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#4 | Posted by eberly at 2024-05-16 10:32 AM
Wholesaler prices don't scare me....
They should - the markets just had a party based on supposed "slowing consumer inflation" numbers, which were predictable from last month's PPI numbers (-0.1%). We just had huge increases in PPIs for April, predicting the increase in consumer inflation in next few months.
In January 2024 the markets expected 6-7 Fed rate cuts, just last week the Fed's Powell said rates "won't increase"(!) this year - drastic change in tone, and probably a 'politically reasonable' move with the election coming soon, not to tank Biden's chances.
Both Trump and Biden and the Congresses have poured $Trillions into an economy, states mandated increases in "minimum wages" and benefits for unskilled (which are passed to consumers, along with RIFs, reduction in hours, outsourcing and automation) and stupid tariffs, to "protect" for consequent uncompetitive cost structure, i.e., "pricing ourselves out of the market."
We had threads here about "populist" isolationist Trump not understanding the economics of tariffs and trade, and loss of hundreds of thousands jobs... Of course, "Trump's tariffs bad, Biden tariffs good ('targeted')" will get us eventually to the same place - higher inflation and loss of some foreign markets as countries respond in kind.
www.npr.org - Biden kept Trump's tariffs on Chinese imports. This is who pays the price.
www.cnbc.com - Biden's China tariff threats are more bark than bite
Despite what some "experts" say, numbers show that economy is not in great shape:
Actual -- Expected -- Prior
PPI Apr
0.5% -- 0.3% -- -0.1%
Core PPI Apr
0.5% -- 0.2% -- -0.1%
CPI Apr
0.3% -- 0.4% -- 0.4%
Core CPI Apr
0.3% -- 0.3% -- 0.4%
Productivity - Q1
0.3% -- 0.8% -- 3.5%
Unit Labor Costs - Q1
4.7% -- 2.5% -- 0.0%
Avg. Hourly Earnings - April
0.2% -- 0.3% -- 0.3%
Average Workweek - April
34.3 -- 34.4 -- 34.4
Retail Sales Apr
0.0% -- 0.4% -- 0.6%
Retail Sales ex-auto Apr
0.2% -- 0.2% -- 0.9%
Import Prices Apr
0.9% -- NA -- 0.6%
Import Prices ex-oil Apr
0.7% -- NA -- 0.2%
Export Prices Apr
0.5% -- NA -- 0.1%
NY Fed Empire State Manufacturing May
-15.6 -- -9.0 -- -14.3
Philadelphia Fed Index May
4.5 -- 5.0 -- 15.5
UofMichigan Consumer Sentiment May
67.4 -- 76.5 -- 77.2
... prediction of what they believe consumers can afford and are betting retailers can pass along the increase.
They are not "betting" - the price they paid (plus usual profit margins) is passed to consumers, which will be reflected in CPI 1-3 months from now.
You expect wholesalers to increase prices as far as they possibly can ...
No different than before inflation spike - the increases are all along supply chains, as their expenses increase. Government and consumers have been spending like there is no tomorrow, household CC and BNPL debt is staggering, people are dipping into retirement accounts. Few companies do make "record profits" (at least, unadjusted for inflation) but a lot more, especially lower-end-consumer-facing, like discounters and restaurants are struggling to break even or even fold, especially those having large debt or needing more credit.
We have a like-'70s "Tower of Pisa" economy ("stagflation" / "growflation") and like-Y2K stock market bubble (this one based on "AI" and Magnificent Seven instead of "internet").
At least Biden stopped saying "Bidenomics" and "shrinkflation."
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