This is not going to be news to CTH readers and intellectually honest analysts. The Bureau of Labor and Statistics has released the March consumer pricing data [DATA HERE] showing the recent surge in energy, gasoline and food costs that we have all felt.
The monthly increase of 1.3% brings the annual rate of inflation to 8.5 percent year-over-year. However, the details tell the exact story we have been outlining for well over six months. This is the second wave of inflation being recorded. Grocery store prices (food at home), energy prices, and gasoline prices are all driving the inflation rate. [BLS Table 1]
Again, I modified Table-1 to take out the noise. The data shows what we have felt for the past two months. Working class families are feeling the pinch as their wages cannot keep pace with the increase in prices on products that are a priority. Food, housing, gasoline, energy.
If we were using the old CPI method for analysis, current inflation would be well above 20%.
That said, there are issues also inherent and visible in the data for the non-food and energy segments, what I would call the durable goods side. First, we are seeing the beginning of the durable good contraction getting quantified as we have previously discussed. The prices for used vehicles, electronics, appliances and other non-critical durable goods are now flatlining, or even dropping in price.
Every indication within the economy indicates this is being caused by a demand contraction. People are not purchasing durable goods because their disposable income is gone. This lack of demand also shows up in wage rate suppression. Despite high employment, wages are not rising – in part because there is excess productivity in the durable good economy.
You will note from Table-2 [available here] that food away from home, restaurant food, is not climbing as high as food at the grocery store (0.3% -vs- 1.5%). Restaurants are trying to keep prices down and their profit margins are being eroded. They are in a tough place, because if restaurants raise prices, they may lose customers who are already feeling pain in their checkbooks. However, they cannot hold out much longer before raising prices, because the price increases are permanent.
The good news is the March data appears to quantify the apex of the second wave rate of inflation. The rate of increase in food, fuel and energy will now start to moderate and slow down. The prices may, likely will, keep going up, but they will go up less dramatically than they have in the past six months. This price plateau will hopefully remain in place until late summer, that’s when the next harvest food costs will hit in Wave-3.
On the durable goods, what we will see now is a typical demand side issue. Price increases for durable goods will quickly, if they are not already, be less connected to material costs and more connected to demand. Obviously, the cost to manufacture, create, produce, transport and deliver durable goods is still experiencing upward pressure due to raw materials. However, the demand variable will now enter more dominantly.
With wage growth meek and prices still rising on essentials like food, housing, energy and gasoline, demand for non-essential durable goods will drop. The demand decline should naturally put downward price pressure on appliances, electronics, used vehicles, etc. Unfortunately, this also contracts the overall economy, creates unemployment, and indicates “stagflation.”
(MSM) – […] The consumer price index leaped 8.5% annually, the fastest pace since December 1981, the Labor Department said on Tuesday, likely cementing Federal Reserve plans for an unusually large half-point interest rate hike early next month. That increase is up from 7.9% in February and inflation now has notched new 40-year highs for five straight months. (more)
We will need to watch the service side closely now to see if consumers start to lessen travel, entertainment, and other service side expenses.
Protect your family. Be frugal, wise and smart with expenses. However, do not trouble yourself with dark imaginings.
If you are like most here, you have prepared yourself with commonsense actions and you are a doer who fixes problems, not a naysayer who sits around mulling over them. Your family, kids and/or grandkids as well as your community can benefit from wise, albeit sometimes stern, counsel. Stand strong, stand firm and stand resolute.
All of these challenges are simply that, challenges. Work any problem as it arises, including for the kids. And also remember, God is in charge, not you. So, listen to his instructions. Listen to that instinct he buried within you. Draw upon the strength that a loving God constantly provides.
Be a vessel for those who need hope. Be a guiding light for those who feel distressed. Be cheerfully strong among everyone around you, and thankful for all the kindness you experience. If you get stuck, start giving….
A man made crises created by Joe Bungles Biden and his gang of nefarious misfits. People who refuse to see it for what it really is are either in on it or they are incredibly stupid.
To me either you are a communist, or you are a communist enabler
Huh?
Ya think?
What are you smoking……have you read the communist manifesto?
Well said.
Scapegoating to Joe is popular, but the truth is both parties and the government they run and own have spent nearly a century getting us here.
I agree that people who refuse to see truth for what it is are incredibly ignorant.
There is no benevolent side, both are Progressives, many even cheer that!
Absolutely! It’s sad that the large majority do not understand that “both political parties are wings of the same vulture.”
And joe biden doesn’t understand what’s going on, really, he only knows what he’s told to say, and 10% for the big guy.
