On Friday, the Trump administration will release a legally mandated data report on inflation due to the requirements needed for Social Security and other agencies to calculate COLA benefits (Cost of Living Adjustment).
In an attempt to calculate the upcoming report there are numerous choices. One can look at the historical data for the September report as several administrations have been accused of suppressing this number to reduce the size of the COLA’s for the elderly and lowering expenditures. Also the history based on the Atlanta Fed Sticky-CPI might provide some clues also. The analytical mind might want to drink a bottle of vodka and put groceries on the table and play spin the bottle then check the latest prices versus your weekly expenditures.
The truth is no one has a clue how the measurements are calculated because even with the recall to work a few weeks ago (see: Inflation Report Will Be Released Despite Shutdown) first reported on October 10th, that does not appear to be sufficient time to develop an in-depth survey of available data unless they elect to price check every 7-11 in northern Virginia or eastern Maryland.
Thus the idea of analyzing historic data from the Fed seems more appealing versus writing an article begging for funds for a liver transplant to deal with all of the insanity coming from D.C. these days.
First, let’s look at the core CPI-U (CPI minus food and energy) from the BLS website:
Based on last year’s data, the obvious conclusion is that the 3.1% reading last month for core inflation might well have been the indicator that a higher reading is possible. However since the COLA’s are not based on core CPI-U but on the CPI-W, that could provide an indicator as just how variable this month’s estimates might be.
The Atlanta Fed Sticky CPI is this author’s favorite measure for inflation as it remains much more comparable to what consumers encounter on a monthly basis.
The only consistent thing we can take from this, despite the shutdown, is that prior to the layoffs the government was measuring a trend change of higher prices potentially taking hold at the consumer level.
The problem is the government does not use these statistics for the cost of living adjustments but the CPI-W which is only mentioned during the September report on inflation. The August report has the following statement on this measure from the BLS report:
With that being established, I think the data will only reflect a mild uptick in consumer inflation with CPI-U at the core level up to 3.2% and CPI-W moving up a mild 2.9% annualized increase, sufficient enough to tout that “inflation is tame” plus providing cover so the seniors to not get infuriated at the administration by the manipulation which was attempted by prior administrations.
Unfortunately, it might end up being buried in the news of the day.
“WAR”
One of the distractions this administration, as others prior has adopted is to bomb someone or something like an aspirin factory to distract from the headlines of the day. The so-called misery of the government shutdown which hasn’t had much impact outside of the Washington media and those workers directly impacted, is fading from the front pages faster than Kamala Harris’ approval rating in September of last year.
This is why I think the unfortunate losers in Venezuela are going to catch some cruise missiles just prior to the release of this report. What better way to distract markets, the media, and the Idiocracy-minded electorate of America with some things going “boom” in a foreign land to prevent them for getting angry about $29 per pound t-bone steak.
Prepare for another eventful day in the media, markets, and nonsense tomorrow as the bread and circus must continue.
