This is a massive amount of inflation that companies are passing on to each other through much of the economy.
By Wolf Richter for WOLF STREET.
The Producer Price Index final demand (PPI), which tracks inflation in prices that companies pay each other, spiked by 1.38% in April from March (+17.8% annualized), seasonally adjusted, the worst since the historic one-month spike in March 2022, driven by services and energy. It had already spiked by 8.7% annualized in March – and by 7.0% and 6.6% annualized in February and January before the energy price spike hit (blue in the chart).
Year-over-year, it spiked by 6.0%, the worst since December 2022, according to data from the Bureau of Labor Statistics today (red in the chart).
The shocker is the spike in services, and services dominate the PPI. The services PPI weighs 68% of the overall PPI, and it completely blew out – that was in addition to the spike in energy prices, and it also shows how some of the energy price increases have moved into other parts of the economy.
The services PPI spiked by 1.18% (+15.1% annualized) in April from March, seasonally adjusted.
Year-over-year, the services PPI jumped by 5.5%, the worst since November 2022. The low point, the point of the coolest recent services PPI inflation, was in December 2023 at 1.8%. The inflation rate has multiplied by more than three since then.
Within the services PPI:
- Trade services (weigh 19% in overall PPI) spiked a huge +2.7% month-to-month not annualized in April from March.
- Transportation & warehousing services (weigh 4.9% in overall PPI) exploded by 5.0% not annualized in April from March.
- But “other services” (weighs 38% in overall PPI) ticked up only +0.1%, after no change in the prior month.
This is really bad.
Core PPI Final Demand, which excludes energy and food components, spiked by 1.03% (+13.1% annualized) in April from March, seasonally adjusted.
This shows the massive impact of the blow-out of the services inflation in PPI, since the price spike of energy components is excluded from the core PPI.
Year-over-year, core PPI jumped by 5.2%, the worst since December 2022.
The PPI for energy prices spiked by 7.8% in April from March (+145% annualized), which came on top of the 10.1% spike in March.
This pushed the year-over-year increase to 22.4% in April.
The energy PPI performs such huge spikes and plunges that the year-over-year percentage changes blast through the top and bottom of the chart; so to gain some perspective, it’s helpful to look at the price level, rather than the percent change.
The chart shows the price level of the energy PPI. The big spikes in March and April pushed the price level to the highest since July 2022.
The PPI for core goods (goods without food and energy) jumped by 0.65% (+8.1% annualized).
This pushed the year-over-year increase to 4.6%, the worst since February 2023.
This is a massive amount of inflation in prices that companies pay each other and are trying to pass on to each other. And some of that will seep into consumer price inflation measures, such as the CPI and PCE price index.
The Fed has a real problem on its hands, and it has been boiling for months at the PPI level, and some of it already seeped into consumer price inflation, with the CPI jumping by 3.8% in April on core services and energy, but that jump didn’t yet include the dynamics working their way through the business sector in April.
In case you missed it: CPI Inflation Blows Past Fed Rates as Core Services, Gasoline, Electricity, and Food Spike. Fed’s “Real” Rates Are now Negative
Enjoy reading WOLF STREET and want to support it? You can donate. I appreciate it immensely. Click on the mug to find out how:
I just replaced garage door. Supplier said that price goes up after May 1. It’s no surprise given the higher cost of fuel and everything else. inflation is a stubborn bitch, once started, won’t stop easily.
Yep. I am currently replacing roof with standing seam metal. Ouch! Well I figure it ain’t gettin cheaper, and it should be good for 2+ cycles of replacing it with asphalt singles
You won’t regret buying this roof, especially when the weather is crap….just smile.
We are buying a new stove. Our comment? Well, it won’t be getting cheaper this year, let’s do it.
companies saw Iran conflict as way to profit more
RECORD profits being recorded by companies
gee, go figure who pays
and now they also are getting $150,000,000,000 in tariffs returned
were is my cut???
