The Bureau of Labor Statistics finally corrected part of the CPI distortions in September, October, and November.
By Wolf Richter for WOLF STREET.
The gasoline price spike hit CPI inflation for the second month, but electricity prices also spiked, core services inflation spiked – it’s the biggie, accounting for over 60% of CPI – and food prices jumped. So it’s a mess – and even if the Fed wants to “look through” the impact of the gasoline price spike, it’s going to smack into surging core services inflation, accelerating food inflation, and surging electricity inflation driven by the AI bubble.
The all-items CPI spiked seasonally adjusted by 0.64% in April from March or by 8.0% annualized, on top of the majestic spike in the prior month (blue line in the chart). Not seasonally adjusted, it was even worse: +0.85% (+10.7% annualized).
Year-over-year, the all-items CPI jumped by 3.81%, the worst inflation reading since April 2023, according to data from the Bureau of Labor Statistics today (red in the chart).
Negative “real” rates: The year-over-year CPI, rising by 3.8%, has now blown by the Federal Reserve’s policy interest rates of 3.5% to 3.75%, thereby turning the Fed’s policy rates negative in “real” terms (adjusted for CPI). This situation of short-term borrowing costs below the rate of inflation is stimulative of inflation and of the economy. The bond market should freak out if the Fed sits on its hands and watches it play out.
The CPI for core services, which excludes energy utilities such as electricity, jumped by 0.50% (+6.2% annualized) in April from March, the worst spike since March 2024 (blue in the chart below).
It was driven by hot inflation in housing (Rent and Owners Equivalent of Rent, see below), lodging away from home including hotels and motels, and airline fares. It weighs over 60% in the all-items CPI.
Year-over-year, it accelerated to +3.3% (red line).
The “core CPI,” which excludes the spike in energy prices and food prices, jumped by 0.38% in April from March (+4.6% annualized), the worst increase since January 2025.
Year-over-year, it accelerated to +2.8%, the second month in a row of acceleration and the worst reading since September (red line).
The core CPI is dominated by the core services CPI, but also includes all goods except food and energy goods.
The CPI for rent of primary residence spiked by 0.54% in April from March (+6.7% annualized). The spike corrected for part of the distortions in September, October, and November last year that I lambasted month after month.
So this month-to-month spike in April does not reflect a spike in actual rents but a methodical correction of the distortions in September, October, and November. Actual rent inflation has calmed down quite a bit, with a widening gap between multifamily rentals and single-family rentals (my analysis on the widening gap between them in 14 of the biggest markets).
Year-over-year, the CPI for rent rose by 3.3%, the biggest increase since December.
The CPI for rent of primary residence weighs 7.7% in the all-items CPI.
The CPI for Owners’ equivalent of rent (OER) spike by 0.53% (+6.6% annualized) in April after the same type of catch-up correction as the BLS had done to the rent CPI.
Year-over-year, it accelerated to 3.3% (red line).
The CPI for OER weighs 25.9% in the all-items CPI. Combined, rent and OER weigh 33.6% of the all-items CPI.
OER tracks what a large panel of homeowners think their home would rent for; it’s a lazy stand-in for costs that homeowners actually face, such as homeowner’s insurance, property taxes, HOA fees, repairs and maintenance, which are not included in CPI, and which are much harder to track accurately (but other countries, such as Canada, do it). It is a fundamentally flawed metric in the CPI and should be replaced by the actual costs homeowners face.
The CPI for airline fares spiked by 2.8% in April from March (not annualized), the second spike like this in a row.
Year-over-year, it spiked by 20.7%. Fuel prices are one driver; another driver is the collapse of Spirit Airlines, whose low fares had kept a lid on price increases of competing routes.
This chart shows the price level of airline fares, not the percentage changes. The price surge began in December. But prices haven’t yet reached the peaks of mid-2022.
Energy inflation boils down to gasoline and electricity.
Gasoline prices, after a huge spike, tend to fall back at least partially. But electricity, provided by utilities to consumers, is a regulated service, and it just marches higher and higher, though more steadily than gasoline.
The CPI for gasoline spiked by 5.4% in April from March, seasonally adjusted, and by 11% not seasonally adjusted.
Year-over-year, it spiked by 28%.
In terms of the price level, which the chart shows, prices are now approaching the peak of the prior bout of inflation in mid-2022.
