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Some Inflation Reality: It’s Worse than Today’s Report

When these pages or this author is wrong, I always want to lead an article or commentary off with an admission. This morning on FinTwit (now called X), I got cocky thinking that Secretary of the Treasury Yellen’s comments on inflation in China and the article posted on ZeroHedge in combination with the price action in equity markets late on Tuesday would lead to this postulation by yours truly:

Yeah, that one sucked. It’s also why I have a disclaimer and tell people not to follow my investment postulations on short term moves at times.

This morning in my spare time between meetings, I had time to dig into the numbers and tonight, even more so. One thing I heard on the bubblevisions was “wow, look at auto insurance” or other such nonsensical nonsense.

So let’s look at personal motor vehicle insurance from the Bureau of Lying Statistics (BLS):

All BLS Charts via BLS Data Viewer

The chart speaks for itself, but the spike since 2022 is the impact of the Fed and US governments monetary and fiscal irresponsibility.

Meanwhile from the “depends on where you live” department, Homeowner’s insurance:

All BLS Charts via BLS Data Viewer

As the bubble is allowed to expand, the cost of household insurance shall continue to skyrocket as states meddle in the maximum increase in rates they allow.

From the “have a drink to believe this one department” the BLS reported a 15.2% decline in Medical Insurance.

All BLS Charts via BLS Data Viewer

I wish I could try her mushrooms out for a test drive to believe data like that. But that’s not all, it gets worse as one digs into individual categories further.

Like eggs.

During a bird flu outbreak.

According to the BLS logic, $3.89 per dozen is cheaper than $2.89 per dozen.

And of course none of the BLS “experts” have ever watched the movie Trading Places because fresh orange juice prices locally, where it is produced, have been advancing a good 10% plus per month. So another beauty from the political statisticians who determine if grandma gets a pay increase to afford cans of cat food for dinner.

This story alone shoots a massive hole in their theory on the coffee data (via CNBC):

Cocoa and coffee prices have soared to record highs — and Citi says there may still be room to run

Published Thu, Apr 4 20248:41 AM EDT

Weird. It’s almost as if no one goes shopping at the BLS.

For example, this strange outlier, in my opinion:

I’ve been to meat slaughterhouses, hot dog factories, Oscar Mayer, etc. Guess what? Yeah, a lot of the same meats are made in the same factory. So we are supposed to believe that hot dogs cost 6.2% because the West side of the factory was unable to produce and process the same meat cheaper than the East side of the same factory?

Bullcrap.

Overall, I despise the BLS data series on CPI as I have been ranting about since 2006. It is and has been artificially suppressed to keep the COLA increases down for severely limited income welfare recipients and Social Security dependents for decades.

The truth is the number I view as closest to reality is the Sticky CPI series from the Atlanta Fed which in my opinion is better than the Cleveland Federal Reserve number purely due to methodology.

While the price movements are somewhat less dramatic, the truth is that they have been somewhat consistent and 4.5% for all goods and services combined is much more realistic than the nonsense we saw at 8:30 a.m. this morning.

The headline number scared the markets but the move down was on somewhat mediocre volume so barring further news headlines a recovery in equity prices could begin tomorrow or conveniently on Friday when the big banks begin to report.

Until this author sees a decisive change in the financial condition of the regional banks and commercial real estate, there is no reason to change my forecast of a 50 bps cut in June and 25 bps cut in July.

Because if the CRE market, regional banks, and lower/middle class does not get rate relief soon, the US is heading into a credit crisis and economic contraction of unknown depth and duration.

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2 Comments

  1. tom tom 04/11/2024

    They blatantly lie to us about the food prices ( and pretty much everything). Food and energy will be used to control us. Noticing the price of gasoline ticking up on Long Island, NY. I was reading that the Strategic Petroleum Reserve holds about 17 days worth of oil and it isn’t being replenished. We are moving toward WWIII and we don’t have a healthy amount of reserves.

  2. […] CPI inflation report was issued by the BLS this week and the news was dire for lack of any better words. Unfortunately, the pace of inflation is insufficient to provide […]

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