I always thought metal roofs were a scam. In the most technical sense they last twice as long as asphalt shingles. But after 25 years and a handful of hail storms, how many people are going to look at their beat up metal roof and say, “Yup, she’s got a lot of life left in her!”?
As a carpenter I can assure you they are not a scam. Furthermore, I have replaced many roofs in my life. There are a few things to consider where I live. No moss. Coniferous needles blow off and don’t clog the gutters, and same for leaves. Seldom clean gutters). When the rain pounds (6:12 slope) the drops don’t bounce onto my deck, they are simply diverted at a slight angle angle. Snow slides off, and a few years ago we had 4′ snow in a week and I had to shovel off every other day with asphalt. Better attic ventilation under ridge cap. Plus adds to resale value. And at 2X guarantee I will be in my 100s when I need to consider a new one. :-)
I would.
PPI numbers stink. No wonder market climbed another record today. What a joke and manipulation. Wolf’s article on Household Debt he just wrote is i believe the key to all this. Houses are sitting on lot of cash and lot of equity compared to 2008. Unemployment is low despite high inflation for last 5+ years. I dont wish this on anyone but unless there is massive job losses, consumers are not going to cut any spending. As long as there is paycheck, we will complain about inflation but we will still take vacations and go to restaurants and buy stuff we dont need.
TBH this is a Terrible time period to pay to fix up your houses. Wait for a large recession.
These trades are robbing you right now, the business owners are sitting back and raking it in. They still pay their guys next to nothing.
Wait until their business drys up and see the best price you can get. Maybe home values falling will take these exorbitant service prices down with them.
I agree with the robbing part, but the reality is that we’ve all been waiting for a recession for at least 2-3 years. Sure, we can point to a few cracks in the economy, but I don’t see any sign of an approaching recession.
CRE isn’t turning out to be a big deal.
Private equity is a problem, but most likely won’t turn into a headache unless the stock market drops at least 20-25%.
Housing isn’t going to cause the economy to crater.
AI job losses will eventually be an issue, but I don’t see that broadly for at least 2-3 years.
Employment remains very steady although not blowing out in terms of new jobs created.
Inflation is likely to keep rising, so maybe by late summer the Fed will raise the FFR. But even then, it’s not likely to be more than a 25 BP increase. Most people will view a 10-20% sell off of the markets as a healthy correction which will see money on the sidelines jump right in.
I’m stunned that Trump has allowed the ceasefire to continue so long. If it lasts much longer, I’d say further military action is off the table.
Granted 2-3 of these things could combine by September to become a real economic drag, but that assumes Trump allows the Iran situation to fester past June.
We all might be waiting quite some time for the next recession to put more reasonable services pricing on the table.
AI job losses are always 2-3 years away.
Bonds are up today. They have spoken.
Are they denying reality again, which of course is, bond prices must fall as yields rise significantly?
I mean what are bonds going to go to, 20%?
20% bonds. Ummm nah.
Just a whisper, wait for much more…
Until the 5 & 10-year Treasuries are above 5%, and the 30-year above 5.1%, bonds haven’t said anything other than “same ol’ trading range since 2023” …
In real estate it’s been an incredibly frustrating year. Lenders last minute backing out of funding purchases and refinances or increasing rates altogether. Owning property, we keep rents low and are seeing more people late on rent and households combining. This is certainly a tough year on the way to being really hard on all.
Apologies for posting unrelated quote from Babylon Bee. This just reminded me of Wolf’s RTGDA 😄
PATMOS — The Apostle John emerged from his cave earlier this week feeling confident that he couldn’t have been more clear in his description of the revelation he’d received.
“Perfect. Crystal clear,” John declared, setting aside his ink. “That should keep anyone from coming up with weird interpretations. If anything, I may have made things too obvious, perhaps spelled things out too much. It’s okay, though. It will make it more readable for kids.”
When asked by a scribe the exact identity of the beast with ten horns and seven heads, John sighed with impatience and said to just read what he wrote.
