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  • The Fed’s Preferred Inflation Measure, PCE, Shows No Further Progress

    From mishtalk.com

    More weakening: Real (inflation-adjusted) Income and spending was negative in April. The PCE price index remained flat at 0.3 percent for the month and 2.7 percent for the year. chart Personal Income and Outlays, April 2024 The BEA’s Personal Income and Outlays report for April shows no further progress on the inflation front and weakening consumer spending. PCE stands for Personal Consumption Expenditures. The PCE price index is the Fed’s preferred measure of inflation. Key Income and Outlays Details • Real Income was negative for two out of the last three months and barely positive in March. • Real ... (full story)

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Companies that are pushed to the limit by high interest rates are forced to cut costs. Inflation can not reduce raw material costs and electricity costs, so companies are actively reducing employment. The Fed's poor interest rate policy from 2020 is putting millions of workers at risk of losing their jobs, yet none of the Fed's members are reflecting.
Quoting Guest
Companies that are pushed to the limit by high interest rates are forced to cut costs. Inflation can not reduce raw material costs and electricity costs, so companies are actively reducing employment. The Fed's poor interest rate policy from 2020 is putting millions of workers at risk of losing their jobs, yet none of the Fed's members are reflecting.
You've outlined the exact plan to bring down inflation. This is what is SUPPOSED to happen. The byproduct of "achieving goals" on inflation (that all pundits are blaming the fed for not achieving) has, since the beginning, been an INCREASE in unemployment. You can't have zero unemployment and zero inflation. There is a balance. In the US, we are below historic average unemployment.

https://www.bls.gov/charts/employmen...yment-rate.htm

Fewer people employed means lower labor costs and fewer people able to buy certain goods, thus reducing the rate of price increases companies pass along to consumers. If 133M people are employed in the US today, a 1% increase in unemployment, getting back into the "normal" range does, indeed, mean around 1.5 million people will lose their jobs.

This is why the unemployment number releases and jobs data affect the markets. If those numbers are perceived as unemployment decreasing or holding steady, it is a "sign" that the fed policies aren't restrictive enough and 'higher for longer' will persist with respect to interest rates.

The goal of the FED is to manage this balance to the best of their ability. Keeping as many people employed as possible while keeping inflation to a manageable figure. It's kind of like steering a boat. Go too fast or too slow and you'll overshoot or undershoot your objective.
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Quoting ffghost
{quote} You've outlined the exact plan to bring down inflation. This is what is SUPPOSED to happen. The byproduct of "achieving goals" on inflation (that all pundits are blaming the fed for not achieving) has, since the beginning, been an INCREASE in unemployment. You can't have zero unemployment and zero inflation. There is a balance. In the US, we are below historic average unemployment. https://www.bls.gov/charts/employmen...yment-rate.htm Fewer people employed means lower labor costs and fewer people...
Philips Curve is pure nonsense.

Inflation has nothing to do with the unemployment. It's all about the money supply which the Fed has stubbornly kept increasing. All this time the Fed is printing money and the obvious consequence is higher inflation.

Everything, and I mean everything the Fed officials have said so far is either wrong or a complete lie.

Let me repeat again... higher unemployment has nothing to do with the inflation. It's MONEY SUPPLY that keeps increasing!

People should do some research finally on how everything works by themselves and stop listening the same "experts" that basically have the perfect track record of always being wrong!

You remember transitory?

You remember soft landing?

You will remember "we'll get to 2%" soon once that also proves to be either a lie or just plain wrong yet again.
Quoting Guest
{quote} Philips Curve is pure nonsense. Inflation has nothing to do with the unemployment. It's all about the money supply which the Fed has stubbornly kept increasing. All this time the Fed is printing money and the obvious consequence is higher inflation. Everything, and I mean everything the Fed officials have said so far is either wrong or a complete lie. Let me repeat again... higher unemployment has nothing to do with the inflation. It's MONEY SUPPLY that keeps increasing! People should do some research finally on how everything works by themselves...
It is sometimes hard to have an open dialog with those of your mindset. Your response wasn't limited to one or words, however, and I sense at least a willingness to be more open minded than some on here, so will give it a shot.

I won't disagree that the money supply certainly has an impact, but Of COURSE inflation has a relationship with unemployment (and demand, and spending, and debt, etc, etc). Everything has to do with everything.