The Fed is going to “look through” this spike, expecting that it will subside eventually, but it cannot look through the non-gasoline parts of inflation.
The CPI for gasoline of all types weighs 3.6% of the all-items CPI.
The CPI for electricity spiked by 2.1% in April from March, after the 0.82% jump in March from February.
Year-over-year, it jumped by 6.1%. Since January 2020, the index has soared by 44%.
The price that households pay for electricity on their monthly bills – the fixed fees and charges and the price per kWh used – is largely set by utilities that are monopolies. Some of the utilities are owned by public entities, such as a municipality; some are owned by their ratepayers, such as co-ops; others are investor-owned regulated monopolies, and investors come first. The only competition these electric utilities face is rooftop and plug-in solar.
Data centers are rapidly increasing the demand for electricity (see chart and data), but it takes a long time to build power plants. And regulator-approved price surges are the consequence. Electricity prices generally don’t fall back, and price increases are permanent, to be followed by more price increases.
The Fed cannot look through that type of AI-caused energy inflation. The CPI for electricity weighs 2.5% in the all-items CPI.
The CPI for food at home jumped by 0.68% in April from March (+8.5% annualized), the biggest month-to-month increase since August 2023, after a small dip in the prior month.
Year-over-year, food inflation rose by 2.9%, also the worst increase since August 2023. Note the acceleration over the past two years (red line).
The CPI for durable goods dipped in March and was unchanged year-over-year. The chart shows the price level of durable goods CPI. Durable goods prices have come down from the peak in mid-2022, but not by much.
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– And no, the FED won’t raise rates. I consider it to be more likely that the FED will leave rates at the current level and perhaps even lower rates.
It is now highly likely that the Federal Reserve will raise their interest rates.
Futures markets mostly think no change over the next year and a half, though as Wolf has often pointed out, futures markets are often wrong.
Taylor Rule per the Atlanta Fed
Fed Funds should be between 4.6 and 6.1 %
We need hard rail monetary policy. The Fed is obvious in their “slow to raise, quick to cut” massaging of monetary policy. The 2% target is a joke….yet no one calls the Fed out. Asset appreciation is their goal, even with the demise of the currency.
The bond market must be the deciding factor, disciplinarian
It would be unwise to lower them in the next couple of years, unless the federal budget gets massively curtailed. At which, thank goodness the Fed ignored everyone on lowering rates between 25′ and now. If they hadn’t rates would have to hike up to 7%+ right now.
can MMT be far away?
I work in manufacturing sector and we just received 30% price hike for our raw materials. Even during Covid we did not see 30% hike in one single transaction. We have passed it to our customers and who will be doing the same to their customers and we will be paying for it in coming months. If this war continues, this CPI is a good news compared to what is about to come. What most baffling is – Market is barely down since CPI release. Its like Market is living in alternate dimension these days.
in the long run, high inflation in the CPI will cause the stock market and real estate to go up.
This is one of the worst times to go into cash.
LOL I’ll take the other side of that one. Back in 2007 and early 2008, there was the same scenario of rising inflation and high energy costs. (We can toss in a Middle East war, a rotten housing market, and lame-duck president too.)
Early 2008 was a great time to be all-cash; the stock market was about to lose 50%, and real estate got crushed too.
The saner economies don’t tolerate high inflation, and the cure is bearish for stocks and real estate.
The only question is when the cure arrives.
remember biden and his great INFLATION PRODUCTION ACT
pretty much accelerated inflation(debasement of fiat $dollar)
today companies have made it their mission to raise prices
and they have
In the 1970’s high inflation crushed the stock market.
Unless psychology changes and people realize the jig is up. Yes the stock market can just inflate higher as overall prices do/will, but its also at record valuation levels by many methods. You are assuming those can hold. I guess time will tell there. Depends if the AI bubble holds strong i guess.
Not really, not for real estate at least which is tied to mortgage rates.
Not if stocks decline sharply and significantly ahead.
It doesn’t matter if you are diversified in cash, stocks, RE, bonds, metals, etc., and have hedges in place where needed.
Investments are not all-or-nothing propositions.
This is only true if we don’t get stagflation.
We’re not seeing inflation in wages so real estate won’t go up. Real estate is limited by purchasing power.