“It’s literally spelled out,” said John. “All you have to do is read it. I can’t make it simpler than that.”
At publishing time, John had added a few more clarifying verses about the giant burning mountain falling into the sea just to be doubly sure there could be no confusion.
Can’t blame any of this inflation on a virus folks.
This implies that “Trump Devotion Syndrome” has a bacterial origin…
More of a cancer than a virus.
I never blamed any inflation on the “virus”. They went crazy with QE and 0% rates in 2020, and no rent paid, or mortgages, or student loans.
In fact, if 2020 was what they told you, that would have been deflationary.
The Straite of Hormuz is about to become a water cooler topic considering that approximately 25% of oil consumed globally passed through it before the war broke out.
Not to mention a significant portion of global fertilizer.
This is by every measure a horrendous setup for nearterm inflation. There’s no getting around it, sadly.
The NACHO trade, which stands for “Not A Chance Hormuz Opens,” reflects Wall Street’s growing skepticism about a quick resolution to the ongoing crisis in the Strait of Hormuz, leading to expectations of prolonged oil disruptions. This trade indicates that investors are treating these disruptions as a lasting risk rather than temporary volatility.
Actually, sulfur is more important. 50% of world supply comes as a byproduct of refining MidEast “sour crude”, and is shipped out on bulk carriers through Hormuz.
Sulfuric acid is THE most fundamental material in chemical processes. Somewhere along the line it’s involved in making nearly every material you use.
Exactly because it’s an essentially free byproduct of sour crude refining, and the shortage will disappear if and when MidEast crude starts shipping again, there’s little incentive for anyone to invest in creating alternate sources of supply.
Although the Canadians have small mountains of it up in Alberta from their own crude refining, they lack the ability to ship it out in quantities needed to make up the MidEast shortfall. Would need to go by rail instead of in huge bulk carrier ships.
Mountains of it in North Vancouver waiting for ships. Lots of US west coast ports that used to take on ME crude could switch over? :-)
The first thing that the West Coast refineries should to is stop exporting gasoline, jet fuel, and diesel to Mexico and other countries further south. This is a huge profitable business: import crude oil, refine it, sell the value-added product overseas… From our windows, I see the tankers heading out the Golden Gate fully loaded from the refineries in the San Pablo Bay and Richmond Bay.
Gasoline demand on the West Coast has been declining for 20 years, and the decline accelerated in recent years due to the growth of EVs and hybrids. Logically, what should refineries do with their excess production capacity. That answer was years ago: exports of refined products.
Jm –
Truly spooky stuff! Hard to believe someone would willingly put the US in such a precarious position.
Since the oil exporters need the revenue, you can bet they’re trying to figure out a way to get oil to the market without sending tankers through the Straits of Hormuz.
The chance to make huge profits usually results in a lot of ingenuity.
The first casualty of war is the truth and the truth is that trade between Iran and Russia/China has resumed. Yes, Americans will definitely be paying more for everything for the foreseeable future.
Hey you spelled fertilizer right!
The FED should be doing an emergency 100 basis point RATE HIKE.
Volcker did a 250 basis point emergency rate hike when he took over the Fed in 1979. We need a similar rate hike now. Jimmy Carter is looking better every day.
That raises a good question. With inflation primarily being caused, or blamed on the scarcity of oil driving up prices everywhere, would a rate hike actually do anything to help?
Inflation seems to be mostly, dare I say, transitory, due to this issue?
Would increasing interest rates actually do anything for Supply Side inflation?
1. Central banks can look through the energy part of inflation. But look at the non-energy parts of PPI, including services and core goods, look at the fat red lines in those charts. Inflation has been accelerating for quite a while before the energy price spike, as I pointed out in the article. Energy prices came on top of it.
2. The idea of raising rates to combat inflation is to create tighter financial conditions and take some exuberance out of the economy so that demand backs off, which can bring down inflation — and it did in 2022-2024.
