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2022-01-12 09:00 by Karl Denninger
in Macro Factors , 555 references Ignore this thread
The Fed And Congress LOVE High Prices
[Comments enabled]

Oh look what the cat dragged in!

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in December on a seasonally adjusted basis after rising 0.8 percent in November, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 7.0 percent before seasonal adjustment.

Why would you seasonally adjust a 12 month number?  Does not Christmas occur every year at the same time?

In any event this is 1982 style inflation, and exactly what both Trump and Biden, along with Congress, should expect having dumped credit into the economy with wild abandon for the previous two years.  

The all items index rose 7.0 percent for the 12 months ending December, the largest 12-month increase since the period ending June 1982. The all items less food and energy index rose 5.5 percent, the largest 12-month change since the period ending February 1991. The energy index rose 29.3 percent over the last year, and the food index increased 6.3 percent.

The nasty part is that energy and food are inelastic demand items for most households.  That is, you have to buy them and you have to buy them in more-or-less constant amounts.  They're not really optional for anyone, and for the lower income folks shifting food consumption isn't much of an option (the rich man can go out one time a week fewer and eat a hamburger instead of steak; the poor man is already eating hamburger and might wind up with Alpo!)

What's really bad is that the CPI-W, which is the index for urban wage and clerical earners was up even more, 7.8%.  This index reflects the impact on mostly lower to middle income wage employees in cities, who are getting hammered even worse than the averages suggest.

You want to know why you shouldn't support shutting down coal-fired power plants?  How's a 24% increase in piped gas cost sound?  Want to translate that directly into your power bill?  Oh by the way, wind/solar would be even worse since petroleum products figure big into production of both despite the claims of certain climate screamers.

Finally, the scam of Owner's Equivalent Rent continues in this data, which I've pointed out since I began this column.  It implies that the cost of buying a house has only gone up 3.8% over the last year.  I'd like some of whatever they're smoking.

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Twainfan2
Posts: 408
Incept: 2018-12-04

MN
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Good thing its only transitory. Oops had the sarcasm button on!
Greenacr
Posts: 338
Incept: 2016-03-15

Northern Ohio
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Yep, just received a notice that the Electric Coop is raising prices 7.6% in Feb and added a caveat that we could see more this year. Propane up 30% (Glad I payed to lock in at $1.70/gal. Groceries are rediculous.....

Prices are not going to go down if this get's under control..... might level off some....
Wearedoomed
Posts: 4700
Incept: 2009-01-14

slightly red state
Online
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The wife has noted that a dozen eggs at Aldi went from $0.70 late last year... to $1.70 earlier this week. That's "only" a 143% increase in a month or two - just a flesh wound.

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Whitehat
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Elsewhere
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Not going to be a good thing to live in a climate that has cold winters.

Right now we are faced with people forgoing extras and discretionary for food.

Just wait until they have to start making such choices for heat.

I predict that places such as the Northeast are going to experience something we call "house packing" in my market where people increase occupancy massively, not necessarily illegally by local codes or dangerously but where there are a lot more people converting public house spaces to living quarters.

Immigrants are known for this as are some old order European families.

Neighborhood character is going to change a lot.

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smiley

"Better to reign in Hell, than serve in Heaven," Satan's monologue in the first book of John Milton's Paradise Lost
Aquapura
Posts: 2596
Incept: 2012-04-19

45th parallel
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Meanwhile I'm waiting to see what my salary adjustment ends up being for 2022...if I even have a job post Feb 9th. DW works in human resources for a major employer and they're giving out meager 3% raises to most, so effective purchasing power of your wage is going down. They, like everyone, are desperate for labor so I'm guessing new hires have leverage to negotiate. Typical that the loyal employees get screwed. Par for the course in my industry too. So long as their is tightness in the labor market I expect a lot more resignations with people job bouncing between co's for a higher salary just trying to tread water with inflation.
Proverbs16.33
Posts: 39
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WNC Foothills
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And of course my first thought is that if this is what's being reported, then the ACTUAL increases are much worse.
People I talk to/work with/interact with are *starting* to wake up and notice, but so far most folks aren't really angry yet, just starting to be a little more concerned.
Ihsmta
Posts: 700
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Midwest, USA
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@Whitehat - also look for more space heater fires as we recently saw in NYC.

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"Economists are no different than the prophets of ancient Pompeii who reassured that Mt Vesuvius would never blow. After all, it never had before." Baxter Black, DVM and Cowboy Poet

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand
Shadowmask
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Local governments get a bit more tax revenue when food prices go up since people have to eat. Those who can absorb a bit more spend more, those that don't get ****ed.
Thelazer
Posts: 848
Incept: 2009-05-11

Davenport, Fl
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Well on the upside, the clot shot lottery should kick in and start reducing the population so less folks to buy those $1.70 eggs.
Nma
Posts: 270
Incept: 2010-03-16

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"You asked for all of this."

