizer early, while they’re still available at a reasonable price. Three of his clients this spring are asking that he design raised bed vegetable gardens for their yards so they can grow their own food this year.

  37. phleep says:

    I started radically abstaining a few decades ago. I cut out all alcohol, tobacco, large land animals, snack foods, any drink that is not water. Any clothing or activity or distraction that is overpriced and/or stupid. I swear by it. My realty is still rising, and my cash stash too. Nominally, anyway, not inflation-adjusted. But if I’m falling back on this treadmill, so far, it is not too badly.

    • OutWest says:

      Well done, phleep. I’m close but lack that level of discipline. Nothing better than controlling costs while maximizing pleasure…sometimes referred to as the Pleasure Principle.

    • Alku says:

      “snack foods, any drink that is not water” – very wise choice, regardless of the CPI :)

      I’ve just recently read books of Taubes and Davis and I reconsidered a lot of things

    • Bernard says:

      And you must have the most boring existence on the planet.

      • VintageVNvet says:

        10-4 B,,, reading this holy and pure ”stuff” reminds me of my old neighbor who told me he tried that once, he said “I quit drinking, smoking, and having sex. It was the most boring 15 minutes of my life.”
        Great guy!

  38. Duane says:

    S&P profits were up in 2021, pretty substantially. Inflation hasn’t hurt corporations. Expect the hedge fund manager running the Fed to act accordingly, i.e., stay the course with low interest rates for the foreseeable future. Quarter point raise, if that.

    • Jake W says:

      of course profits were up. their customer base was helicoptered trillions of dollars to spend wastefully. how could profits not be up?

  39. Goomee says:

    Everyone of us who has invested wisely will be ok. Yes, things will cost more but since most of you here are above average intelligence this will be a small speedbump towards our goals.

    • Augustus Frost says:

      This (from the late 1990’s to now) is the biggest asset and debt mania in the history of human civilization. None other even comes close.

      Not sure what scenario you have in mind but it’s end and aftermath will be over decades and represent the most challenging environment (financial and otherwise) in the history of the country.

      It’s not going to be a “bump in the road” and then it’s “upward and onward” with permanently increasing American prosperity. The country has been eating its economic seed corn for decades and the culture which made this country successful in the past has changed noticeably, for the worse.

      The environment is never uniformly bad at or near a major market peak and as the motto of this site states, “nothing goes to heck in a straight line”. However, the current actual economic and societal fundamentals are mediocre to awful and have been for years, but the worst of the bad news will come out years later.

      Not everyone will be a financial loser but most (a noticeable majority) almost certainly will be.

      • unamused says:

        “Not everyone will be a financial loser but most . . . almost certainly will be.”

        As the world returns to the historical order, the rich get richer, everybody else gets poorer. The existence of a prosperous middle class is believed to have been a mere aberration of history.

      • rankinfile says:

        It begs the question, did the people of the 30’s know or call it a “Great Depression”?
        I just can’t help but wonder if the future will look back on our time as a second great depression.Tent cities and homeless drug addicts and mentally ill roaming the streets helpless and hopeless does not indicate a great society.

  40. John says:

    Wolf—

    The Fed has possibly already started QT. Check the monetary base stats.

    https://fred.stlouisfed.org/series/BOGMBASE/

    Watch what the Fed does, not what it says. We will need to stay tuned to see if this reduction in the monetary base is a trend.

    • Wolf Richter says:

      In terms of the Fed’s actual assets on hits balance sheet — Treasury securities and MBS, primarily — I have not seen any signs of QT. I do see the signs of the end of QE though.

  41. Otto Maddox says:

    I think this currency will collapse and bring the entire economy down with it. Don’t vote for any incumbent politicians – fire them all. So what if we get a lot of no-nothings in office? Can they do a worse job?

    • BuySome says:

      Form the Sound Money party and be prepared to cut out all which undermines that. Saying goodbye to a pile of crap that does not amount to real wealth buildup, nor help facilitate the growth of such. There goes MTV. No more money for nothin’ delusions.

    • Tom15 says:

      Sounds good. But if you leave the corporate bought staff in place nothing will change.

  42. Randy says:

    Back in 1996, when I first wrote my paper titled What Is Money?, I coined the phrase “perceived purchasing power” to describe as best I could, what is REALLY going on with ANY fiat currency and its demise via what we call inflation. And over the last several years, I have seen more and more articles using the phrase “purchasing power” in them when discussing inflation! Is the world finally waking up to the truth, by chance?

    Randy

  43. Finster says:

    The dollar’s purchasing power has been going to heck for the past fourteen years … though not in a straight line. What’s changed is that the losses in purchasing power have migrated from the realm of investment assets to that of consumer goods and services.

    This phenomenon happens over and over again, but will continue to befuddle central bankers until they admit that asset prices register inflation just like any others, just not usually at the same time.

    • Jake W says:

      there were economics back in 2009 who said that qe would lead to consumer price inflation, just with a long lag versus asset price inflation.

      looks like they were right.

    • Randy says:

      ALL fiat currencies begin to lose their perceived amount of purchasing power from the very first day that they are implemented! It starts out as a very slow trickle at first, mostly among the ones who are in the know and are aware of how it will end. Then, as more and more people wake up to the scam, it fails faster and faster until it’s an avalanche roaring down the mountain of lies that were built up! Like when Hemingway was asked about how it was that he went bankrupt, he replied, “Slowly at first, and then quite suddenly!”.
      So the loss in PPP of the USD, was not restricted to any one small segment of the society at all, it was happening all over the place! It’s the lies that are told to us that make it seem like inflation is happening in only a few places.

  44. David Hall says:

    The median price of a U.S. home listing was up about 12% YOY at the end of January.

  45. Brewski says:

    QT?

    My guess is WT…wimpy tightening.

    The Fed and Congress are out of control. Spending and money pumping will continue until it stops.

    When?

    B

  46. imafuckoffer says:

    after reading this, should we be selling a home we inherited in october of last year? it is paid for and vacant, but i wonder in this environment where i can even put the proceeds to keep up. i don’t need the cash

    • Wolf Richter says:

      imafuckoffer,

      Keeping a home vacant for longer periods is never a good idea for a whole bunch of reasons, some of which you’re going to find out. Move in, rent it, or sell it — that’s what I would say.

      • Harry Houndstooth says:

        Pure wisdom served up fresh daily.

      • Jake W says:

        yes. one thing i would add to that is that you’re better off renting it for a lower amount to get a good tenant. real landlords know that it’s not worth squeezing out the last $100/month and getting possible deadbeats or people who will destroy your place.

      • Swamp Creature says:

        Jake W

        There’s no such thing as a good tenant.

Comments are closed.