And I just don’t get it Wolf, the NFCI has done nothing but get looser and looser over the last year. Risk seems to be a non-event for everyone, even with a blockade of the Gulf? WTF?
“The NFCI decreased to –0.52 in the week ending May 8. Risk indicators contributed –0.29, credit indicators contributed –0.15, and leverage indicators contributed –0.08 to the index in the latest week.
The ANFCI also decreased in the latest week, to –0.48. Risk indicators contributed –0.35, credit indicators contributed –0.14, leverage indicators contributed –0.05, and the adjustments for prevailing macroeconomic conditions contributed 0.06 to the index in the latest week.”
Usually, increasing interest rates in these circumstances results in stagflation. A combination of recession, high interest rates, and high inflation can be quite unpleasant.
Volcker stood 6 feet 7 inches tall like some Greek economic god of wealth like Plutus . A graph of Volcker’s interest hikes look like a journey in the Illiad or Odyssey. Today’s FOMC takes after the Greek god of fear Phobos where Phobia originates. References: Wikipedia.
The FED chose this when they started cutting rates and slowed QT.
Sort of. The FED didn’t choose when to start a war and crippled the world oil market. The FED didn’t choose to run huge budget deficits.
Blame the FED for not responding fast enough and I am with you.
Well it is hard to argue against that popular POV that inflation suddenly appeared
“Wolf….Wolf….Wolf……is it time to play Taps for the U.S. Dollar?” “Ten-hut!”
Some “authority” on the internet yesterday said gold going to 17,500 dollars per oz. I guess this means the purchasing power of a us dollar will be about a few cents, us debt will be worthless, and our government can start over again with a new currency. Hope this does not happen.
Some “internet authority” 🤣 just another gold promo guy, some as with cryptos and RE other stuff.
Gold has been going the other way for the past few months as the dollar appreciated.
🗣🐻
No.
Inflation has gone global. USD dominance is in full effect.
BOJ intervention has kept a lid on it: Above 160 YEN:USD the wheels fall off (although I am not exactly sure why?).
Until debt matters (again, see Japan) the world will continue to have USD in over half of all transactions.
Lemme guess: we will be replacing it with… Gold?!?
I posted yesterday that we received 30% increase on our raw material and we buy millions of pounds each year and we passed it to our customer. Wolf’s article and PPI data confirms companies are passing this inflation to their customers. There are things we have less control over (like Covid) and then there and things we dig a hole and jump into it. This current situation is all our doing.
You have 1 customer?
/s 😉
When your selling millions of pounds you only need one customer!
Depends entirely on what you’re selling millions of pounds of and to whom.
‘The Fed has a real problem on its hands, and it has been boiling for months at the PPI level, and some of it already seeped into consumer price inflation, with the CPI jumping by 3.8% in April on core services and energy, but that jump didn’t yet include the dynamics working their way through the business sector in April.”
How much do you want to bet they’re going to pull out their “transitory” BS again? They probably won’t use the word, but they’re going to do the same exact thing. These scumbags won’t stop at anything to avoid doing their job. They go kicking and screaming to rate hikes, but cut rates in an instant. The fact that they never got inflation under control should be cause for investigations and imprisonment of FED officials for dereliction of duty.
The real villain is the Big BS Bill and complete failure by Congress to balance the budget.
Warsh has already said that AI is deflationary and rate cuts actually need to be done preemptively. Even before any data has been seen. So if anything we’re in for a worse time than just the previous transitory mistake.
That’s the second part of what he said. The first part was that AI investment boom is INFLATIONARY. And that there is some time between those two, but that no one knows how much time.
This whole AI mania/extreme stock market bubble is inflationary. It is disturbingly gross.
Depth, I agree. The percentage of the economy that is driven by the capital class will keep growing as long as the stock bubble stays alive.
Walsh needs to fire 1/2 or more of the Fed Staff on day one. They caused this mess that we are in and they should be given the exit door.