Isn’t everything limit by purchasing power?
If my homeowner’s insurance keeps going up and CPI doesn’t effectively capture this, over the next 5 years or so, it’s going to be a major issue for people’s ability to afford insurance.
This can be said about all sorts of things like food & car insurance, for example. Nowadays, these are necessities just like housing.
I dunno, one advisor I follow says cash is ok.
Especially if the bubble pops in tech.
In 2000 the index valuations got so weighted that it was a real problem, fund managers were arguing that the weights were going to kill their funds when the stocks dropped. And a lot were battered badly.
Problem is the indexes are setup to put weight to the most valuable stocks. But then they suck up all the demand.
So the indexer thinks he/she is safe, but then Nvidia, AMD etc etc all drop 50% (albeit slowly), then there goes 10-20% or more of the index’s value.
Then we have a lost decade and your losses fester for 10 years. If you hang on, you’re 20 years older when the recovery happens.
Real fun stuff 😬
Be sure you let Warren Buffet know.
MS
Inflation makes assets go up ……ONLY when that inflation is unaddressed by monetary policy.
Apparently, everyone in the financial industry EXPECTS the Fed will do little to nothing…..expecting the Fed to SHIRK their duties.
Isnt that a sad arrangement? The word “deceit” leaps to mind.
Manufacturing and same here, seeing some pretty big jumps in raw materials (prior to the war even), that kind of came out of no where. Expecting more to come, so this inflation cycle is probably just warming up.
I am curious to see where tariff refunds are being put now that companies are getting them back. Seems potentially inflationary as well.
Don’t forget, the Fed has already begun expanding it’s balance sheet again. The dollar is the denominator in market pricing. The market isn’t going “up”, the purchasing power of the dollar (and many other currencies) is getting smaller…
This calls for a rate cut, no?
No. Obviously not. It calls for a RATE INCREASE in the very near future.
I’m looking forward to seeing what happens when Warsh gets squeezed between an immovable object (Trump calling for rate cuts) and an irresistible force (inflation demanding rate hikes).
I’m sure glad I’m not a bond trader right now. The choices seem to range from Chaos (the bond market enters a death spiral) to Insanity (the bond market commits itself to ignoring reality forever).
It would seem we are all Japanese now.
“I’m sure glad I’m not a bond trader right now.”
You may think you’re not a bond trader. But if you have anything resembling a 60/40 in an IRA, 401k, or Roth then you actually are a bond trader. By proxy.
Tell that to Trump or the new Fed head.
Howdy Lone Wolf. Great honest article… All the Govern ment Bean Counters need to do , like most do ???? Use the term. ” As Expected “.
Party on Sailors. I plan too..
I saw one crook neck 80 year old hurtling down the Raleigh motorway today. This is the type to ride your bumper cuz they are in a perma bad mood.
Def a don’t care attitude
I doubt jimmy buffet had that guy in mind for margaritaville
I kinda miss the morning commute I had living in Raleigh. If there was no wreck on I-40, I’d get over in the furthest left lane and accellerate up to 80 or so. Car in front of me and car behind would be doing the same. No bad mood for me. It was exhilarating.
Nice,
Those types now do 100 no problem, then there are the people of Durham who visit. Perhaps they are getting up to shenanigans? I know not, but those guys floor it 100% of the time.
Meanwhile I do not want the $1000 speeding ticket, lol.
Shit show
If you are a borrower, it’s a great show.
The 30 year is above 5% today. 10 year is pushing close to 4.5%. I dislike politics in economics discussions, but the services and electricity prints were already coming in hot and the escapade in the desert is just making things messier not to mention the extra borrowing required to fund the military and potential gas tax suspension. Rates are going to spike with US debt interest payments becoming even costlier. Sometimes it’s best to cut your losses while you can.
Also, it’s time to actually deal with taxes and overspending. It’s going to require a mixture of budget cuts and taxes to stave off the looming debt spiral. We need a reset.
This isn’t what folks voted for, that’s for sure.
“We’ll just spend our way thru this inflation” seems to be the operating philosophy.
It’s exactly what folks voted for, even if they might either be too ignorant or self-delusional to know it.
What people voted for:
no new wars, make america affordable again, reduce electricity rates by 50%, etc.
What they got:
the exact opposite.