I'm about to have even fewer friends.
Kennington
Posts: 217
Incept: 2013-09-12

Pittsburgh, Pa
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Have to pick up a pharmacy script once a year for the Mrs...last year paid like $34 and change and was complaining about that amount. Just picked it up again this year and it was over $70. Same drug, same amount.
Greenacr
Posts: 338
Incept: 2016-03-15

Northern Ohio
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@Aquapura -"Meanwhile I'm waiting to see what my salary adjustment ends up being for 2022"

My company is locked in at 2%. At least they held medical premiums even for the year while improving the deductible. Still falling behind.
Susanlauren
Posts: 1038
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Inflation is a form of theft. If you have savings, what you "think" is adequate ... soon becomes "not so much." I suspect the official numbers are significantly understated. Certainly salaries are not keeping pace.
Wifi
Posts: 7785
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The Land That Was
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PSA for the very near future.


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"Freedom cannot end where fear begins."
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Bearcubs9497
Posts: 97
Incept: 2017-02-01

Huntsville, AL
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Karl, et al

How accurate is shadowstats in their reporting of inflation?
Scottj175
Posts: 402
Incept: 2010-09-06

Vandiver, AL
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I'll throw my own data point into this. Had the propane tank filled from half yesterday. 100 gallons at $2.99 each.

Out of curiosity I looked at the last purchase. October 11th and just over 100 gallons because it was slightly below half. $2.79 a gallon then.
Wtfishappening
Posts: 75
Incept: 2021-10-15

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@whitehat...those in the country will have to start stacking the **** next to the house like in the old days to insulate against the cold

@susanlauren Taxes are also a form of theft but that doesn't stop the feds from stealing from us

Ticker Guy...I'm with you on the smoking what they have because in my area housing prices have literally exploded. I can sell my house today for more than double what I paid for it in 2014...not even joking...think I'll just wait out the madness and pick up some cheap property when everyone forecloses.


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Tickerguy
Posts: 180232
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@Bearcubs9497 - Worthless, period. If you read or listen to any of that you forfeit an IQ point for each sentence.

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Aztrader
Posts: 8703
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Scottsdale, AZ
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I have never seen prices move like this since I started by business. Add in the supply chain issues and things are going in the wrong direction.
Small businesses will be hurt hard in the coming year if this continues. The democrats dream...........
Ihsmta
Posts: 700
Incept: 2008-04-10

Midwest, USA
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In my area - a 5 bedroom, 2.5 bath, 10,483 sq ft house on 6 acres of wooded land bordering a golf course sold late summer 2021 for $1.5 million. The last week of December 2021 that same house sold again for $2.75 million - a 48% increase in 4 months. (Nothing was done to the house between sales and it still needs a "cosmetic update".) Damned...


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"Economists are no different than the prophets of ancient Pompeii who reassured that Mt Vesuvius would never blow. After all, it never had before." Baxter Black, DVM and Cowboy Poet

"You can avoid reality, but you cannot avoid the consequences of avoiding reality." Ayn Rand
Kiwiapsa
Posts: 17
Incept: 2021-09-12

michigan
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Canada is getting ready to start enforcing ******* proof for truckers entering their nation on January 15th. The United States begins January 22nd. If these mandates are allowed to go ahead, then watch the inflation/empty shelves fireworks really begin. And the Socialists in power will predictably double-down. Waiting, warning, and prepping.
Cmoledor
Posts: 526
Incept: 2021-04-13

Akron Ohio FEMA region 5
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Morning all. Just **** us all sideways. And come back and do it again please. Thanks gubmint. You suck ass!

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The whole world is one big ****ing scam
Why are you giving a vulgarity warning here? Our genial host is an advocate of both skull****ing and sodomy via rusty chainsaw. Credit to Rollformer
Traz
Posts: 147
Incept: 2009-08-14

Vancouver, WA
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I thought Biden was bringing down gas prices? Cheapest in my area just jumped from $3.27 to $3.47 OVERNIGHT!
Joancrawford
Posts: 120
Incept: 2013-10-14

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Housing, smoking crack, inflation, etc.......In my area, houses and condos are snapped up very quickly, mostly by "investors". There are about 4 condos in my building that are Airbnb. As mentioned in a prior post, the U.S. government is paying to house Afghan refugee families in 3 of them. The rental market here is very tight.

My gut tells me that any renters who decided to get cute these past two years and f*ck the landlord out of rent money due to Uncle Sugar forgiving all rents (WTF?)
are effectively screwed. Nobody in their right mind would ever rent to them again. Homeless much? Yeah. No pity on this side of the street. F*ck 'em! And f*ck all the *******s who voted for Captain ****shispants. He's gonna give it to you in all orifices, bar none. Hope you enjoy getting raped without lube, guys!

And while I'm on this rant, F*CK all you nice folks wearing your ******n masks and marking off days on the calendar until your next booster. DIE, F*CKERS, DIE!!! And let it be slow and painful, please, none of this "he/she died peacefully in sleep (aka Bob Saget). No, I want you on ****ing respirators, crying out in pain.

Price of hamburger got you down, f*ckers??? Here, have a bug and caterpillar filet sandwich, courtesy of the Uncle Sugar you blow on a regular basis. And make sure you wear your masks when you fill up your gas tank with $8/gallon gas. But hurry! You'll be late for your graveyard shift as Taco Bell ASS-istant Manager @22/hr, part time, of course, no bennies. Let's get this ******n party started already.

Attention, Mr. and Mrs. America! That **** sandwich you ordered is ready. Be sure to eat every.single.bite! Happy New Year, bitchez! Rant over...

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I never touched those *******n kids!
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