Unfortunately, the upward trend is continuing unabated.  The “producer price index” is essentially the tracking of wholesale prices at three stages: Origination (commodity), Intermediate (processing), and then Final (to wholesale).  Today, the Bureau of Labor and Statistics (BLS) released December price data [Available Here] showing a dramatic 9.7% increase year-over-year in Final Demand products at the wholesale level.

I’m not going to beat this dead horse {Go Deep Here}, except to point out a few even larger warning signs that are evident.    Suffice to say, despite the spin likely from defenders of the White House occupant, the inflation impact is continuing exactly as we would expect.

The monthly price increase was 0.2% which would under normal circumstances give the impression that price pressure for the month was lower than previous.  However, there’s a key component clouding the problem.

As noted by the BLS, “A major factor in the December decrease in prices for final demand goods was the index for gasoline, which moved down 6.1 percent.” Gas prices momentarily dropped in the December capture of pricing; this has skewed the data considerably.  As a consequence, the energy costs measured in December looked like they dropped 3.3 percent.

You are well aware that gasoline has jumped back up in price in the past few weeks.  Additionally, total energy costs to you have not dropped at all.  In the background of this momentary skew, the costs of final demand goods after the energy impact rose .04% in December.

The momentary drop in gasoline and diesel fuel in December gives an artificial outcome in the data for all three stages.   Oil prices are back on the climb, and the prices of the goods and services overall to consumers have not reflected any decrease; factually they have increased even more.

(more…)

We have talked about this quite a bit. {Go Deep} I’m not sure how this attempted needle threading is going to work out in the longer term. The announcement has come as a surprise to the Canadian trucking industry.

Apparently fearing the economic consequences, the Canadian government has dropped the vaccination requirement for Canadian truck drivers, and instructed border officials to permit unvaccinated Canadian truckers to cross the border.

The vaccine mandate for cross border truckers was scheduled to begin in a few days, January 15th.  However, the Canadian vaccination rule for U.S. truckers will remain in place.

MONTREAL — The federal government is backing down from its vaccine mandate for Canadian truckers three days before it was set to take effect.  Ottawa announced in mid-November that truck drivers crossing into Canada would need to be fully vaccinated by this Saturday.

But on Wednesday evening Canada Border Services Agency spokeswoman Rebecca Purdy told The Canadian Press that Canadian big-riggers will not have to quarantine if they are unvaccinated or have received only one dose.

[…] The new rule will still take effect for American truckers, who will be turned away at the border unless they’ve been inoculated starting this weekend. (read more)

How the hell can Canada justify dropping the vaxx mandate for Canadian truck drivers, but not for U.S. inbound shipments?  Are they preparing for a massive amount of rig switching at the border?   Good grief, what a mess.

(more…)

A Quinnipiac poll released today [DATA HERE] shows just how far Joe Biden has fallen in the eyes of most Americans.  Of particular note inside the data is how Hispanics and Latinos view the Biden policies as complete failures.

Among adults overall, Americans give negative scores on the following issues when asked about Biden’s handling of…

• The economy: 34 percent approve, while 57 percent disapprove;
• Foreign policy: 35 percent approve, while 54 percent disapprove;
• The response to the coronavirus: 39 percent approve, while 55 percent disapprove.

(See Full Poll Results Here)

Earlier today, the White House pushed the Director of the National Economic Council, Brian Deese, to the podium to defend the administration from the outcomes of their economic policies.   Consider this presser the pre-quake tremors.

Mr. Deese begins his presentation by saying giving American workers back their jobs, after shutting down their workplaces and locking out their ability to work at their job, is the equivalent of creating new jobs; the administration is very proud of their magnanimity. Mr. Deese then moves on to the inflation data from today and celebrates a “decrease in the rate of price increases.”  Yes, he used those exact words.

Deese then goes on to say [01:59] that despite the claimed 7% inflation, prices at the grocery store are not higher, gas prices have dropped, home heating costs and natural gas costs are lower, and things are going swimmingly.   I’m not joking about any of that, just watch the first four minutes:

.

There was really bad news following the White House celebrating their current economic success. Brian Deese stated the White House intends to use the federal government to get involved in supply chains (distribution), pricing (federal price controls), availability (distribution of products under newly claimed emergency federal authority power via the “pandemic”) and providing relief (protecting urban areas).

What Deese is saying there [4:00 – 09:00] is the worst thing we could ever want to hear when there are massive price increases and simultaneous shortages.  The federal government is ‘leaning forward’, and is going to get more involved.

Then at 09:00 of the video, the alarm bells start ringing.  Journalists asking Brian Deese what the White House is planning to do to get involved and provide national food security.  “The shelves are too empty, and the food is too expensive. What is the White House going to do?”

Whiskey – Tango – Foxtrot!   Danger Will Robinson, DANGER!!

(more…)

The absence of food will change things….. Quickly.

The issues will fluctuate region by region and chain by chain as we enter the destabilization phase.  In this phase the impacts in some operators will be small, and in others will be more noticeable.  The difference will be the overall operational excellence in the proprietary business system they operate.

However, once the internal merit is exhausted, the manufacturing issues will impact all food retailers regardless of their warehouse and distribution excellence, or lack thereof.  Ironically, small independent stores might be in the best position to withstand fresh supply pressure as they are closer to the field.

