CPI Won't Provide The Fed Reprieve On Wednesday
Year-over-year headline CPI likely will have accelerated when CPI data is released Wednesday morning. The price of oil is up and that ought to be enough to push headline CPI to 3.4-3.5%.
The Fed had to have known that growing the money supply (M1) from $4 Trillion to $21 Trillion over 24 months would cause prices to explode given the Dollar dilution associated with all of that printing.
The damage to the economy has been done as the price of most goods and services will never retreat (houses and vehicles will retreat as unemployment ticks up, but they are the exception).
Yes, I expect the unemployment rate to move higher as companies continue to file for Chapter 11.
In addition, I expect April earnings calls to be littered with RIFs in the 8K filings. Companies will further cut heads to protect earnings and executive compensation packages.
Companies have pricing power, but it is not as if unit sales are exploding. That has been the tale of the U.S. economy since early 2022. Pricing is up, but my guess is that unit sales are flat-to-down for most companies. Real GDP is flat to down. This nonsense about Real GDP growth is a bunch of hogwash as the GDP deflator is understated. I trust the Government GDP numbers as much as I trust Joe Biden and all of Congress. None of these clowns want to get spending down. How much money is the U.S. going to print this year?
The only thing propping up the U.S. economy is deficit spending. The fiscal year-to-date (since October 2023) deficit is $828 Billion. That is $106 Billion or 15% higher than the deficit at this time a year ago. Once upon a time this country did not run fiscal deficits.
