Govt Claims Inflation ‘Cooled’ in July Despite Rising Prices
Government math!
It’s always to have suspicions when it comes to economic numbers.
The July Consumer Price Index (CPI) is the latest example.
Somehow, inflation slightly “cooled” to 2.9%, not counting volatile energy and food items, even though prices rose 0.2% since June.
Government math! I mean…what?
If you include the volatile items, inflation is 3.2%.
The BLS has never included the volatile items. Weird, huh, considering those are the biggest factors in our lives.
If the BLS included those items, the inflation number would be higher. MoM = Month to Month. YoY = Year to Year.
CPI 0.2% MoM, Exp. 0.2%
CPI Core 0.2% MoM, Exp. 0.2%CPI 2.9% YoY, Exp. 3.0%
CPI Core 3.2% YoY, Exp. 3.2%— zerohedge (@zerohedge) August 14, 2024
The report also showed a rise in the unemployment rate to 4.3% compared to 4.1% in June. The rate was 3.7% at the beginning of 2024.
Want more red flags? Almost everyone says the 2.9% gives the Federal Reserve the ammunition to cut rates.
Also:
Inflation: Trump vs Biden/Harris pic.twitter.com/cLJm28qA5c
— zerohedge (@zerohedge) August 14, 2024
The Federal Reserve
What happens when the Fed cuts rates as prices continue to increase? It floods the country with more useless currency and encourages risky behaviors by institutions, such as driving higher prices for real estate and other assets.
Many of these funds and institutions use margin (buy securities with debt) to trade. So lower rates = cheaper debt to borrow and BUY STONKS.
At the same time, the cost of goods increases because the dollar is worthless.
The Report
CPI breakdown: while most of the data was in line, supercore CPI saw a decent jump MoM to the highest in 3 months (via ECAN) pic.twitter.com/nsL0e5kiMT
— zerohedge (@zerohedge) August 14, 2024
Remember, the overall number does not include food and energy. Also remember, the BLS has never included those numbers so it’s not new or nefarious.
How convenient for them since the energy index increased by 1.1% for the past 12 months. The food index increased 2.2% during that same time period. I’ll look at those later.
MoM = Month to Month and YoY = YoY.
Here are some big ones and I’ll include both numbers instead of nitpicking.
- Shelter: +5.1% YoY and +0.4% MoM
- Medical services (overall): +3.3% YoY and -0.3% MoM
- Hospital services: +6.1% YoY and -1.1% MoM
- Transportation services (overall): +8.8% YoY and +0.4% MoM
- Motor Vehicle Insurance: +18.6% YoY and +1.2% MoM
- Used cars & trucks: -10.9% YoY and -2.3% MoM
- Apparel: +0.2% YoY and -0.4% MoM
- Medical care commodities (not services): +2.8% YoY and +0.2% MoM
- Education and communication commodities (Textbooks, computers, smartphones): -6.2% YoY and +0.4% MoM
- Education and communication services (Tuition): +2.2% YoY and +0.2% MoM
- Rent of shelter: +5.1% YoY and +0.3% MoM
- Rent of primary residence: +5.1% YoY and +0.5% MoM
Used cars -2.3%
New cars -0.2%
Airline Fares -1.6%
Apparel -0.4%
Car Insurance +1.2%
Furniture +0.3% pic.twitter.com/O9z6clq9ia— zerohedge (@zerohedge) August 14, 2024
Food and Energy
Now let’s look at the two items that affect us normies every day!