The further away the retail business operation is from the farmer, the greater the impact.  The more people, systems and bureaucracy there are between the retailer and the farmer, the greater the operational impact.  The longer the supply chain, the greater the impact.  It is an unusual dynamic, but the local farmers’ markets are going to be the best source of consistent local supply.  That reality is why the urban areas are going to be hit the hardest.

In this media report from Philadelphia, the local NBC affiliate blames the food supply issues exclusively on Omicron.

This claim is patently false [SEE HERE].

.

The final straw, to collapse the remaining supply, will likely be the cross-border truck driver vaccine mandate which kicks in on January 15th.

After that, things start to get sketchy.

(more…)

The Bureau of Labor Statistics (BLS) released the December inflation data today [DATA HERE] for December.  Readers on these pages are not surprised to discover that inflation in the U.S. economy has now reached a forty year high at 7 percent.  {Go Deep}

Unfortunately, the 7% in June of 1982 was when inflation was on the way down from Jimmy Carter’s failed economic policy.  This time our 7% milestone has been achieved while inflation is on the climb thanks to Joe Biden’s failed economic policies.

Carter’s mess was created by regulation, policies and oil prices.  Biden’s mess is created by the same and much more.

Yes, it will be getting worse.

That weird picture with the Bidens and the Carters comes to mind.  The scale within the picture is appropriate when considering inflation and what is to come.  Biden’s inflation is much larger than Carter’s.

As you know, the top line number of 7% is a false premise.  We are feeling much, much higher overall prices in our lives with gasoline, home heating fuel, electricity costs, housing and the astronomical prices at the grocery store.  The BLS data is backward looking, meaning it was compiled in early December 2021 for comparison to December 2020.  Where we are CURRENTLY is much worse than where we were in early December.

We are feeling the front side of the inflation hurricane right now. The consumer prices at end of January and through February are now reflecting new purchase order prices and contract prices to wholesalers, buyers and retailers.  The higher energy costs, fuel costs, warehousing costs, transportation costs and delivery costs are cumulative. As a result, the December report is simply the precursor to what will be much more damaging inflation data in Feb (showing this month) and March (showing Feb).

Additionally, the BLS data captured gas prices at their slight drop from oil prices in late November and early December.  The price of oil has now gone even higher, and the price of gasoline is once again on the rise.  We have not yet seen the worst of this folks.  Hopefully most are prepared.

I modified BLS Table-1, taking out some of the noise, to give the snapshot of how the bureau is compiling data:

(more…)

Transportation Secretary Pete Buttigieg visited the Port of Los Angeles (POLA) and Port of Long Beach (POLB) to announce the Biden administration officially saved Christmas.  Yes, that actually happened.   Los Angeles Mayor Eric Garcetti took it one step further and proclaimed Secretary Buttigieg as the official “man who saved Christmas”.   WATCH:

The Biden administration is making these ridiculous claims, because they know that no one in the media will actually look into the data and challenge them on the insufferable nonsense.  [SEE DATA HERE]

However, beyond the ridiculous claims about increasing port container delivery, when there was actually a decline in port container delivery, the POLA and POLB scheme to hide the ships {Go Deep} has now spread to the Port of Oakland, California.

“Operation Hide the Ships”

OAKLAND – […] Following its success in Southern California, the new system is being expanded to the Bay Area. Ships will wait 50 miles off the coast in a safety and air quality zone until their scheduled arrival time at the Port.

The new system became effective Monday. Ships will get an arrival time based on when they left their last port of call. Before Monday, ships were given an arrival time when they were fewer than 80 nautical miles from the coast.

(more…)

The empty shelf problems in/around DC last weekend were mostly due to regional weather and employment issues.  However, the snapshot represents an example of how people react to their first encounter.  The conditions in the video represent a worst case scenario for those who have been watching the supply chain issue coming over the horizon. {Go Deep}

I doubt our average 2022 result will be this bad overall, however, there are areas where this might be the status.  For most people outside urban areas, this severity of a food store shortage is unlikely, unless the federal government gets involved.  If the federal government intervenes, this will be more common.

We know from prior examples, if these types of conditions were to last for just 72 hours across every store in a metropolitan region, you would see a level of panic begin.  Civic stability remains relatively stable for 72 hours (3 days).  However, if these conditions are persistent for more than 3 days, the general mindset of the population changes quickly.  Things rapidly deteriorate.  After three days, all reference points for civic norms are gone.

Those who remember Miami-Dade, specifically the Homestead region, in the aftermath of hurricane Andrew have a solid reference for what happens.  New Orleans after hurricane Katrina was a lesser, albeit more public version.   Hunger, fear and desperation are not a good combination.

{Background on Larger Issues HERE}

(more…)

The snowball effect of cumulative inflation is going to be on display tomorrow when the BLS inflation data from December is released.  We have previously discussed the unavoidable price increases as noted within the November data Here, and within the producer price data Here.

While the data being released tomorrow is backward looking, we are in the eye of the inflation storm right now.  The consumer prices at end of January and through February are all reflecting new purchase order prices and contract prices to wholesalers, buyers and retailers.   As a result, the December reports will be the precursor to what will be much more damaging data in Feb and March.

White House spokesperson Jen Psaki began trying to get ahead of the consumer price release with a short briefing to the traveling press pool earlier today.  A short audio-only soundbite reflects the political problem the White House knows they will soon be dealing with. LISTEN:

(more…)