Protect your family. Be frugal, wise and smart with expenses. However, do not trouble yourself with dark imaginings.
The good news is, there isn’t much left to imagine. It’s all out there for everyone to see. Plan appropriately as best you can.
We just do not yet know just how bad it can or will get but with Joe at the helm it very well could be depression 2.0.
Todays move to allow more ethanol in summer fuel blend will keep corn / feed price high.
It will also decrease fuel economy as ethanol has 70 percent of the energy of gasoline.
And it will ruin car engines, and fuel delivery systems.
That ten cents per gallon Joe thinks we will save will cost far, far more than that in repairs.
Meanwhile, I’m curious if Joe and the democrats realize that. Perhaps they do, and if they help us all have a shorter engine life it will NUDGE us to buying electric cars.
Yeah, that’s a potential conspiracy theory, but nowadays just give it a few months and they seem to come true.
Can fuel additives , lessen the effects of ethanol in the gas.
Leaded fuel was used way back as a lubricant. As we went to all un-leaded fuel the bearings and metals were hardened for longer wear…. but it has limits.
What can we do now ?
Follow the laws of thermodynamics rather than the two party propaganda.
Political bias is high, common sense is rare.
Which creates more pain for the consumer, not relief, as gas price will NOT be going down to make up for the worse mileage results. I found it interesting that when I filled my car with Costco gas it registered that I had 380 miles available, whereas with my usual Chevron fill-up it registered 430 miles available. I’m not an expert in why that is, but that’s 50 miles less for the same amount of gasoline in the tank, which seems significant to me.
It will also do more harm to the environment as a study has shown that non ethanol fuel burns cleaner.
In a time like this we need corn to go for food and livestock not for fuel.
Ethanol is a horrible concept for several economic and environmental reasons.
‘Idiotic’ is more like it but it funnels subsidies and tax $$$ to corporate agribusiness so it’s good for ‘Murica.
All Hail The Peanut Farmer!!!!
FJB
Just watch FJB on TV blaming the “Putin price hikes”
Yeah – Putin price hikes – yeah, that’s the ticket
Pelosi is calling it the same, as are all the democrats.
They are DESPERATE to blame this on Putin even though the time line proves otherwise.
And media is just as desperate to back them up.
They will look you dead in the eye and lie, lie, lie.
Just ONE reporter needs to go over that timeline with Psnarky. This administration thinks Americans are too dumb, busy, or distracted to put two and two together.
This administration doesn’t think of the average American at all, except how to ruin us.
Same as almost all Presidential administrations in my lifetime.
The state run echo chamber media will run with that.
He’s making ‘Ol Jimmy look better all the time! Who’d thought it was possible?
Another fudged government number. Don’t hit the panic button yet. Wait another year.
We were just informed that our property taxes were raised by about a third, but were limited to the maximum allowable state increase of 10 percent. That will cost us several thousand dollars per year, and really eats into our monthly budget. We are cutting out extras and consuming some of the supplies that we put away last year in the pantry. We only received a 2 percent pay increase this year, and the union is not talking about pay, but about covid panic. With inflation at 8.5 percent, the union will probably proudly claim that they negotiated a big 4 percent raise. We are already getting squeezed. Snarc.
Does your union have the guts to try to get people to vote democrat this time, or are they recognizing the reality of what’s going on now?
I sold my 8 acre farmette a few years ago because the taxes were costing me almost $2k PER MONTH. I had no mortgage. It was insane, I was just renting from the government. Here in FL I own 42 acres and pay about $3k PER YEAR.
I can’t believe I waited so long to move.
Try hard to have a garden and a few chickens. It really helps with the food budget, believe me.
And try to cook from scratch, and buy stuff in bulk. I buy wheat and beans, etc. from Azure Standard. Good prices.
In my state there are elderly homeowners credits and other low income property tax relief which help older folks like me.
God’s help and blessing to you.
Inflation has little to no effect on the rich! During the 70’s oil embargo gasoline and diesel were in short supply. Long lines were every where in the cities. I had one high school friend who’s family was very rich. They had a lake house way out in the country side. His dad drove a Mercedes Benz diesel. So what did he do? He bought and installed a diesel storage tank and fuel pump on his lake house property and bought his own diesel by the tanker load. He could just fill up at the lake house and the diesel shortage never impacted his driving at all! That was my first real insight that the rich were really different than me and my family! Today is no different those hurt most by inflation are those of us on fixed incomes-social security and the middle class!!! The elites could care less about inflation and its impact/destruction on We The People!
Conspicuous consumption, it used as to be called…as in the recent grotesquely expensive Becker wedding.