Just how did any staff of the Federal Reserve cause any ‘mess’ at all? Please do tell.
Don’t worry, it’s all transitory.
It’s time to cut rates and start QE.
/s
We all know how the people in power would act. We should plan ahead for our self.
Nearly $600 for front brake job on a small car, the greater part of which was “labor”.
Next car will a Fred Flintstone vehicle. YaBaDabAdo!
@NoBadCake,
Youtube has saved Me a lot of money in repairs ….Auto and Home.
I stand behind my DIY brake job! (But will I stand in front of it…)
Good Christ, man… you got ripped off!
Front brake pads cost ~$100 (usually cheaper).
A shade tree mechanic can install these in about an hour.
A shop should be able to do it in 30 minutes.
A simple brake job took these grease monkeys 3 hours (@ $160/hr)?
Even the “book time” says an hour for pad replacement.
I bet they replaced the rotors whether it needed them or not.
Here in CA most mechanics are now over $200/hour. I friend said his Porsche dealer in S. Cal is over $300/hour. I’m lucky that I have never had to pay for a fluid change or brake job for any car over the past 50 years. The two post lift in my garage makes brake jobs a LOT easier.
Apt. a lift really makes the jobs a hell of a lot easier!
I enjoy working on me rigs,just need land/shop(and lifts!).
Really?I bought my own BOSE breakes at 32$ at Amazon,and paid my friend 50$ to change it, same with rear breaks.I used to change myself before.They charge 100$ in Brooklyn,NY to change front brakes.Probably 200$ in Manhattan.
Yeah
I just got some stuff done at the dealership.
They found about $1000 worth of items I just declined.
Look I’m here today for what I asked for. Not what you think I need.
Then they have told audacity of slapping a 10% service charge onto all their service invoices.
*the
Unless that small car was an Fcar I’d say you either got robbed or it was a great deal.
My small F430 was $1295 parts, $550 labor rotors and pads all 4.
Did you know you can buy brake pads for $50 online then install them in most vehicles by simply removing one of the two caliper pin bolts and sliding the caliper up without removing it. Slip the old pads out, then drop the new ones in. Literally takes me less than 15 minutes per wheel. No appt, no wait, no hassles.
Maybe in Cali, but in the rustbelt after a few years the whole gd thing is one massive piece of rust that you gotta beat on with at least a 5# hammer to get it apart.
When I used to do this on my Hondas to save money, it was not quite so simple. I also had to open the bleed screws and attach a tube to direct the brake fluid to a waste container, then had to use a C-clamp to force open the calipers. Because the new pads required more clearance than the old worn ones, and it was otherwise impossible to install the new pads. This was how the Haynes manual said to do it.
Bobber,would lube the pad caliper to pad contact points as well as the caliper pins.
Many rear disc brake parking systems require a special clamp that will rotate piston sideways down in rear due to it being part of the parking brake,tool usually a free loaner or do like me and buy one for 20 bucks,well worth the investment.
Cooked numbers on a cooked economy.
Wolf Richter: The boomers and Gen X own mortgage free
homes, bonds, CDs, commercial RE, rental houses and stocks they bought a long time ago. They have high income and little debt. The lower K have little assets or no assets. They have student loans, car loans and c/c debt. Their Household Debt as % of Disposable income is high. They cannot go bk. When those new data centers and
factories will be ready the lower K will move to the middle, get married and feed a family. Their debt will dissipate. When the boomers and Gen X expire, millennials and gen Z will become the Upper K.
After Oct 2008 and Mar 2020 the Fed raided other people bank
accounts. In 2026 the economy is doing well. The Fed can lower rates
to kickstart the parasite banks. The spread between market rates and Fed Rate will widen. The banks will make more money than ever before.
Bring back QT.
$50B per month.
TODAY’S BIG NEWS!
The 30 year bond sale closed above 5% for the first time since August 2007
Interest expense on the national debt is going to be highly inflationary going forward in and of itself.
and the stock market is Up and Up!!