- Food (total): +2.2% YoY and +0.2% MoM
- Energy (total): +1.1% YoY and no change MoM
Breakdown of food essentials:
- Food at home: +1.1% YoY and +0.1% MoM
- Cereals & bakery products: No change YoY and -0.5% MoM
- Bread: -0.9% YoY and -1.1% MoM
- Meats, poultry, fish, and eggs: +3.0% YoY and 0.7% MoM
- Beef and veal: +4.5% YoY and +1.2% MoM
- Pork: +3.6% YoY and -0.2% MoM
- Chicken: +1.7% YoY and +0.1% MoM
- Eggs: +19.1% YoY and +5.5% Mom
- Dairy and related products: -0.2% YoY and -0.2% Mom
- Milk: +1.2% YoY and +1.9% MoM
- Cheese and related products: -2.3% YoY and 0.3% MoM
- Fresh fruits and vegetables: -0.2% YoY and +0.8% MoM
- Apples: -12.5% YoY and -1.2% MoM
- Bananas: -1.3% YoY and -1.7% MoM
- Processed fruits and vegetables: +0.7% YoY and +0.2% MmM
- Canned fruits and veggies: +1.3% YoY and 0.1% MoM
- Frozen fruits and veggies: -1.7% YoY and +0.4% Mom
- Nonalcoholic beverages and beverage materials: +1.9% YoY and 0.5% MoM
- Coffee: -0.4% YoY and +1.7% MoM
- Frozen noncarbonated juices and drinks: +19.2% YoY and +0.7% MoM
- Sugar and sweet substitutes: +3.7% YoY and -0.5% MoM
- Fats and oils: +3.6% YoY and -0.6% MoM
- Butter: +6.1% YoY and +0.1% MoM
- Peanut Butter: +2.6% YoY and +0.2% MoM
Breakdown of energy essentials isn’t bad YoY. MoM? Most went up:
- Energy commodities: -2.0% YoY and +0.1% MoM
- Fuel oil: -0.3% YoY and +0.9% MoM
- Propane, kerosene, and firewood: +1.1% YoY and +1.9% MoM
- Gasoline (all types): -2.3% YoY and 0.1% MoM
- Energy services: +4.2% YoY and -0.1% MoM
- Electricity: +4.9% YoY and 0.1% MoM
- Utility (piped) gas service: +1.5% YoY and -0.7% MoM
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Comments
I guess that’s more of that don’t believe your lying eyes stuff
Trump should make a campaign promise: No more government-generated inflation figures that do not include food and energy.
Government figures are always lies.
Yeah, and in the last month, I went from being able to buy 4 bags of groceries to buying 3 bags with the same money. (Of course, that same money used to buy me 7 bags of groceries; and before Biden it was 12.)
It’s always been food and fuel were not factored into inflation because of their supply volatility — one they they jump up, the next they come back down after the supply glitch corrects.
But… when food and fuel prices have remained (and climbed) consistently high over the past four years, it’s no longer a volatility issue and instead a direct result of government energy policy. I’m sure the media and the WH Press Secretary will correct the record. (Just kidding).
Food and fuel were once part of the inflation index. They changed it a number of years ago because it always made Democrats and other progressives look bad.
Exactly correct. I believe the change was made in the early 1980s.
Food is now discretionary spending…. you can decide whether to eat or not. Those worms and a side of bugs begin to look tasty when that’s all one can buy. I wonder if this has impacted the newest protected class recently imported?
That’s a great point.
Maybe the government needs to be paying My vet bills.
Took my two dogs to the vet got heartworm shots good for one year a nail trimming a vet diagnosis of fungal infection their feet to 14 day antifungal meds and shampoo and it was $600.
Incredibly insane these are rescue animals I’ve had for many many years that bills are just out to lunch and I don’t know how we’re gonna say that inflated. I’m sure having to pay the staff $20 an hour up has not helped at all and the drug prices are insane
Next dogs I will be getting Penn insurance but that’s very expensive too. It doesn’t generally cover as much as human insurance.
Just a suggestion: try a deeply rural vet. When I moved out here from suburbia, I was astounded how much my vet bills went down. 20 miles into the nearest city, and the vets are sky high there.
Our Daughter has brought their FOUR dogs with them to visit (from near Atlanta to a small SC town) because she can get them shots and treatments so much cheaper! It’s still not “cheap”, but comparing the two areas – MUCH CHEAPER! We have three cats and just keeping them up with flea treatments and some shots it’s amazing! I should just take them with me to my PRIMARY CARE DOCTOR!
Prices are starting to recede on the bigger ticket discretionary items – like CARS – because these are the first product categories that people stop buying…because they can’t afford them anymore…and they’ve reached their credit limits (US credit card debt is at an all-time high). Year-over-year car sales have declined 3% or more in three of the last four months. I suspect (but can’t prove) that people are starting to drive less because gas is expensive. It will be interesting to see what the NHTSA says the total miles driven is at the end of this year compared to last year. I bet it will be appreciably lower.