So it goes
How is it possible that inflation is elevated well beyond Fed comfort and housing is stalled (to put it lightly) and no inclination of a recession? GDP is growing and yet inflation and housing are major obstacles?
October 22, 1979 the Volcker shock was delivered. A single rate increase of 250 basis points. We might need that again.
🤣❤️ that would be a hoot
Any prediction for PPI tomorrow?
Getting popcorn.
Certainly a 250 shot is not likely, but what happens in July when the Fed has to decide again if inflation is “transitory”?
Personally, I’m looking forward to a rate increase. I’d like to see how the markets react.
If we can’t have a recession, then I’d certainly want the annual 15-20% drop to by the dip.
I’m seeing more cars on the highways than ever.
Raleigh was all gummed up today.
Nobody cares about these high prices or they would stay home. Yet they drive bumper to bumper.
One lady paid 4x her plane ticket costs when spirit airlines closed cuz “I planned my vacation and I’ll just put it on a credit card”.
IMHO they won’t hike at the June and July meetings, but they will talk about hiking. They’re going to wait too long again.
Ah sorry, inflation of and in itself is not harmful. Only unexpected inflation is bad because business managers can’t necessarily adjust to the unexpected.
Deflation is absolutely the worst.
It’s possible for ordinary people to survive and even prosper in deflation. It’s almost impossible for ordinary people to survive a real inflation.
The reason deflation is so terrifying to the FED is that the monetary system is based on debt and a real deflation would end in default and repudiation of debt.
Deflation is great for creditors – except that their debtors will probably end up in default.
Ah, yes, okay. Let me check with the starving masses. According to Mr. Google,
“As of May 2026, high food inflation is driving a global hunger crisis, with 52 million people projected to face acute food insecurity”
Seems pretty harmless to you, eh?
Inflation is VASTLY WORSE than deflation. Prices need to and will fall sharply ahead.
MS
“deflation” is the worst?
Who has ever seen deflation….raise your hand.
How about some price roll backs…….deflation, disinflation?
Ratcheting higher only ends in disaster, and it is an indictment of the sham that is the Federal Reserve.
Everyone expects prices to drop when the Iran thing is over………likely no. IMO.
what are you drinking ?
A rate cut is coming :-)
Interesting historical fact.
It would be interesting to see other macro stats from around that time period (like SP 500 PE multiple…which was 7, with a 10 yr Treasury – pre spike – of 8.4%).
Flash forward 47 years (and many, many, many more trillions in Fed debt) and we have
an SP 500 PE of 31 (vs. 7 in 1979)
and
a 10 yr Treasury of 4.5% (vs. 8.4% in 1979, *pre* spike mentioned)
The “system” will never allow Volker-level rates again.
A guy can dream though.
Under those Volcker rates, the US economy took a huge nosedive, with many thousands of banks failing, innumerable companies going out of business, millions of people losing their jobs, and the unemployment rate going over 10%, and staying above 7% for years. It took the boom of the 1990s to get unemployment back down. I got caught up in that as I came out of grad school. Volcker is no hero in my book. I paid for it.
Love the content. You explained in this article what actually will occur in the months to come. Fuel prices have etched their way to the business sector. Prices for all food will go up not mentioning the potential fertilizer shortage. Consumers spend more than 40% more on fueling their cars. The final countdown occurs when asking rents go up, which they are. Ppi in services alone show us that trend was coming. How much longer will the consumer be able to absorb? The fed will have to raise rates to accommodate, which the us government cannot afford.
Hello stagflation.
These charts just reinforce the incompetence of our federal government.
Its clear to me the world would be a better place today without the massive covid intervention.
Bernanke started in with QE.
Just sayin.
I would never let Bernanke off the hook. The covid dislocation is just so undeniably huge. I thinks its been about 50 years of really poor mismanagement. Some may argue its been longer than that.
Zimbabwe Ben.
Perfect example of the arrogant incompetence of American leadersh*t of last 70 years.
“We have a technology, called a printing press…”
The entire “attitude” of the Fed changed in 2009 IMO
Inflate and never let prices decline again (as it did in 2008).
The Fed took on a new mission and the 2% goal (from stable prices) was just and indication.
QE and the Fed diving into the long end another giant departure from a more calmer and in the background Fed.
It all began with trickle down (I mean trickle up) and the repeal of glass steagall accelerated the wealth disparity.