Beckham! I’m thinking of Boris Becker convicted of fraud in the UK… what’s in a name…
If you live up North you can buy #2 home heating oil and not pay a penny in fuel taxes plus get a volume discount and even lock-in the price you pay for a year!
I live much the same way and I am not rich at all. I am country fugal. I have a 55 gallon barrel for fuel. I accumulate cash by being economical, pick up storage containers second hand, and buy in large quantities. I just bought 200 pounds of wheat and a flour mill, for example. That frees up money for the next purchase. Perhaps that way of thinking is WHY your friend’s dad was rich.
Being frugal won’t help nearly as much as you think.
The entire economy is being driven by this inflation and even if you live very frugally you will still get affected in nefarious ways.
Perhaps selling your house, buying some land and putting up either a mobile home or a couple of trailers… something that won’t be affected by your rising real estate taxes.
Personally I wonder how long will the Calimexistan Commies be blocked from touching Prop 13 in their constant class warfare.
Funny you should say that. It is exactly what I did 25 years ago. Now the old round-top mobile is demolished and I live out back, in a cedar cottage on a walk-out basement. Property taxes are minimal. The assessment people don’t care much about gardens and apple trees. Or beauty.
Yup, frugal only takes you that far, particularly if you are already on a modest budget.
You cant make something out of nothing.
Another way to describe what your saying; the rich/priviledged, USE their riches and priviledge, to insulate themselves from experiencing the negative consequences of their actions.
They use it to insulate themselves from ANY negative consequences, but that invariably includes negative consequences of their own actions.
2-3 generations, raised like this insures Sociopaths, who do not LEARN because of this insulation from consequences.
They live in a construct in their own mind, NOT reality.
TIIC (formerly TPTB) is the inevitable result.
Agree/exactly!! His dad never had to wait in any gasoline/diesel lines and his travel wasn’t inconvenient by the shortage in the least! But my family and I were!!
I was aware that by the third generation many families are messed up, often catastrophic.
I hadn’t thought of the sociopathic angle.
But of course..that explains so much.
Cheers!
Well said Dutchman.
I get a general notion Sundance has a strong background in Economics & Analysis. Thank you for the insight & detailed summary of what to expect next.
I get that same notion.
A reeeeeeeeeeeeeeeeeeally strong background.
“[T]here is excess productivity in the durable good economy.”
How can industry be too productive? “Excess productivity “ suggests that workers should take more cigarette breaks and longer paid lunches.
Combat excess productivity through union featherbedding! 😜
I second that notion.
I kid you not, the wife and I went out to one of our local restaurants and the menu listed 10 chicken wings at “Market price”. The waitress said they were recently selling at $18!
18.00 apiece?
10 wings for $18 – ridiculous
When I was a kid, no one would buy them except for making soup stock.
This suggests that cheap meat cuts can be popularized through clever marketing.
Buffalo Wings only caught on after Buffalo’s steel mills closed and disposable income fell off steeply.
At Whole Foods the party wings are already cut and marinaded for $5.59 a pound!
I don’t like wings. They have just a few bites and really are just a way to get the sauce they are cooked in into your mouth.
Personally I love them but rarely eat them anymore due to price. What amazes me is many moons ago they were considered scrap meat. And then along came the Anchor Bar.
In the 30s and 40s lobster was junk fed to cats and used as bait.
In Newfoundland lobster used to be what fishermen and families are when they didn’t have money.
Cake is just a way to get frosting into your mouth, too!
If you think that’s bad – wait till you see the price for a bowl of Beak and Talon soup and the Feathers Florentine on the side…………
On the bright side bat soup is still pretty cheap.
NOOOOOooooooooooo!
Not the Feathers Florentine!!!
…with Bug Burgers soon to follow.
Local Diner is raising prices 15% on Monday. Eggs went up $30/case, coffee up $80/case. I get it. He can’t “eat it” and survive. Supported him every day for the last 3 years, sometimes his only customer during the worst shutdowns. But I may have to cut back on breakfast away from home.
Recession is coming says the inverted yield curve. Followed by real estate, construction, etc. The dominoes will fall fast once they begin. The stretch is gone from reality and when it snaps back, it will get everyone’s attention.
Get small as you can. This ride has a long way to go until things get better.
“Recession is coming says the inverted yield curve.”
This has always been reliably predictive of falling economic activity.
My wages use the “old CPI method” to calculate my budget.. therefore I feel the 20% hit.. I paid $1.48 for a head of iceberg lettuce not grown in the US yesterday..
I hope you use every single bit of that lettuce.
I’m seeing more gardens being gotten ready for planting.