I think what we see for the “big ticket” items is a reaction to DEMAND! With the ESSENTIALS having gone up so much, many people just can’t take on more for a new car or furniture. My wife went to McD’s to get two “happy” meals, four “Dollar Menu” burgers, two Big Macs (should be called MEDIUM MACS), and ONE order of fries. Nearly $60.00!!! And NO TIPS!! We are VERY FORTUNATE to be financially ok but I do not see how a small family can even enjoy taking their kids for a “fun meal”!!
Too much liquidity; lots of printed $, injected into the economy is always harmful. It encourages dumbass behavior b/c the rate of interest and borrowing is lower than it otherwise would be. Instead of being able to put $ in lower risk CD/Bond folks must take on excess risk in assets to have a hope of exceeding inflation and making a positive real rate of return. That creates its own bubble; see the commercial real estate market. Then there’s the mal investment to foolish projects that wouldn’t be funded in a tighter credit market. This is a slow motion equivalent of burning piles of cash. The bill for the several decades of folly will come as assets begin to crash. Pumping more $ into the economy by the Fed Reserve or more gov’t over spending (we are now spending nearly $1 Trillion every 100 days above Federal revenue) on top of the $35 Trillion in existing Federal Debt (on the books, this doesn’t count everything) will just make the $ less valuable.
Bottom line is we gonna have to cut spending by roughly $3.5 Trillion each year just to get in balance. That doesn’t include paying down the debt. Nor does it include the in run borrowing costs as lower interest rate debt matures and higher interest rate debt is issued to replace it. Everybody’s personal piggy gonna have to go to the slaughter house to make it work. Cutting ‘foreign aid’ alone or in concert with ‘fraud’ won’t make a dent. Get ready for one of two things; either a tough tighten your belt couple of decades for govt spending (very unlikely) OR more can kicking until the can hits looming wall that is well in sight (likely). When the holders of US debt are already reducing the amounts they hold and other central banks are buying gold it shows the end of the road is very near.
I do not agree that “the end of the road is very near”. I think when is unclear, because we are still a better house in a horrible worldwide neighborhood. Note that Harris cast the tiebreaking votes in the Senate for the 2 budget-busting Biden-Harris spending bills, So this degree of inflation is 100% on her.
“we are still a better house in a horrible worldwide neighborhood.”
In the kingdom of the blind, the one-eyed man is lynched.
The end of the road I envision is the ‘point of no return’ for an aircraft. By that I mean our ‘aircraft’ still has sufficient fuel to turn around and return…IF we can make the decision to do so. The problem is too many folks have become addicted to Federal Pork. These addicts ain’t interested in giving up ‘their’ piece of the federal budget pie. Many/most on the center/right ain’t willing to endure the required levels of belt tightening to reverse the process.
What majority exists to bring the Federal budget into balance? Not pay down the $35+ trillion debt, just stop spending more than the Federal gov’t takes in. There’s not a majority that supports this at present. Unless we get a majority to implement this before long it will be too late to act.
DoD spending in FY’24 is about $950 billion, just short of $1 Trillion. The costs to service the Federal debt is over $1 Trillion in FY 24. More $ spent on debt than on the entire Defense budget. Medicare costs are exploding as are Medicaid costs. Neither program is even close to being solvent and never were built to be.
I don’t see the end of the road as some national catastrophe with CHUDs rising from the sewers or some fantasy civil war. Instead it is the point at which dependency so pervasive that we can’t make changes and the Federal debt so large that even huge changes would not work; the point of no return. Won’t be an immediate collapse but a gradual one. Just as the aircraft has fuel to keep flying for a while the Nation’s momentum keeps it from falling out of the sky …until it doesn’t. We have about a decade to implement changes to Social Security, less for Medicare to avert a bigger cut. SSI is gonna take a roughly 25% cut without any changes.
Old timers will recall the mess that Jimmy Carter caused and the pain involved in wringing inflation out of the economy. That was painful but this will be worse if we can do it at all. There are too many people in DC who will be more than happy to ride this bomb right into the ground.
Oh, and once upon a time long long ago, I did government stats. I can say with great certainty that they’re mostly bullshit and the closer the statistic is to potentially harming an elected official the higher the propensity for it to be bullshit.