What’s the line on polymarket that Trump blames these numbers on Biden?
As @AR pointed out, it’s like the market is living in an alternate dimension.
Until these numbers begin to affect the Epstein class nothing will change.
Does anyone else get the feeling that Trump and the rest of his nine-figure narcissists (past and present) are treating the US like a vulture capital firm treats an acquisition?
Load the country with debt while fleecing the country for everything that’s not bolted down… then, when it’s time for hard choices to be made, these parasites will undoubtedly use their golden passports to flee the scene.
We need a major correction in the stock market and the housing market in order to return to a time when mathematics and rational thought made sense.
If I hear one more 30-something talk to me about their “buy the dip” strategy as though they were the Oracle of Omaha I’m going to vomit blood.
The only question left is will the 20/30 year bonds hold 5+% this time. If so, and TNX gets to 5 then we’ll see 30 year fixed mortgages at 7% as business as usual and the summer home buying season will be Gone with the Wind. 7.5-8% is conceivable by EOY. I thought last year but Powell had other ideas. Lucky for Powell, his revenge is having Trump and gang left on stage to answer stupid questions instead of him.
and now potus is proposing eliminating gas tax for next few months? I guess government is going to print more money to pay the bills? we are watching politicians destroying our economy in front of us. Republicans rejected gas tax break when Biden proposed it. I bet they are going to be on board this time. Politicians are making decisions based on who’s man is sitting in White House instead of what is good for country.
That would only be $1-2 a fill up.
Big whoop
Let’s make sumthin outta nothin
And then do nothin
The government won’t print money, at least not immediately. They will just not fund the highway improvement and repair projects the gas tax is used for. Which means worse roads. Ultimately those will have to be paid for one way or the other, unless we don’t pay for them and instead descend into a permanent 3rd-world state.
Shit’s expensive.
Normal inflation: zero to 10%. Elevated inflation: 10% to 20%. Hight
inflation: 20% to 80%. Hyper: 80%+. Inflation can rise: 10Y x $40T debt x (-)2% = (-)8T. When those factories and data centers will be ready, along with shrinking labor force, highly skilled workers and skilled workers real wages will rise, along with productivity. Tariffs, higher income and payroll taxes, a smaller gov, less regulation, student loans collection… will fill gov coffer. A dynamic economy can deflate US gov, c/c, corp and mortgage debt ==> FAST. With less debt the dollar will rise. The US gov and profitable private co will support real poor people needs.
You forgot just one thing… the shrinking labor force votes. There is no way that the kind of AI upheaval the tech bros are gushing over will ever come to pass… because the people will vote in a government that will make the trust-busting of the early 1900’s look like child’s play. The economy is already far too centralized, with wealth increasingly consolidating into the hands of fewer and fewer. It isn’t politically sustainable.
Shouldn’t AI be allowed to vote?
I can see a future where sentient robots unionize and are covered under universal suffrage.
Fun thing I noticed, the slope of the line on the CPI price level graph from 1978 to 1982 and from 2022 to 2026 is identical! In 1982 it resolved by becoming less steep, but in 2026 it’s getting more steep. Starting to wonder how it will slow down without needed an economic version of how you put out an oil well fire.
Two decades of oil glut killed inflation, not Paul Volker !!!
The US is the largest LNG and oil exporter. Europe and Asia need us. Higher oil and LNG prices are good for us. Demand for our industrial goods is strong. The US is a “Cornerstone State”. Without us the Europeans, the Gulf states, S. Korea and Japan chicked out.
“Demand for our industrial goods is strong.”
Not compared to China, it isn’t.
What a mess. A serious Fed would dispense the medicine now, instead of waiting for the data to get even worse. But like the other commenters, I see next to zero chance of that happening.
It’s all going to be labeled as transitory again.
Americans have been told that they are energy independent but what most fail to understand is that energy prices are set at the margin by international markets! Big difference that is lost on most people.
Looks like the Strait will be closed for an extended period of time. Iran is in total control considering, among other things, they are the largest drone maker in the world. Inflation in the US is just getting started unfortunately…
Iran is quite a lot of things, but the largest producer of drones is not one of them.
Baykar Technologies, Turkey, is the largest armed drone mfg.