That can’t be good.
Would higher LT rates matter if the govt funds the deficit with TBills? The TBill rate is under the Feds control.
Businesses and homebuyers would face higher rates on borrowing, and the economy might slow as a result, but the govt might be somewhat insulated assuming tax revenues don’t plummet.
Warsh got confirmed on a hellish day for inflation. I feel sorry for him because the President said that the he doesn’t care about affordability and continues to insist that Iran end it’s nuclear program. This is just outrageous because it adds to the debt and pushes energy prices higher at a time when AI is already driving energy demand. I doubt Warsh will raise rates fast enough and might even be tempted to lower them because of the large of amount of t bill issuance required to deal with staggering borrowing required for the military.
So, we’ve all seen it boiling for monthsb the anecdotes have been going on in earning’s calls for quite some time. The K is getting larger. What’s the Fed going to do about it? Seems they don’t want to do anything.
They are part of the K, what do they care
All the Fed has to do is promise that they will never use QE again, no matter what, and the K disappears, very quickly.
The Fed obviously views QE (a.k.a. balance sheet expansion) as an important tool to prop asset markets in times of turbulence, then keep them propped as ample liquidity is maintained. With liquidity high, market participants bid up assets and pass them around like hot potatoes.
The ample liquidity regime is a different world, seemingly sustainable, until asset prices rise so high that persistent inflation ensues and wealth concentration becomes unbearable for the population.
Its also a way of trading off five recessions for a massive depression AFTER the political and business instigators are gone and buried.
You are right. If the Fed took QE and its broader ample liquidity strategy out of the toolbox, its’s game over.
Exactly right, Bobber. Many people have been in awe that the past few years, stocks are still priced for ZIRP and QE, despite a period of time when interest rates were over 5%. It’s now clear to me that they’re priced, figuring, “as long as the economy can handle higher rates, all is well, and if they can’t for some reason, the Fed will drop rates back to 0 and begin printing again.”
It doesn’t matter if it’s true or not. What matters is that the market BELIEVES it, which is why we still have stocks trading at idiotic P/Es.
If Congress prohibited future QE, then the market would have to adjust to a scenario where a recession would mean an actual drop in earnings, and thus, lower stock prices. Right now, the market figures that the economy will be bailed out, through a combination of fiscal and monetary stimulus, which means corporate America will keep on earning, no matter what is happening. Unless the market begins to believe that this is impossible, it will continue.
One other point. If wealth concentration is not already unbearable for much of the population, we’re very near that point. Look at how such a large percentage of Americans have been unhappy with the economy for years now.
It’s clear that neither Biden nor Trump was interested in fixing the problem.
The talking heads on Bloomberg say that companies have had no problem passing on price hikes plus a little bit more.
Inflation is in fact good for business and good for the economy. Just look at the stock market. It makes absolutely no difference to a company as to whether revenue comes from inflation vs organic growth based on a better service or product. I expect to see further crapification of everything as companies can just sit back and watch the inflation dollars roll in.
Companies that sell services, from Google on down, have jacked up prices for their services no problem, that’s completely true.
Companies that sell durable goods to consumers have had hard time jacking up prices over the past two years without losing sales, including automakers. They had jacked up their prices to unsustainable levels during the pandemic, and those price levels are now the ceiling that they could not break through without losing sales.
Why is that though? It does seem like Google, Netflix, Microsoft and even the local barber can easily raise prices 15-20% every two years or so, and no one bats an eye. I don’t think they realized they had so much pricing power prior to COVID, which is why corporate profits have soared.
Why don’t consumers, individual and business, push back on services, the way they do on goods?
“Why?” Good question. I often wonder about that too.
Sometimes the answer is that there are few alternatives, if any (monopolies or oligopolies) — I’ve run into that when I tried to fight back, but finding alternatives was either too hard to implement and not worth it the time, or impossible to find.