Same…$1.48…and not the normal sized ones I normally am able to get. Plus it felt like a bowling ball, which means most of it will be inedible.
Sorry, off topic .
Has anyone seen watch the water on rumble , stew peters ? Crazy covid theory I can believe from all I’ve read over the last two years . I had trouble pasting it .
Yes…. Horrifying. I’d say incredible, but somehow I believe every bit of it. The final story Ardis told gave me chills, having been the recipient of signs like that myself.
Yeah , the gilead co , is a giant that’s been gobbling up smaller companies . And the cures , I use most daily . I bought a case of NAC last year when I heard the government was trying to ban it over the counter .
I think they’re still arguing in court about this….thank you for reminding me. Ill head to Sprouts tomorrow for a top up.
IMO It made a lot of sense, and I sent a link to my senator Ron Johnson.
https://tv.gab.com/channel/realstewpeters/view/world-premiere-watch-the-water-6254d522b4b328149a82065e
A propaganda flick. It went viral too quick . Snake venom will not survive a municipal water system. BTW.there are hundreds of good medical remedies made from snake venoms. The Chinese have perhaps thousands in their pharmakopeia. Also..folks in India have been smoking and injecting cobra venom and thy did not get covid like symptoms. Common sense people. If his was true how come it was allowed to ravel around he internet so virally. Basic chemistry say snake venom peptides will not last long in an oxygenated and chlorinated environment. As well old snake handlers get bit frequently through their life to increase immunity. Right when the Ruskies are ready to seize the biggest of the US biolabs in thew tunnels beneath the steel plant the ukronazis and their western military advisors are currently trapped in.
Corinthians 16:13 ►
Be watchful, stand firm in the faith, act like men, be strong.
I’ve been preparing for what’s coming ever since bath-house Barry was installed and proudly exclaimed “We’re going to fundamentally transform this country!”
Didn’t that phrase start during Obama’s 8 year reign of terror?
Yes, it was him proudly stating what he was going to do. And then did.
What worries me is Progressive Democrats are handing 2022 & ’24 over on a silver platter and the GOPe will find a way to screw everything up.
The mail-in ballots, and the illegal drop-box ballots will probably be in play again.
I think the covid propaganda will be in full force, including the latest democrat / communist variant.
To me, it says they aren’t worried in least that they’ll lose…
They do not intend to lose, notice how confident they are just like 2020.
They aren’t “finding a way to screw things up”.
Its a feature not a flaw.
The system is working as intended.
Did a bird just pooped on Biden while he’s talking inflation in Iowa?
In my local MA watering hole eavesdropping on a conversation involving 5 leftists (I am acquainted with each of them 5+ years now) who all hate PDJT. The recently retired 65 y.o. simply asked, “Do you think the economy was better under Trump?”
The contortions the 4 respondents put themselves through were laughable and I almost snorted at, “I hate Trump but, I wish biden would have done some things differently.” I laugh because this guy is filling up his Chevy Avalanche once per week.
Sadly, biden still has a 50+% poll approval in MA.
B.S.
Incredible!
And sad…..
Zerohedge shows increase of $5200 annum per family, God help hard working families w children. Meanwhile 99% illegal gimmigrants w <high school edu skinny their arses under the border fence knowing joebama regime is handing out free entitlements courtesy the legal American taxpayer. And your senators all believe they deserve their $140k salary = parasites
“illegal gimmigrants”
I like it! 😆
And where will they all live?? Housing Americans are having trouble finding?
And so…I see that – as I and many others have predicted – Wage and Price Controls are now being raised up the flag pole to see if anyone salutes!
“So what exactly is coming next? Well, nothing would surprise us less than some kind of price controls – especially since the hearings pinning the blame on ‘Big Oil’ (have) absolutely no evidence of any price-gouging taking place.”
See:
https://www.zerohedge.com/political/watch-live-president-biden-explains-how-hell-lower-energy-costs-after-highest-cpi-print
U.B.I. – universal basic income , is on their wish list.
cashless > digital too
UBI is generally proposed as below the poverty line. Those who support it are all math challenged.
“Wage and Price Controls are now being raised up the flag pole to see if anyone salutes.”
I never want to see Nixon’s War Socialism again but I never wanted to see Carter’s inflation redux, yet we got it anyway.
I have readjusted my food budget so my expenses haven’t changed so far. I also stockpile food when I find a sale.
That is the key if you have extra income to do it. Winn Dixie and Publix still have BOGOS and I load up on them. Can goods is the key.
