The economy, and inflation, are revving up at a terrible time for Biden

[mahatmakanejeeves]

Last edited Sat Apr 13, 2024, 10:40 AM - Edit history (1)

No, this is not from the NYT Pitchbot.

ECONOMY
The economy, and inflation, are revving up at a terrible time for Biden

President Biden has spent his presidency touting the country’s economic growth. But the economy’s unfettered strength is becoming more of a political liability for the White House.

By Abha Bhattarai and Tyler Pager
Updated April 13, 2024 at 9:59 a.m. EDT | Published April 13, 2024 at 6:00 a.m. EDT

The booming economy is exacerbating a key vulnerability for President Biden heading into the height of campaign season, as inflation and interest rates could remain higher until deep into the final weeks of the presidential election. ... Fresh data this week shows inflation picked up again in March, in the latest sign that the economy is overheating. Unexpectedly strong job growth, wages and consumer spending are a plus for most Americans but bad for inflation. The higher inflation reading makes it more likely that the Federal Reserve will keep interest rates — and mortgage rates — elevated until late in the year, possibly until days after the election, eluding much political gain for Biden.

“It’s really a case of bad luck,” said Karen Dynan, a professor at Harvard University and former Treasury Department chief economist. “The Biden administration has made some big strides but it’s up against one of the most disruptive economies in decades. Rate cuts would be a welcome development for a lot of people, but the prospects for cuts have really changed given what’s happening with inflation.”

Gasoline prices, in particular, have always played an outsize role in how Americans feel about the economy. The average gallon of gas has been creeping up in the past two months to $3.63 a gallon on Friday, according to AAA. Fears of rising prices could already be weighing on Americans anew, as consumer sentiment fell unexpectedly in April, according to a University of Michigan survey released Friday.

A booming economy can fuel inflation if spending is so robust that consumers are willing to pay ever-higher prices for goods and services. Consumer spending makes up two-thirds of the U.S. economy, and so far Americans have been more than happy to splurge on services like dining out, travel and hotel stays, despite inflation. That’s forced businesses to ramp up hiring — and raise wages — which in turn pushes prices even higher.

{snip}

By Abha Bhattarai
Abha Bhattarai is the economics correspondent for The Washington Post. She previously covered retail for the publication. Twitter https://twitter.com/abhabhattarai

By Tyler Pager
Tyler Pager is a White House reporter at The Washington Post. He joined the paper in 2021 after covering the White House at Politico and the 2020 presidential campaign at Bloomberg News. He won the Gerald R. Ford Journalism Prize for Distinguished Reporting on the Presidency in 2022. Twitter https://twitter.com/tylerpager

[sinkingfeeling]

1. As planned by the billionaire corporate masters.

[jmbar2]

2. This worries me a lot

The stock market is likely to have a significant pullback late this spring. Part of a very normal cycle of growth, and pullbacks. I'm seeing estimates of a 300-500 point drop in the major indices.

Investors and traders like these pullbacks/corrections, but it couldn't come at a worse time. Layoffs and decreases in household retirement accounts will be very scary, giving lots of ammunition to use in the election.

Buckle up.

[paleotn]

6. Possible retrench in equity markets? Yes. Scary unemployment? Ain't happening.

Short of another pandemic, no. Way too much tightness in labor markets. In my area, unemployment has been essentially zero for months and months. We'd do a hell of a lot for more warm bodies but they're just not there. If economic conditions soften a bit, we just won't fill open positions we can't fill anyway.

[jmbar2]

10. Layoffs in the tech sector are at 2009 levels.

Those affected are young voters, and they are having a very hard time getting reemployed. That also worries me a lot.

https://www.cnbc.com/2024/03/07/layoffs-rise-to-the-highest-for-any-february-since-2009-challenger-says.html

[paleotn]

3. Lets see if this is a data point and not a trend.

Inflation spiked slightly in Dec. only to fall in Jan. And really, in comparison to where we've been since 2022, the recent increase is minuscule. But, for people who think the world started 2004, I guess it's a big deal. Time will tell.

I also guess I've become my dad....no inflation is as bad as the early 80's just like no cold spell was ever as bad as Belgium in '44 / '45.

[SARose]

4. Economy booming where I live

North of San Antonio. Restaurants are packed and not just on the weekend. Costco parking lots look like it’s Christmas. Home prices are through the roof and new homes are going up everywhere.

People are making money and most are not worried about inflation. Oh sure, we gripe about McDonald’s and Whataburger’s high prices. The drive thrus are packed and Door Dash still delivers nightly in my neighborhood.

At my local grocery store yesterday the higher priced eggs were not selling. The grocery store brand was half the price of the more expensive eggs.