So you said that the BLS finally corrected for part of the CPI distortions in September, October, and November. Approximately what percent of the distortions from that period would you say were corrected, and approximately what percent remain?
That’s hard to say because I don’t know what actual increases were during that time. But it looks close enough to me.
But the problem now is that it distorted CPI and PCE inflation at the time, and the Fed cut three times during that period based on the wrong inflation data.
The Fed has a 2% inflation target, therefore inflation will average 2% over time. The Fed is telling us this, so it must be true.
What the Fed said in the 2000s: “Part of our mandate is stable prices”
What they meant: “Inflation between 0 and 2% is ok”
What the Fed said in the 2010s: “Our goal is 2% inflation”
What they meant: “We want more inflation, and won’t fight until it hits 3% or more”
What they say now: “Our goal is inflation symmetrically balanced around 2% to make up for prior low-inflation years”
What they really mean: “We want more inflation and won’t fight until TSHTF. We just say 2% to keep ‘expectations’ anchored.”
FOMC should have raised at the last meeting to front-run some of this shit show. What did they have to lose? Powell is already on the way out and the others aren’t getting the chairman’s seat.
The average homeless man on the street knows how much a 7-Eleven hotdog is costing him now, but an institution with as many resources as the Fed doesn’t see this coming after 2-months of warfare? … And this is just the beginning.
What even is the point anymore?
“What is the point anymore?”
The Fed is a scapegoat used by the politicians whose policies actually set the inflation rate.
E.g. what would the inflation rate be if we had a balanced budget? That’s not on the FOMC.
Just look at this board. Everyone thinks it’s the Fed’s fault, not their local congresscritter.
It is both the Congress and the Fed’s fault and the older voters somewhat for not caring or paying attention. The Fed had/has a choice whether to do QE, increase currency supply, or not. If there is a tacit agreement to monetize govt debt in order to be nominated for the Fed, then they make the choice there.
The “data driven” series of rate cuts that started in 2024 didn’t seem right to me at the time. They just felt wrong. But I didn’t have the data, so what did I know? Apparently more than the Fed…
Last fall, when the Fed cut three times, the data was wrong because of the doctored rent and OER factors that I discussed multiple times back then. That was corrected today, but the Fed already cut based in part on the wrong inflation data. So now its rates way too low for this environment.
This inflationary episode seemed extra predictable.
Anyways, I don’t see Warsh and the rest pissing off trump at his first meeting as chair by raising. So we’ll have another Fed is late because reasons and let inflation get out of hand a couple of quarters.
Gasoline inflation is baked in because of the air gap. Electricity inflation is baked in from the AI capex spend / contracts. Food inflation is baked in because of the fertilizer increases. The strait could open tomorrow and not much changes.
But the real chaos starts after inventories run out and it’s a free for all for bidding for demand destruction. We will see how bad that gets.
The Electricity CPI graph looked awfully stable up until the dawn of the data center age.
So if AI doesn’t take us out as fast as some fear, the high cost of running all of these servers in data centers certainly will.
I asked AI for recent stock closing prices.
It got them wrong.
🤔
I thought I was being such a smart guy asking for a 4% rent increase rather
than CPI in my latest rental. Now, I can see why they were ok with it.
Ha. I deserved to eat it. Good tenant and pays on time, so it’s ok in the run
long. Rough seas ahead, my lads. Hold. Fast.
You’re lucky to get that. Average rents are flat right now (though as always location matters)
Oof that’s steep I’m bet you they move next year with 2 months free rent from everyone else
There are really two Treasury bond markets. The FED controls the shorter bill market keeping rates low for us debt. The long bond market is on its own. Interest rates will reflect a 10 percent inflation rate before long.
Wolf, the CPI rent adjustment smells. Its like they waited for a month where there was zero and tagged it on. And since energy inflation is so large, it will overshadow it in the headlines.
The rent and OER CPIs last Sep, Oct, and Nov stank to high heaven, they were doctored, and I lambasted them month after month. But the Fed cut three times during the period based in part on this wrong inflation data at the time. I blame the BLS for that. That was a shitty job. But I don’t blame the BLS for finally correcting the figures; that’s better than not ever correcting them.