Sometimes the answer is that services can be very complex, such as health insurance, and are difficult to price-compare.
On several occasions recently, services providers have included AI as part of the package and raised their subscription rates because of it whether you want it or not (in my case: Microsoft 365, Google’s Workspace, MailChimp (which I scuttled last year)…
And yes, I agree, during covid these companies discovered their pricing power, and they’re not giving it up now.
It’s fascinating. It’s like prior to 2021, they never realized they could massively hike their prices, and while consumers would grumble about it, wouldn’t change their behaviors.
I’m not even sure at this point a recession would change people’s behaviors.
The second wave of inflation is just getting started. It’s the summer of 1972/1973 again…
…this time with 120% DEBT/GDP…
…really going to be a bitch when we get to 1978.
Just as it was then (Vietnam), the first casualty of war is the truth. Seems humanity has to keep relearning the same lessons.
For all those suckered into buying overpriced EV’s…this is the shape of things to come. You are just seeing the beginning of inflation in the electricity arena.
“Residents Pay the Price for Tech’s Appetite
Liberty Utilities customers already feel the squeeze in their wallets. Rates have jumped 100% over four years, with an 11.4% increase approved for 2025 adding roughly $37 monthly to average residential bills. That pain comes before the real uncertainty hits: finding replacement power in an increasingly competitive Western energy market.
“It’s like we don’t exist,” Danielle Hughes, CEO of local advocacy group Tahoe Spark, told Fortune. Hughes, who also supervises energy programs for the California Energy Commission, calls the situation “resource extraction” that ignores low-income residents and the area’s unique winter tourism demands.
Lake Tahoe sits in a “grid island” within Nevada’s system but serves California customers under California rate oversight, with federal authorities controlling wholesale transactions. The regulatory maze makes accountability nearly impossible.
David Meets Goliath in the Power Markets
Liberty plans a summer 2026 request for proposals to replace NV Energy’s supply, prioritizing California renewables and affordability. But they’re entering a market where data centers can outbid residential customers by massive margins, and transmission capacity remains limited despite the $4.2 billion Greenlink West line coming online alongside their deadline.”-MSN
Never buy an EV. Always lease them due to rapidly changing technology. Who knows, new batteries and more effective use of energy could possible offset increase in utilities…or not. Just give it back to the manufacturer at the end if things no longer make financial sense.
Don’t take this guy’s advice if you want to be financially independent. Never lease a vehicle
It wasn’t blanket financial advice to help become financially independent. But if you want to buy a new EV and own all the depreciation that comes with it be my guest!
@WaionoIn We have Liberty at our Tahoe cabin and the rates have gone up, (but not as much as cabin insurance has gone up). When you wrote “Liberty Utilities” it reminded me that they changed their name a few years back (spending tons of money to let us all know and repaint all the trucks). Google found “October 2020, Liberty Utilities rebranded to simply Liberty, dropping “Utilities” from its operating name to reflect a refreshed brand focused on sustainability and customer-centricity. As the regulated services division of Algonquin Power & Utilities Corp., the company adopted a new “radiant heart” logo to represent its focus on water and energy services.”
Well, the USSC court has effectively ruled that corporations have as much or more rights than living breathing tax paying citizens. Liberty must consider energy sucking corporations that make it easy for AI to decimate real life more important customers than real life oxygen breathing human beings fraught with all our silly emotions. Welcome to The Terminator. Humans are out once the AI machines learn how to fully operate the supply chain. Seriously, my friends own/operate 3 massive food processing facilities. They began transitioning to robot factories a while back. Moved from Cali to Texas and the the loyal former green card Hispanic employees were offered to transition to Texas and the best and smartest workers did so provided they embraced the transition from line workers to electricians, etc. to automatic line designers/maintainers and builders. The first factory is up and running and employees have been cut by 90% and productivity is through the roof and no California regulatory BS. Then employees in Texas are ecstatic because they make more, feel better being so well trained and educated, sold their homes in Cali and now live a lifestyle near Dallas that would never have achieved in SoCal. Oh, and the employees love the family patron for what he has done for them.
