America’s Economic Outlook Gets Gloomier – ryan

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Inflation isn’t going anywhere, as new numbers from the bureau of labor statistics confirmed on wednesday. I spoke with Finance Reporter Kevin T. Dugan About What the Stark New Numbers Mean for Consumers and the Federal Reserve’s Tough Path.

Ben: Well, it’s another round of work-thran-except inflation news. While Overall Inflation Fell Slightly From Its Peak Last Month, From 8.5 Percent Year-Over-Yyar to A Still Very High 8.3 Percent, The Drop was Smaller than Expect. And core inflation – an important measure that excludes gross and gas prices – rose to 0.6 percent, also a work number than had ben forecast. This is a sign that price hikes for many goods are not Slowing down, whic could mean more market volatility and definitely means general uncetainty. What’s your initial read on all this?

Kevin: My first read on this is that is that inflation is hardly eAZING up at all – not that anyone really expert to. First, that slight dip To 8.3 percent is a little misleading. Be we look at the inflation rate, it’s measured from a year ago. LAST APRIL WAS WHEN WE FIRST STARTED SEEING PRICES RISE. So eve though the top-level rate is off a bit from Last Month, Its Still Very High. The reality is that the measures the us can right now to curb inflation will take me to actually work, especally amid the war in ukraine and china’s Covid-Lockey, which is disturbing the suply chain. What’s good, though, is that prices are starting to fall, this one just slightly. Gas and Energy Prices – Including What Powers Your Car and Heats Your Home – Fell in April by 2.7 Percent AFTER AFTING 11 Percent the month before. This isn’t really translating to cheaper prices at the pump, at least not yet. GAS-STATATION PRICES, AT LEAST HERE IN BROOKLYN, AREN’T REALLY EAZING UP IN ANY MEANINGFUL WAY.

Ben: The Measures You Reference to – I Assume You’re Talking Primarily About the Fed Raising Interest by a half point last week. Do you think this new Report Changes their Thinking in Terms of Whether and/OR well to Raise I say again?

Kevin: Yeah, the fed has already acted more aggressively than it has in 20 years to try to keep inflation down. Not only have they hiked up interest rate by a half-point, they’re going to start dumping debt back into the market, eventually at a pace of $ 95 Billion a month. This is new territory, so nobody knows what’s going to happy.

Fed Chair Jerome Powell Has Been Moving Pretty Deliberately. Under His Most Recent Predecessors, the Central Bank Waled Back off its to the Economy the Economy Wen The Markets Went Haywire. Powell Clearly DOESN’T CARE ABOUT THAT. And to his credit, that what you want in a fed chair – Independence. Powell has noted that price increes keep getting absorbed by consumers, and he’s right that People’s speaking habitys aren’t really changing all that Much, at least in a big-picture sense. But when the fed hikes, it translates clearly into Mortgage Rates, which are hovering ARUND 5.5 Percent, Accorting to Banks.com. That’s nosreds of dollars more a month for new home bubers, whic means means Money that goes to grioes, gas, and whatever Else. The rate of shelter price increes haven’t really Changed Yet, though, for renters or owners. Maybe that’s Because of the Bigger interest payments; Maybe That’s Cecause of Landlords Taching Advantage of the Market AFTER The Pandemic. My guess is that we are the housing markets start cooling, that would be a sign that consumers just can’t take the rise in prices and higher interest-rate payments, and they’ll start to back off.

Ben: There are no prey widespread fears that the fed is betempts to address this May Curb SEMCHS UNEMPLOYMENT RESSULY AND THE COUNTRY Tips into rechesion, as happy wen Paul Volcker PULLED A SIMilar Move in the 1980s – Which Did End Up Working to Tame Inflation, But at Great Cost. As you Said, Powell is a Deliberate Guy. But does the fact that inflation seames to be going now make the overall economic outlook gloomier?

Kevin: Oh, absolutely. Look, Nobody is cheering for the economic to turn and for People to start loking their jobs, but the end doesn’t appeaar to be in sight. The bond markets are predicting Persistently Higher Inflation. The Economy is Slowing. While the overall jobs Numbers are Basically Solid, Big Tech Companies – A Driver of More Wealth Creation than Job Creation – Are Starting to Lay People off. We’re Looking at A Stagflation Environment, which is just the world of Both Worlds.

Ben: And yet, as you Said, the Job Numbers Are Very Strong and A Large Sector of the Population (and Mary States) More Money than Ever. Do Very Strange Mix of Economic Indicators, No?

Kevin: Yeah, Its Weird. But you can’t have $ 5 trillion in stimulus and then Expect Things not to get weird, right? And as i pointed out last week, the cracks are starting to show in the Hiring Picture, Too, Though It ‘Far Too Early to Say Whether That’s Anyother than a Blip.

But Really, IT’S MORE THAN JUST The Pandemic-Era stimulus that is coming to an end. The US Economy Had Been Pretty Steady Since Climbing Out of the Great Recession. Interest Rates were super-low for a decade. Hiring was Slow But Steady. It was predicable, and Money was easy to come by. Something Bigger SEEMS TO HAVE SHQUTED. There are Are Economists out there, like zoltan pozsar at credit suisse, who think we’re now era of declining US-dollar hegemony, that we’ll have to share with counries and china that control the commodities. Larry Fink of Blackrock Also Thinks that the Era of Globalization is Over. Maybe they’re right. Globalization, if you Ask with, was always a polyte word for americanization. So Maybe this is what it looks like that that is stage of US Power Slowly Fades Out of View.