President Trump has said he is keeping house prices high, the FOMC isn’t going to stop inflation. Therefore, the proverbial “Black Swan” is needed to deflate bubbles and reset economic fundamentals. Well we have a Black Swan in the form of burning oil tankers trailing Black slicks of crude oil, except the Swans are probably sea gulls. Supposedly we are going to hit the bottom of the oil storage tanks, it wasn’t high prices in the 1970s, but no gas at all.
Secondly isn’t demand destruction a good thing? Powell talked all about demand (inflation expectations) driving inflation. We have significant reduction in global warming if there is no fuel to burn and what’s left too expensive to waste on marginal industries; getting those demand and job markets into better alignment just like Powell has been saying.
It’s not a black swan if those in charge are holding a can of black paint, a brush and chasing the poor white swan around.
🤣
I think taleb would even agree. lol
Taleb doesn’t know what a black swan is.
Except CO2 doesn’t drive global temperatures
The Federal Budget deficit for this fiscal year is slated to be 2.3 Trillion. The shills on the financial news networks hardly mention this. The spending by this administration is completely out of control. No one voted for this insanity.
I would like to make an intelligent comment in regard to your article….
But all I can come up with…. Is inflation sucks.
Diversion: QQQ and SPY made a new all time high after Mar low. The Dow didn’t. Only a lower high.
It was a cold winter. Every CPI Y/Y (red) made a lower high, ex
electricity. The heavy duty CPI Rent and Food at home dropped to 2017/ 2020 level. Kevin might cut rate and dump bank’s assets parking in the Fed, collection negative rates, doing nothing for the economy.
Well, so this data today is for April, not winter.
You’re summer children, you know we starks have a saying…
🥶 🐺
If they made a 6 month late correction in Apr 2026 to the doctored OER figures in Sep – Nov 2025, it will also mean that it will keep CPI elevated till April 2027.
Funny thing will be if FED makes an argument to not increase rates or even cut rates due to this data anomaly, while keeping an eye closed in Q4 2025 knowing fully well that CPI was doctored down. Exactly the same kind of perverse logic by which it can pump in 3T of QE money in a few months (2020) but then it takes years to wind down citing market stability.
They need another Volcker for sure. Or maybe a return to the good old gold/silver/platinum/tulip whatever standard, where they don’t have the freedom to do anything they fancy.
@wolf – How do I find out if my T bills are yielding positive or negative rates ? Also, should I assume that the actual CPI is a certain amount higher than the official one like by 1-3% ? I think the FED/Govt has incentives to understate inflation. Hence my concerns.
Your personal inflation rate is going to be different, depending on how and where you live. That’s really what matters to you personally. Your T-bill yields likely are a little short of that.
One can look at it this way
IF you are trying to protect your wealth, and choose not to commit to GOLD or STOCKS, the cost of the insurance for protecting your wealth just went up.
The difference (or lack thereof) between Inflation and Fed Funds…..the pittance you may reap from the difference, OR the cost.
The Fed has “feet of clay”, will not move to the conditions of today and will formulate lame excuses for doing so. IMO
Wheat has exploded: 32% ytd.
between Ukraine harvest, US Western droughts, and ME urea/ammonia reductions, this has to be another major concern that central banks cannot ignore.
At some level the Miran look-through mentality has to give way to econ real impacts, combined with specific micro-economic specific market destruction (including crude inflation), and drive CB thinking. The next announcements from Warsh/FOMC, Baily/BOE, Legarde/ECB will be interesting. I cannot imagine all will stay status quo.
I cannot imagine how these inflationary impacts will be absorbed by the fragile German Mittlestand (esp. Chemical Sector) and Argentine urban service/industrials markets
Plus, the US derivative-propped bond markets has seemed rather shallow already and rather vulnerable to these impacts.
Ahhh but it was in 2022, however will it repeat?
It didn’t in the 70’s. One inflation bond massacre but there wasn’t 2.
I think in 2022 it was because bond rates were in decimals .50 .35 etc etc, then the Fed comes out and makes them 1,2,3,4 in a short period of time. Of course that’s going to shock. They doubled the money supply.
Doubt it happens again. But who knows
Japan might be the canary in the coal mine. I think they report their inflation data soon. Bessent was over there and suggested they raise their interest rates. They’re in a pickle and might be the linchpin to the deck of cards. A lot going on. Debt, inflation, weak currency, etc.
The money supply can never be properly managed by any attempt to control the cost of credit.