I just wonder if they cleared that with old Jay before they released it.
For the record, so my readers know that this author is not just spitballing, here is the Investopedia definition of stagflation:
The survey today is about as bad as it gets when verifying the theory that the Fed chose stagflation as these pages wrote about a year ago. For my regular readers, the reason I’m using individual charts versus the amalgamation of all the data on one chart is for ease of review and reading. The interactive charts and .pdf summary is available from the Federal Reserve Bank of Richmond at this link.
Let’s begin by looking at the diffusion index which continues to show a slowing economy in this region.
Ever since the famous “I don’t see the ‘stag’ or the ‘flation’ speech on May 1, 2024,” the index above has been in negative territory. In fact, it’s been that way since the inflationary surge of 2022 resulting in slowing economic activity paralleling higher prices paid by businesses and consumers.
The employment index from today’s survey results seems to verify this also:
Meanwhile, the wages paid has rebounded, creating additional costs for employers and in the end, consumers alike.
Despite the surge in wages, new orders do not seem to be keeping pace which eventually will begin to impact both employment and wages, just like the 1970s.
This is further validated by the shipments data:
Needless to say with those two key elements above moving the opposite direction of employment, expansion in capital expenditures are non-existent for almost a year per the survey data.
The final missing puzzle piece for a true stagflationary event would be the prices and yes, the survey validates that once again.
If the trend is your friend, it’s not Jay Powell’s in his argument that he didn’t see any stag or flation just one year ago as the price surge started again in the 3rd quarter of last year.
As these surveys come in I shall try to track the trends and see if other districts validate this data, but right now it would appear that the Richmond Fed has validated a stagflationary trend that Jay Powell nor the US government really wants to deal with.
