As of this morning, we’re at a toss-up point.
Note to the reader who was all over my case for mentioning deflation all the time: TODAY’S REPORT is why I have been screaming deflation. We operate in advance of, not in reaction to current events when possible.
New Consumer Price Report is hot off the press release:
“The Consumer Price Index for All Urban Consumers (CPI-U) decreased 0.2 percent in September on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.
Over the last 12 months, the all items index was essentially unchanged before seasonal adjustment. The energy index fell 4.7 percent in September, with all major component indexes declining. The gasoline index continued to fall sharply and was again the main cause of the seasonally adjusted all items decrease.
The indexes for fuel oil, electricity, and natural gas declined as well. In contrast to the energy declines, the indexes for food and for all items less food and energy both accelerated in September. The food index rose 0.4 percent, its largest increase since May 2014.
The index for all items less food and energy rose 0.2 percent in September. The indexes for shelter, medical care, household furnishings and operations, and personal care all increased; the indexes for apparel, used cars and trucks, new vehicles, and airline fares were among those that declined. The all items index was essentially unchanged for the 12 months ending September after posting a 0.2 percent increase for the 12 months ending August.
The 18.4 percent decline in the energy index over the past year offset increases in the indexes for food (up 1.6 percent) and all items less food and energy (up 1.9 percent).
So here’s the thing about inflation and deflation: When the rate of general price increases slows, that’s disinflation. When the rate of price increases increase, that is reflation. When prices go nowhere (after prices go down but more money is pumped into the economy to hide that fact) that’s either stagflation, or it’s second and third have brother (and uncle) from West Virginia.
Now, the Fed can talk all it wants to about how inflation will be back as energy prices turn (true) but the American public ain’t particularly bright. (Look at who goes to Washington, if you doubt me.)
The problem with deflation is that if people think sitting on their spending will let them buy something cheaper in the future, the economic “recovery” will sputter and fizzle out.
But in the meantime, it sets the stage for a massive market blow-off top as occurred in 1928-1929 just before that economic world ended.
The national goose will be cooked when the Fed attempts even a tiny rate hike and they you can set your collapse timer to about 18-months and prepare for the bitter end.
Here’s a freebie from our more serious www.peoplenomics.com website:
Modest Economic Expansion Claimed
Consumer spending grew moderately in the latest reporting period. Most Districts reported that non-auto sales grew at a modest or moderate rate, while vehicle sales generally grew more strongly; tourism across the nation was mixed. Nonfinancial services activity generally strengthened since the previous report, although freight transport activity weakened.
Manufacturing turned in a mixed but generally weaker performance during the latest reporting period, with a number of Districts noting adverse effects from the energy sector. Some strength was reported in the motor vehicles, aerospace, and transportation equipment industries, while metals industries were generally weaker–in part, due to the strong dollar.
Both the housing and commercial real estate markets improved since the last report. Home prices and sales volume increased in almost all regions, and a number of Districts noted relative strength in the market for lower or moderately priced homes. Both residential rental markets and commercial real estate markets were mostly stronger. Commercial and residential multi-family construction showed further strength; single-family construction activity was more mixed but did increase modestly.
Blah, blah, blah…
Consumer Spending and Tourism
Consumer spending grew at a moderate pace over the latest reporting period. Most Districts indicated that non-auto retail sales expanded at a modest or moderate rate. New York and Atlanta characterized sales as mixed, while Richmond and Chicago noted that growth slowed; Kansas City, however, indicated that sales weakened slightly. Contacts were described as generally optimistic about the sales outlook in the Boston, Philadelphia, Atlanta, Kansas City, and Dallas Districts.
Blah, blah, blah…
Employment, Wages and Prices
Labor markets generally tightened since the previous report.
Wage growth remained subdued in most Districts since the previous report.
Price pressures were said to be contained, as most Districts reported that both input and finished goods prices were little changed or up only slightly since the previous report.
Bottom Line: Fed is walking the knife blade. If rates go up, the Federal Debt will balloon and we go Greece. If rates go negative, welcome to 1929. Likely: Knife edge with free money for 18 months and then collapse. That’s not in the report. But it is in the future.
Would someone at the US Treasury come forward and explain how the Federal Debt to the Penny hasn’t budged this year? And I’m the Easter Bunny.
I mean 60% of America may be on mood altering drugs but for both of us who still don’t live chemically, could we please get some hints as to how it’s working? Use our tip line on the menu above, please.
Page 5 of the Federal Reserve Flow of Funds report over here hints that government debt has been going up – so how is it that the Treasury doesn’t show that? Unless…and this is ugly…they are writing down agency debt which means reserve funds (highways and Social Security?) might have less in them than expected down the road. So yeah, we’d like to know how the game is being gamed, know what I mean?
Let’s All Go Fight in Syria
With the latest reports – that the Cubans now have a general and some forced in Syria, we have to wonder who else to invite to the party?
Of course, maybe the Obama administration has a secret plan: Maybe there’s a yet-undisclosed deal to send some Sinaloa and MS-13 fighters to Syria… I mean haven’t we rung up enough favors for at least a small force from the drug gangs in return for leaving them an open southern border to exploit?
Aw, hell, can’t anyone in Washington get anything right?
Where’s that Peace Prize?
Well, for one the place becomes part of the Global Caliphate if we do.
Second, the invasion of Europe by military aged militant Muslims grows if we don’t keep order.
Of course, it’s going to go badly, but at this point it’s a matter of degrees.
As long as I’m on grouchy this morning, how’s that shutdown of Gitmo coming?
Unloading on Reload
Hillary Gaff Du Jour
Did she get a look at the secret trade deal in advance…a Whitehouse Spokes noticed.
Also in the political circle jerk, CNN reports Hil’s aid Huma will be on the grill tomorrow. Nickel side bet on a last minute excuse for her or Hillary on the 22nd?