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October 13, 2022

Biden: Look Fat, the Recession That We're Totally Not In Right Now Will be a "Slight Recession"
Another Inflation Gauge Shows Accelerating Inflation; Wages Fall

Inflation plus falling wages and flatlining economic activity -- hm, what did we used to call that?

Stagflation, was it?

The Producer Price Index, the report of what producers receive for their goods, hit a new record level.

This measure is slightly different than the Consumer Price Index, which measures what consumers pay for goods, but it's two different samplings attempting to measure the same thing, prices of consumer goods. It's like the difference between estimating average American salaries by surveying workers themselves, versus surveying employers for what they're paying workers. Due to incomplete information and differences in who gets surveyed, these reports will sometimes disagree with each other, somewhat.

The PPI just posted a record.

Headline PPI inflation showed prices increasing 0.4 percent in September, double the 0.2 percent economists predicted for a 12-month increase of 8.5 percent, a rate that also surpassed Wall Street estimates.

Expectedly is the new unexpectedly.

What's more, the month-over-month number shows that cost increases are accelerating for producers, with final demand services advancing 0.4 percent in September after increasing 0.3 percent in August.

The Consumer Price Index also rose 0.4% in September -- also, get this, exceeding Very Smart (Left-Leaning) Wall Streeters' expectations.

The consumer price index increased 0.4% for the month, more than the 0.3% Dow Jones estimate, according to the Bureau of Labor Statistics. On a 12-month basis, so-called headline inflation was up 8.2%, off its peak around 9% in June but still hovering near the highest levels since the early 1980s.

Although gas prices dropped 4.9% -- due to the fact that we're in a recession, and therefore there is less of a demand for fuel -- there was such a huge increase in the prices of other goods that the Core CPI was actually higher, at 0.6%.

Excluding volatile food and energy prices, core CPI was even higher for the month, accelerating 0.6% against the Dow Jones estimate for a 0.4% increase. Core inflation was up 6.6% from a year ago, the biggest 12-month gain since August 1982.

Food prices were way up again:

Another large jump in food prices boosted the headline number. The food index rose 0.8% for the month, the same as August, and was up 11.2% from a year ago.

Oh, and energy prices are moving up again, of course.

Analysts quoted in that story note that the Fed will probably continue hiking the interest rate by 0.75% increments until inflation stops "exceeding analyst expectations." I wonder why the goal is to get it to stop exceeding analyst expectations, rather than just... stopping. I genuinely don't know and the article doesn't say.

"The Federal Reserve has made it very clear they're committed to price stability, they're committed to reducing the inflationary pressures," said Michelle Meyer, chief U.S. economist at the Mastercard Economics Institute. "The more inflation comes in above expectations, the more they’re going to have to prove that commitment, which means higher interest rates and cooling in the underlying economy."

Do they mean above the usual expectations in the 2-3% inflation target range?

Not only did prices rise, but wages shrunk. Again.

The rising costs meant more bad news for workers, whose average hourly earnings declined 0.1% for the month on an inflation-adjusted basis and are off 3% from a year ago, according to a separate BLS release.

Expect a welter of Propaganda Media articles about how living with less affords us all an opportunity to Look Inside and Close to Home for meaning and purpose. Do we really need to live such materialistic lives?!, the extraordinarily shallow, materialistic, self-obsessed, and status-seeking media will scold us.

Not a bad sentiment, but... weird how we only see these Silver Linings articles with Democrat Disaster "Presidents."

Feast your eyes on these eye-watering price increases, via Ed Morrissey:

yan Struyk @ryanstruyk Annual inflation via BLS just out:

42.9% airline fares
33.1% utility gas
30.5% eggs
18.2% gasoline
17.2% chicken
15.7% coffee
15.2% milk
14.7% bread
10.1% furniture
9.2% vegetables
8.2% all items
8.2% fruit
8.1% ham
7.6% women apparel
7.2% used cars
6.7% rent
3.7% men apparel

Via Hot Air, this collection of horrified reactions by Wall Streeters to the news-- with a special emphasis on how bad they feel for their beloved Democrat Party.

Andrew Brenner, head of international fixed-income at NatAlliance Securities.

"Horrible CPI number... what will the Fed to do on interest rates: Will they go 100 basis?"

That is, a full 1.0% interest rate hike, instead of the 0.75% hikes they've been doing, to avoid the Scare Factor of a 1.0% hike.

Jim Caron. Morgan Stanley Investment Management.

"It is brutal... I do think that prices will start to moderate -- I thought that this would already be happening at this point," he tells Bloomberg TV. The issue now is that inflation has moved from the goods sector and has permeated into the services sector."

Chris Antsey, Bloomberg senior editor

"For Democrats, this is a disaster. Today's is the final CPI report ahead of the Nov. 8 midterm election. You can bet that Republicans will be hitting this hard -- worst inflation in four decades."

Republicans, Pounce!

Dennis DeBusschere, founder of 22V Research,

"This was clearly a bad number. It's just broad-based inflation. Is what it is.... Need much more goods disinflation to offset the high sticky parts of core."

Goods disinflation is, I gather from context, puncturing the inflation balloon by offsetting the inflation due to having too many bills floating around by creating more goods to match up with those bills.

Like, for example, opening up the oil spigots and tapping the billions of dollars worth of petroleum beneath the US?

Nah. Too simple. Also, Greta Thunberg would be cross with us.

Seth Carpenter, chief global economist at Morgan Stanley,

"That this was clearly a shock for markets. If ever there's a time for people who do economic forecasting to be humbled, this is it."

Actually that time was back in 2006 but you do you.

No wonder Biden's threatening the Saudis.

It's all coming apart now.

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