Let’s not forget Nixon putting the final knife into any real restraint on money printing and wildly excessive Federal spending by killing of the final link to gold exchange. Without that basic restraint each successive administration and Congress controlled by either political party has failed to balance spending (except briefly by Clinton and Gingrich largely by accounting slight of hand) much less pay down the accumulated Federal debt.
Want to hear the DC establishment squeal? Suggest a return to the gold standard. They hate it b/c it puts a hard limit on how much they can spend due to folks exchanging their inflated $ which buy less each year for a hard asset. That not only directly locks up those $ but also increases the cost of borrowing the remaining $. Main street and middle class benefit under that but big corporate interests with access to cheap $ by artificially low interest rates (which hurt savers) can’t piss away $ on boondoggles or buy up their competition or make as many no show/no work jobs for lazy politicians.
they also said there was no recession a few years back , even though the gdp was down for 2 straight Qs
BECAUSE
the economy is improving
again me and my lefty friends went back on forth on this non stop as they insisted that there was no recession b/c cnn said so
prices were up more than 30% on food and oil products ( we will leave housing out of it for a moment)
then when the prices “plummeted” down 8-10% FROM THAT 30% RAGGER
the msm rejoiced in their continued lies of a better than trump economy etc
HOUSING PRICES HAS GONE THROUGH THE ROOF as we all know
EVEN IN SOME blue cities where people were fleeing the socialist nazi crime wave epidemic
HOW CAN THAT BE!!?!??!
B/C THE GOV WAS USING UP HOUSING FOR THEIR “FRIENDS” aka illegals made legal by the pen and the phone
man,,,THE USA IS IN TROUBLE!!
as inflation rises, the (value of) dollar becomes worth less and you have to pay more for the same item today than you did yesterday.
why is it then that the “General Population” finds it so difficult to understand that “the Market” will rise in times of inflation – until it doesn’t
Even class conflict can’t be used. Everyone who saved are seeing years of work wiped away. Work 40 years…. think of it as 8-10 years of working destroyed.
If you want to measure inflation you want to include only items that don’t move in price for other reasons. If you include the other-reasons items then your measurement of inflation is less reliable. It’s a matter of picking items with the smallest variance to get the best estimate, a standard statistical practice to get the answer with the most accuracy. Strictly speaking you’d include them with a weight inversely proportional to their other-reasons variance, if you knew it. So lightly weighted.
I don’t understand your comment. Normally one uses weights equal to 1/variance and then renormalize by dividing by the sum of the weights. So to me it makes no sense to assign a zero weight to the so-called volatile items. People buy food and energy and the CPI should reflect price increases.
lolwut?
Define inflation b/c you seem to be substituting the symptoms, rising price, with the true definition; increased money supply. If we suddenly have an additional increase in the amount of money sloshing around then the existing money loses value to the level of the increase in supply of money. More $ chasing goods is inflation. The price increases are the signal that shows the effect.
Every retail level increase in price has multiple reasons behind it. Are some of these price signals more volatile than others? Sure, but that doesn’t mean they don’t exist or that we should ignore them. Why not include them into the measurement as a 90 day or 180 day rolling average to smooth out the spikes? Heck do that with all of the inputs and create a true CPI based on what the kitchen table economics of the average person looks like.
The high interest rates are themselves the Fed removing dollars from circulation. It’s not a double curse but a problem and its solution.
removing after flooding the market
just like everything else lefty does:
letting in 20 million illegals then shipping out 1 million
it never stops as lefty is a narcissist
Beware of seasonal adjustment as done by many government agencies. They used to use a package called X-11 which used the Box-Jenkins times series methodology. While Box was a brilliant statistician his method does not do seasonal adjustment quite right. That’s why you see the seasonal adjustment fixed a few months later. Now BLS and other agencies use X-13, a successor package to X-11. One of my friends did a sabbatical in the 1980s and showed either BLS or Census the right way to do seasonal adjustment avoiding the need to revise. He used methods developed by Akaike and Kitagawa. Alas it made no difference and government still does it incorrectly thus you almost always see the numbers revised months later. The revisions can be large even reversing the sign of the change.
There are better lines of attack than 2.9% v 3.2% inflation. This is just stupid. Is it deflation you want? Ask Japan.
I live in the SF Bay Area … my food costs are up 151% YOY (from 1454.79 in 2022 to 3654.85 in 2023) … and I’m just a single guy with a couple of pets who buys as many sale items as I can.