After listening to Peter Navarro bark like a trained seal on Bloomberg Television this afternoon, I fear this brief thread is more necessary than ever. Courtesy of YouTube:
To stay consistent, let’s review what these pages published after the June CPI report and update the same everyday consumables that were quoted on July 15th.
Food at Home: MoM (month over month) up 0.3% YoY (year over year) up 3% July: (MoM) 0.2% YoY: 2.2%
Ground Beef: MoM: 1.5% YoY: 10.5% July: (MoM) 2.5% YoY: 11.5%
Bacon: MoM 0.8% YoY 3.6% (God help us) July: (MoM) 1.9% YoY: 4.6%
Poultry: MoM 0.9% YoY 3.4% July: (MoM) -0.1% YoY: 3.1%
Eggs: MoM -10.8% (hurray) YoY + 27.3% July: (MoM) -3.4% YoY: 16.4%
Coffee: MoM 2.2% YoY 13.4% July: (MoM) 2.6% YoY: 14.5%
Electricity: MoM 3.3% YoY 5.8% July: (MoM) 2.5% YoY: 11.5%
Utility(piped gas service): MoM 1.5% YoY 14.2% July: (MoM) -0.7% YoY: 13.8%
Rent of Primary Residence: MoM 0.2% YoY 3.8% July: (MoM) 0.2% YoY: 3.5%
Water, Sewer, and Trash Collection: MoM 0.4% YoY 5.4% July: (MoM) 0.4% YoY: 5.3%
Health Insurance: MoM 0.6% YoY 3.4% July: (MoM) 0.45% YoY: 4.4%
Subscription and rental of video and video games: MoM -0.3% YoY +13.4% July: (MoM) 0.4% YoY: 6.0%
Haircuts and other personal care services: MoM 0.6% YoY 3.8% July: (MoM) 0.1% YoY: 3.8%
Now I’m not a professional economist by trade nor as I’ve gotten older have my eyes deteriorated that much, but if one looks at the year over year rate of change indicates nothing below that magic 2.0% that Navarro and the Trump administration claim has been achieved on goods and services that a large majority of Americans utilize or consume every month.
In fact if one looks at the Atlanta Federal Reserve Sticky CPI, that has ticked up again, now at 3.4%.
With the Supercore CPI, something that many economists watch very closely, rising a shocking 0.5% month over month resulting in a 3.2% year over year reading, if the Federal Reserve claims inflation is contained and cuts in September, it would rank up there with many of their greatest blunders in history. A mistake similar to that of Paul Volcker’s Fed thinking the trend was down in 1980 and cutting too soon leading to a major jump in short term inflation which took 20% interest rates to tame.
The Consumer Isn’t Paying the Tariffs or Inflation Myth
Unless you live under a rock or are a politician with a ‘D’ or a ‘R’ after your name, common sense reminds the American consumer that they are still paying higher and increasing costs for all types of goods and services. But the big lie being spun by this administration is that foreign countries are paying it or retailers like Walmart are eating the expense.
This is 100% bovine scatology.
The reality is so subtle most consumers do not realize it. If the average consumer goes into a big box retail store and buys a three pack of underwear made in Bangladesh one week for $8.99 it’s no big deal, right? After the imposition of a 20% reciprocal tariff rate on this poor nation, one would think the new price would be around $10.79 or so, right?
Wrong. Odds are the increase would only be up to $9.99 per package if a retailer like Walmart is smart. So where does that additional $0.80 get absorbed?
Easy, increase prices 1/2¢ per item say for butter, milk, ice cream, beer, vegetables, frozen pizza, children’s cereal, etc. Now spread that out throughout the store on high volume, high turnover items that people will not even notice that they are paying it. When a company slowly expands that to over 100,000 SKUs and it does not take long to offset the price increases in auto parts, clothing, etc. and make the consumer eat the costs while not blaming the administration for its tariff policies.
While there are some low volume items which are going to be marked up thanks to the tariffs due to their low inventory maintenance and overhead, the reality is that majority of products the people use or consume everyday will bear the brunt of these tariffs.
Thus why the Trump administration wants large Federal Reserve rate cuts to make sure there is plenty of credit available for consumers to run up those credit cards or use BNPL to buy everyday consumables and necessities. The administration knows that the “poors” need more and easier access to cheap credit so they can afford to maintain the illusion of a lifestyle that the administration promotes as much better than the good old days of 2019.
Prepare for another series of hot inflation readings the next two months as more of the tariffs begin to impact the items the average American frequently uses or consumes.