Our neighborhood successfully fought off a proposed apartment complex right across the street from us. My neighbors are more concerned about Summer plans for their kids right now. Politics and the economy are not the first items folks are talking about here.

Are some people hurting? Yes they are. I see a lot of cars at Dollar Tree now. The Goodwill Stores near me are very busy, too. Our local food pantry does a booming business every month.

[paleotn]

7. People overall have jobs.

Where I work, we'd give people $25 per hour and great benefits if they'd just show up when they're supposed to. In my mind, that's what's driving this economy. There's just not enough warm bodies and we'd need a near collapse for us to have to lay off the warm bodies we currently have.

[SARose]

9. Yep here too

Lots of people in my neighborhood depend on military and military retiree paychecks. Also, we have a lot of medical personnel living here, too.

Our daughter is having a tough time getting people to just show up for an interview. Our granddaughter starts her first “big girl” job next week. Her starting salary and benefits are impressive. 💕

[moose65]

5. We just need to keep asking one question

What would Trump and the Republicans do to combat inflation?? Then listen for the crickets.

[FBaggins]

8. "We can't fix it - but they can't either" isn't effective campaigning

When you’re the incumbent.

It doesn’t matter whether or not it’s true. They can point to inflation during the previous term and say “it sure looks like we knew “

[gab13by13]

11. I see these economic doom and gloom articles

scroll across the home page of my computer, I don't click on them and I am certainly not taking the bait here.

When the 300,000 new jobs report came out the economy was booming narrative was abounding all over, I predicted that within a week the right wing would flip the narrative, it took less than a week.

I am on a fixed income and my economy is doing just fine.

Bidenomics Baby.

[progree]

12. Inflation in the last month and last 3 months, graphs and all. PCE, CPI, PPI. Regular and Core

Last edited Mon Apr 15, 2024, 01:46 AM - Edit history (2)

I've been seeing some mischaracterizations of the recent inflation situation, so here is a summary table followed by the graphs.

I annualize them all to be easy to compare to each other, and to compare to the FED's 2% goal. I use the actual index values rather than the one-digit changes that are commonly reported in the media. Links to the data are with the graphs.

The "1 month" number is the change from February to March, expressed as an annualized number (for the PCE it's the change from January to February; the PCE folks don't do March until near the end of April).

"Regular" is the "headline" number that has "everything"

"Core" is the regular with food and energy removed (The Fed prefers this as a basis for projecting FUTURE inflation)

3/29/24 PCE (Fed's favorite inflation measure)

REGULAR 3 month: 3.4%, REGULAR 1 month: 4.1%; CORE 3 month: 3.5%, Core 1 month: 3.2%;

4/10/24 CPI-Consumer(retail) inflation

REGULAR 3 month: 4.6%, REGULAR 1 month: 4.6%; CORE 3 month: 4.5%, Core 1 month: 4.4%;

4/11/24 PPI (Wholesale prices)

REGULAR 3 month: 4.4%, REGULAR 1 month: 1.9%; CORE 3 month: 4.7%, Core 1 month: 2.5%;

Edited to Add:
Average real (i.e. inflation-adjusted) hourly earnings are up over the past 2 years and are above the pre-pandemic level:
. . . # Real average hourly earnings of production and non-supervisory workers: https://data.bls.gov/timeseries/CES0500000032
. . . # Real average hourly earnings of private sector workers: https://data.bls.gov/timeseries/CES0500000013

And now the graphs, in the following order:

* Core CPI and Regular CPI

* Core PCE and Regular PCE (Core PCE is the Fed's favorite for projecting FUTURE inflation)

* Wholesale inflation - Core PPI and Regular PPI

CORE CPI

http://data.bls.gov/timeseries/CUSR0000SA0L1E



The Regular aka Headline CPI
https://data.bls.gov/timeseries/CUSR0000SA0



CORE PCE through February that came out 3/29/24
CORE PCE: https://fred.stlouisfed.org/series/PCEPILFE

This is the one that the Fed weighs most heavily. The Fed weigh the PCE more heavily than the CPI. And in both cases, they weigh the CORE measures higher than the regular headline measures for projecting FUTURE inflation



Regular PCE through February that came out 3/29/24
PCE: https://fred.stlouisfed.org/series/PCEPI


WHOLESALE INFLATION (PPI - the Producer Price Index)

https://www.bls.gov/news.release/ppi.nr0.htm

As for which core PPI measure, since the BLS highlights the one below in its reporting (as opposed to the one without food and energy), then I guess I should do likewise.

BLS Data Series CORE PPI (excluding food, energy, trade services): http://data.bls.gov/timeseries/WPSFD49116



===========================================================

BLS Data Series Regular PPI ( includes "everything" ): http://data.bls.gov/timeseries/WPSFD4