Then you have corporations like Liberty and the data centers they serve that are soulless.
“Employees in Texas are ecstatic” 1/10 of them that is. 90% of them are either unemployed in SoCal or back in Mexico then?
It’s OK, Bessent assures us that inflation will go down under Warsh. The trick? Make it REALLY high to begin with.
Obviously R* = -0.5???
Also don’t forget the FED isn’t responsible for cutting all sorts of wind and solar projects that might have helped with electricity inflation. Maybe not completely solved it, but would have helped at least a little.
But hey, at least there will be a nice ballroom built.
One of the MASSIVE PSYCHOLOGICAL WAYS that housing inflation has affected the way that some people (including my wife) think is this – homes in California went up to $700K to $800K in decent areas, with much higher prices in nicer areas. Now when she sees a home for $500K, her mind says ‘cheap’ (inexpensive). I remind her that $0.5 Million is A LOT of money and not cheap! The same home in 2013 may have sold for $150K or so.
Inflation sucks !
Somebody somewhere should do something about it.
We need a government sponsored organization that has responsibility for controlling inflation.
Or a monetary system that is connected to reality…
…unless you actually believe the valuations on all those balance sheets. LOL! They don’t call it “mark to fantasy” for nothing.
Look up a chart of the 2% inflation target trajectory with an overlay of what prices actually did.
We are 13% ABOVE the 2% trajectory.
And lets remember, 2% was pulled out of a hat…was not the policy prior to 2008
We never hit tha inflation target and now with upward direction, I am sure FED will say they will hit its target in 2030.
After 2022, every year they have been pushing out.
Its simple. It not going to happen. FED is not serious about inflation. They know. Markets know it. Rich know it. They only have to act like they are serious.
We have hit ATH in all Stock market indices. Some Real Estate markets have corrected. Bay Area where AI Boom is in full swing, this year YoY prices have gone up for many cities.
In last meeting, Powell didnt have balls to remove Easing bias in FOMC Statement or even hint at rate hike.
Now Kevin has spoken big game on reducing balance sheet and inflation hawk. So we will see if he can “Talk the Talk and Walk The Walk.” But we all should know better. Fool me once shame on you. Fool me every time, shame on me.
My son-in-law has a Tesla with 180,000 miles on it. Only maintenance he has done is tires and a windshield.
This is gonna be a toughie. During the last bout of inflation people’s wages went up more or less to match the rate of inflation – on average
That’s not gonna happen this time.
Iran and AI are built in excuses for the Fed.
Iran will be considered “transitory” event……but its not, IMO.
and AI is causing job cuts…….
So the Fed has two built in excuses. Which is EXACTLY WHY we need a “hard rail” monetary policy such as the Taylor Rule. If inflation is X, Fed Funds are Y. Period. The 2% “target” is a joke….a bad joke.
MW: The bond market is already hiking rates as Kevin Warsh takes over as Fed’s new chair
you got tha right
overnight bond yields are on a tear
ten yr a hair under 5, 20 @ 5.044
Edit. Meant 4.5
What do you call a country that has rampant, out-of-control inflation? A banana republic, or at least a (former) republic that has gone bananas.
We may be in the first inning. Hold on.
USA! USA! USA!
Powell left Warsh holding a stinky paper bag on the porch as Powell ran off laughing into the night. Be interesting to see what the next FED meeting looks like. Wolf will have plenty to talk about.
Bond market to Warsh, “Go ahead, make my day!”
Yep. The elite fawn over Powell for “taking strong measures to avoid a depression during COVID” but in reality, all he did was print money. It’s not a new strategy, and it’s not clever. It’s the same piss poor strategy that many countries have used for time immemorial.
If you need to unanchor something, Powell is your guy.
All because the epstein files were getting too much attention.