U.S. inflation reached a new four-decade high of 8.6% in May
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Re: U.S. inflation reached a new four-decade high of 8.6% in May
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Re: U.S. inflation reached a new four-decade high of 8.6% in May
#3Anyone have opinions on how long this inflation spike will last, or what the peak will be?
I seriously thought we had maybe peaked earlier this year, and it looks like the peak so far was in March for core inflation excluding food and energy. However, maybe high energy prices will feed back into other consumer prices eventually, triggering more inflation.
The producer price index (PPI) is still really wild, so maybe consumer inflation really hasn't caught up yet: https://fred.stlouisfed.org/graph/?g=QpsI
If you compare that to the 70s or 80s, it vastly exceeds what happened back then. PPI in 2008 was pretty high though too and didn't lead to 70s/80s style inflation, maybe because of lower demand.
I suppose the tightening of monetary policy might help, but other factors (war in Ukraine, supply chain issues) will not change as a result of monetary policy.
edit: CPI graph over time showing CPI minus food/energy https://fred.stlouisfed.org/graph/?g=i6u6
Re: U.S. inflation reached a new four-decade high of 8.6% in May
#4Anyone have opinions on how long this inflation spike will last, or what the peak will be? I seriously thought we had maybe peaked earlier this year, and it looks like the peak so far was in March for core inflation excluding food and energy. However, maybe high energy prices will feed back into other consumer prices eventually, triggering more inflation. The producer price index (PPI) is still really wild, so maybe…
It’ll last until money supply tightens.
Re: U.S. inflation reached a new four-decade high of 8.6% in May
#5Anyone have opinions on how long this inflation spike will last, or what the peak will be? I seriously thought we had maybe peaked earlier this year, and it looks like the peak so far was in March for core inflation excluding food and energy. However, maybe high energy prices will feed back into other consumer prices eventually, triggering more inflation. The producer price index (PPI) is still really wild, so maybe…
They can't raise interest rates quickly because it would nuke the easy-money economy (i.e. the entire economy) that has become addicted to low rates. They have to slowly raise them to keep stuff from falling apart. The ruling party also doesn't want to get hurt worse than they already are, and a stagflation recession would clobber them. So easy money and high inflation will remain for at least another year.
Re: U.S. inflation reached a new four-decade high of 8.6% in May
#6Anyone have opinions on how long this inflation spike will last, or what the peak will be? I seriously thought we had maybe peaked earlier this year, and it looks like the peak so far was in March for core inflation excluding food and energy. However, maybe high energy prices will feed back into other consumer prices eventually, triggering more inflation. The producer price index (PPI) is still really wild, so maybe…
Depends on factors we can't predict. Increasing the cost of capital should ease the inflation. But will that happen fast enough is a decision for policymakers.
Re: U.S. inflation reached a new four-decade high of 8.6% in May
#7economy has so many crazy forces acting all at once. truly a marvel to watch as I have always had a natural curiosity in economics
Re: U.S. inflation reached a new four-decade high of 8.6% in May
#8Anyone have opinions on how long this inflation spike will last, or what the peak will be? I seriously thought we had maybe peaked earlier this year, and it looks like the peak so far was in March for core inflation excluding food and energy. However, maybe high energy prices will feed back into other consumer prices eventually, triggering more inflation. The producer price index (PPI) is still really wild, so maybe…
They can't raise interest rates quickly because it would nuke the easy-money economy (i.e. the entire economy) that has become addicted to low rates. They have to slowly raise them to keep stuff from falling apart. The ruling party also doesn't want to get hurt worse than they already are, and a stagflation recession would clobber them. So easy money and high inflation will remain for at least another year.
> They can't raise interest rates quickly because it would nuke the easy-money economy (i.e. the entire economy) that has become addicted to low rates.
This is exactly why the easy-money economy should never have been allowed to occur and persist for so long.
Re: U.S. inflation reached a new four-decade high of 8.6% in May
#9Anyone have opinions on how long this inflation spike will last, or what the peak will be? I seriously thought we had maybe peaked earlier this year, and it looks like the peak so far was in March for core inflation excluding food and energy. However, maybe high energy prices will feed back into other consumer prices eventually, triggering more inflation. The producer price index (PPI) is still really wild, so maybe…
it will last much longer and will get worse, because everything is dependent on energy to be created/transported. There's also the fact that many retailers admitted to eating losses to try and keep customers happy assuming that inflation would be "transitory", pretty soon many of these retailers will be forced to raise prices to reflect reality
Re: U.S. inflation reached a new four-decade high of 8.6% in May
#10Anyone have opinions on how long this inflation spike will last, or what the peak will be? I seriously thought we had maybe peaked earlier this year, and it looks like the peak so far was in March for core inflation excluding food and energy. However, maybe high energy prices will feed back into other consumer prices eventually, triggering more inflation. The producer price index (PPI) is still really wild, so maybe…
It took close to a decade ('74 - '84) last time inflation was rampant. That said, a lot of things were tried before Volcker came in under Reagan and shrank the money supply aggressively, even through a subsequent recession.
Nixon tried wage controls, price controls, changing energy policy, etc. It resulted in stagflation - poor economic growth despite high inflation.