Tell us this: exactly, and I mean EXACTLY what would have happened if the Fed injected liquidity at the precise levels that you would have had them (zero to infinity). Guess what, no matter what level you chose, your position on what would have occurred would have been wrong. But that is not at all a slight against you. NO ONE can say with a certainly what will transpire and how any unknown/unexpected information/global event/etc will impact a perceived theory.

Yes, I remember all of those things. However, much like weather forecasting, economists get a pass with respect to "lies". Everything is the "truth". At least, it is all the "truth" at the moment is it said, with the exact conditions that exist. No one has a crystal ball. No one can predict what numbers will release, nor what impact those numbers will have on the world that, go figure, changes moment by moment. All that said, is your contention that a soft landing isn't still possible? I don't recall a specific date being set. "On April 17, 2024 at 8:47AM a soft landing will have transported" was never stated.So, it could still happen. They have had to walk back transitory quite a bit of course, but that is one of those complete unknowns.

I never understand what the types of commentary you suggest when considering events in real time. You want to judge the CBs as part of history? Fine. But that occurs decades from now. And guess what, most of the members are going to be harder on themselves than you will be (not that that matters much). Between now and then, headlines are going to be created to buy attention. Talked heads will earn salaries for life to stir up controversy. The machine of capitalist will continue to grind on.

I agree with you entirely they we, as traders, DO need to stop listening to some experts. They get it wrong. We get it wrong. Do you want to make money or do you want to be right (isn't that the cliche question)? The US stock market has gone up since inception. Rely on that long term. Short term, make money where you can. This creating of generational wealth is a "long game" (decades). Everything else is just noise.

I hope you have a nice remainder to your weekend!
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Quoting ffghost
{quote} It is sometimes hard to have an open dialog with those of your mindset. Your response wasn't limited to one or words, however, and I sense at least a willingness to be more open minded than some on here, so will give it a shot. I won't disagree that the money supply certainly has an impact, but Of COURSE inflation has a relationship with unemployment (and demand, and spending, and debt, etc, etc). Everything has to do with everything. Tell us this: exactly, and I mean EXACTLY what would have happened if the Fed injected liquidity at the...

Quoting ffghost
{quote} It is sometimes hard to have an open dialog with those of your mindset. Your response wasn't limited to one or words, however, and I sense at least a willingness to be more open minded than some on here, so will give it a shot. I won't disagree that the money supply certainly has an impact, but Of COURSE inflation has a relationship with unemployment (and demand, and spending, and debt, etc, etc). Everything has to do with everything. Tell us this: exactly, and I mean EXACTLY what would have happened if the Fed injected liquidity at the...
When there is an economic growth (real growth), then more and more stuff gets produced. Okay?

What does more stuff being produced mean? It means that there is more supply and when that happens where do the prices go? Prices go down, obviously. Okay?

So, the idea that the Fed needs to crush the economy and get all of that people fired from their job to get inflation under control is a complete and utter nonsense.

Fed is increasing the money supply. Manufacturing practically non-existant. Less and less stuff being produced and the Fed keeps pumping money into the system... know, what can we expect and what should we expect to see in the future?

Rising prices along with the economy that is simply dead and buried. Or stagflation, whatever you want to call it...

Don't worry though! Powell neither sees "stag" nor he sees "flation", so we're good.

Soft landing ahead, inflation getting to exactly 2% sharp and economic boom as early as the first quarter of 2025.

The economy is strong and resilient!
Quoting Guest
{quote} {quote} When there is an economic growth (real growth), then more and more stuff gets produced. Okay? What does more stuff being produced mean? It means that there is more supply and when that happens where do the prices go? Prices go down, obviously. Okay? So, the idea that the Fed needs to crush the economy and get all of that people fired from their job to get inflation under control is a complete and utter nonsense. Fed is increasing the money supply. Manufacturing practically non-existant. Less and less stuff being produced and the...
The feds role is not to mangae productivity.
no one has ever suggested the goal i is massive unemployment. A reduction in employmnet is an indicator that things are slowing. Things slowing is what is needed to reduce inflation.
You dont increase productivity , which is at an all time low and a massive part of the problem, by increasing employment.
Ideally you slow things down by making money expensive through rates, as a bi prodict of the slow down unemploymnet increases.
Inflation comes down interest rates come down the economy starts to grow but with lower inflation, unemplyment reduces.
That never works so simply because there are so many variables......but its all the fed has got
However the best way to speed all of that up is to increase productivity, something employees are reluctant to do
its all just one persons opinion....
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