8.5% is the cumulative rate. That’s the inflation we experienced over the past year. The annualized rate is 15.6% (1.3% x 12). That’s the inflation we are experiencing right now. Then double it to approximate the 1980 method and the annualized rate of inflation right now is more like 32%.
On Food , I differ. Most break warehouses are running low and much is imported especially from Mexico. Prices will rise especially for short or early harvest foods( berries, radishes, egg plant, baby spinach) and flowers. (Fresh flowers will be the first edd of May and June).
Durable goods defiantly. Additional pressures from repair/rebuild and spares parts availability.
A friend told me earlier today that Walmart announced it was closing some of its stores — due to food shortages.
Haven’t seen or heard anything formal yet, but if Walmart closes, we know the crash is soon to follow.
I can’t believe Walmart would admit to food shortages causing store closures. Seems none of the retailers want to talk about it – keep people calm and doing just their regular shopping for as long as possible.
“Additional pressures from repair/rebuild and spares parts availability.”
I broke the wheel leveler adjustment on my brand new lawnmower. The manufacturer could not honor the 3-year warranty because no spare parts are available.
The purchase price had to be refunded.
The fundamental issue is that there is no escaping this. This inflation is hitting everything because it affects energy costs which drives EVERYTHING…
The Commies are trying to pin this on Putin, of course.
Whose energy is up only 48%? Gas is more than double here in Las Vegas in 14 months. By the numbers, it’s up about 150%
If we were using the old CPI method for analysis, current inflation would be well above 20%.
——
Question please: When today’s inflation rate is said to be highest since 1981….has the 1981 rate been adjusted to reflect today’s way of calculating it?
Very wise…Grasshopper!
My wallet says at the very least inflation is up above 50 to 150 % !
They can LIE all they want on their magic made up Common Core Consumer Price Index. Too bad all of us trying to buy FOOD, GAS, MEDICINE etc KNOW BETTER !
What has been lost in the inflation data, the drop in purchasing power was steep in March as real hourly wages fell again… 13 decline in last 15 months.
Thank you for your clear, strong voice of encouragement. Namaste. 🙏🏻🙏🏻
My business has always foretold what the economy will do. I run a very successful exterior remodeling business – 47 years who specializes in roofing, gutters, soffit, fascia and siding. About 6 months prior to the Great Recession the number of people requesting estimate plummeted like a marble rolling off a table. I tried to tell people but they denied it. I protected my business and family. Forced AT&T to accept an immediate lump-sum payment in order to try and force them out of our advertising agreement. At first they refused but as the months fell by the wayside they finally relented once I was proven correct.
What led me to the Great Recession conclusion was that the number of people requested siding estimates increased significantly beyond my company’s ability to keep up with the demand. Then 6 months later when everyone who shouldn’t have had a home loan because they could never afford it in the first place lost their jobs the siding estimate requests dried up as well as the other items except for the roofing estimates. They stayed steady.
Last summer (2021) we experienced an significant increase in siding requests even though I turned them all down as I don’t have the help to even be able to offer that service any more due to a lack of skilled labor. Based on that I suspected we may already be in a recession – fall of 2021 – and now business is off a little over 40% compared to this time period last year.
Not completely positive but it sure feels like we are already in a recession. Thank God we are prepared – thanks to Glenn Beck’s advice many years ago by what I call Prep-insurance and then Sundance’s great information/take on where we the economy is headed.
My company is strong – our ratings are far superior to any of our competitors and we’ve been around for decades. My competitors hire illegals/cheap labor and while that certainly affects my competitors when they fight amongst themselves we just keep moving as a downturn simply means people get stingy – really stingy – with their hard-earned money and will only hire those businesses like my own who have a proven trust/track record.
Prepare for the worst / Hope for the Best
OOPS!
This is a good reminder to be thankful for our blessings. Us Treepers should be ready for what’s coming. Thanks Sundance!
The inflation rate is 19.5% if you calculate it according to 1980 methodology
20.5% or more.
Perhaps we should provide more alcohol to Nancy, Brandon and Chuckie!
Maybe those much smarter than me can see if the inflation numbers can be interpreted how I am looking at them. The CPI is up 8.5% which is what us consumers are paying more for the things we buy. Many on the left are blaming companies for the inflation. The PPI is up 11.2%. This is what the wholesale costs have risen. If companies are paying an extra 11.2% and the final prices are an extra 8.5%, would I be correct to look at it that they are essentially absorbing that 2.7%. It seems to me that if they passed on their extra 11.2%, we would be paying an extra 11.2%. I know it is a big simplification and all sectors and individual companies have their own challenges but I was just wondering if that is kind of what the two number mean.