The Economy

BTW, I don't know where I saw it, but a few weeks ago, I am fairly certain I heard Mark Zandi at Moody's Analytics talking about this, and he was positing that people would only cut back on driving so much, and will choose to cut spending on other items instead. This was when Cali had gas over $6 a gallon and people didn't seem to be curtailing their driving habits.

Which would suggest that demand for gas itself is relatively inelastic. But then the question is where is that extra $150 or $200 a month over the last year for the typical household coming from? And by all indications discretionary purchases, things like restaurants and clothes and certain types of entertainment and stuff like that, are starting to slow down. I think we are going to have clearcut indication of that in the rear view mirror over the next half year, and the slowdown could prove to be really dramatic.

We have been such a consumer-driven economy that that creates a really big headwind.

 

And it will go into effect just in time to increase labor costs when we are already dealing with a wage-price spiral, reduce services at a time that supply is flailing to keep up with demand and send runaway prices even higher for consumers. Bravo.

 

I wasn't talking about whatever politics are behind their decision to take it / not take it. Not sure how it kneecaps democrats, unless the idea would be, "Let them have what they want, they'll regret it."

From my perspective, this is the kind of case our courts should be dealing with. ... It's the clear kind of economic freedom case that the court existed to take on for the first 150+ years of our existence. It would be a no brainer, if we hadn't screwed ourselves up the way we have. You have two free parties contracting with each other. The state shouldn't be interfering or dictating the term. ... if we still live in a free country that guarantees those kinds of rights anymore.

But I guess the court has a social agenda to tend to, so no time to play the role of an actual court.

Practically, yes, it is about higher prices (among other things). The typical person who doesn't care about the Supreme Court politics is just going to know that things are going to get tougher for them (on top of all the other things like this that have hurt those people), even if they aren't atuned to the cause and effect.

 

I don't know Jackson Kayak, but a lot of what is going on in retail right now is due to inventory gluts. It's due to the stupid combination of monetary and fiscal policy they unleashed when the pandemic hit. Fiscally, they helicopter dropped money and stuffed it into people's pockets creating runaway demand. Monetarily, they went batshit crazy monetizing the debt that fiscal madness created. That demand boost, coupled with the supply chain problems from the pandemic created shortages (and sent the wrong signals to the market). So retailers overordered inventory. ... just in time for the inflation / Fed trying to slam on the brakes to eat into that demand.

Which is why you are seeing stories like this now: Glut of Goods at Target, Walmart Is a Boon for Liquidators . And ancedotally, you are getting the types of sales (to get rid of inventory) that you are talking about.

The economy right now is getting smacked hard. Just the 175 basis points they have already raised the Fed Funds rate, along with putting the brakes on the bond buying (they haven't done squat to reduce the balance sheet) is hitting the economy hard. And they have barely done anything. ... People won't be talking about it until sometime in the future, because all of the confirmation is going to be backward looking.

Those idiots gave us stagflation. We're talking about the inflation part of it, but the bubble world they created which caused that inflation is a ticking time bomb. If they keep trying to raise rates and follow through on the balance sheet reduction, we are looking at a debt crisis (which is an inevitabilty at some point, the only question being how much bigger will they make the problem trying to put off the day of reckoning).

Nobody is talking about it. ... But just on 175 basis points of hikes to the Fed Funds rate (while inflation is still running rampant) has meant stories like this: Car Repos Are Exploding. That’s a Bad Omen. . The average monthly car payment is now $1,000. ... mispriced interest rates have gotten a lot of people to finance cars they wouldn't have been able to afford without those idiots artificially suppressing rates to encourage more and more borrowing. And defaults (and car repos) are picking up now that all of the "stimulus" that saved the world has effectively filtered into and out of people's pockets. Companies that repossess cars have been buying car lots to handle the flood of reposessions that are coming if the Fed keeps trying (even half-assed, the way it is) to deal with the inflation they unleashed.

 

CPI number everyone was anticipating, 20 minutes ago. ... The hopium markets (which have been hypnotized into a coma by the Fed) had inflation leveling off. .... The number they put out showed it heated up more, and the headline number was 9.1 percent year over year.

This into an economy that at the least is slowing to a crawl, and is likely already in recession (without the credit defaults and pain that are going to come if the Fed follows through on what it needs to do to clear all the malinvestment it is responsible for).

Get used to hearing a lot about stagflation when the GDP numbers confirm recession (which is backward looking).

 

FYI, if you are looking to find any solace in the CPI number and a reason for why the price rises may finally level off soon, one of the inputs that affected it a lot was. ... gas prices, which peaked during the time this report covers. Gas prices are coming down now, as oil prices back off, so this could be the peak.

But even if we don't keep getting 9 percent year over year headline numbers, unfortunately, higher prices are going to be here to stay.