Why have food prices risen? I’m trying to make sense of this, but if energy prices have decreased, shouldn’t we have seen a decrease in food prices, as well?
Consumer prices in everything, not just food and energy, are impacted by a number of forces.
Energy does play a significant role in food prices, just as it does everything else.
Some will argue that there are labor disruptions due to President Trump's ICE raids, as agriculture has for a number of years employed disproportionate number of illegal aliens.
The myriad pricing pressures that are involved for all consumer goods, including food and energy, make drawing too many conclusions from any one month's inflation report. Far more meaningful are the longer term trends.
August was unusual for food because the inflation rate more than doubled--that's a significant spike for any sector in any month. However, the producer price index for food showed almost no change at all, which suggests that food prices are not going to move much higher in the fall, and might even fall back a bit. That would make August a bit of an outlier for food prices, and should be regarded as such.
We need to see what happens with food prices in particular in September and October.
“Now is not the time to say whether Donald Trump’s policies are a success or a failure. At present we do not know that and cannot know that.”
So I realize this is an unfair question to ask and expect you to answer in a few sentences, Peter, but what is your sense of how Trump should respond to this data? Should he stay the course (for now), make a drastic change, or tweak a few policies? You’re the only man I know who is smart enough to answer, Magnificent Man.
Manufacturing jobs are in decline and have been for the past several months.
Service job creation has been uneven and anemic.
Payroll hours have continued their years long decline.
That last point is crucial, because it means there is some labor "slack" even within the employed labor force. If payroll hours were rising that would itself be an impetus for more hiring and more job creation. Rising payroll hours necessarily produces organic job growth.
The economy needs more actual business activity. Consumption rose last month and that is definitely a force which powers business activity. Investment is another.
This is one reason Powell would help matters by trimming the federal funds rate. Loosening the federal funds rate will likely ease pressure on market interest rates for Treasuries and corporate bonds.
Lower interest rates expands credit across the board, and that can create a friendlier investment climate.
Pushing forward with regulatory relief and reform would also improve the business and investment climate.
Given that even after DOGE the federal budget is still an economic 800 pound gorilla, expanding small business access to federal projects and grants, to spur business formation and business expansion, would also improve business and investment in this country.
These are all "small ball" maneuvers, and that is really what is required now. The US economy is not (yet) in crisis, and it would be a mistake to undertake drastic changes in policy and strategic direction. That would b a crisis maneuver and very premature.
Business formation. Increased payroll hours. Job growth. As long as Trump is making these his economic priorities he will achieve the best economic results.
All one has to do is look at the data and consider the underlying economic activity it describes. After that it's a simple question of what measures will influence that activity in the desired direction.
Why have food prices risen? I’m trying to make sense of this, but if energy prices have decreased, shouldn’t we have seen a decrease in food prices, as well?
That makes sense. Thank you for the clarification. Hopefully things were cool as we move into fall. Really appreciate your analysis!
Consumer prices in everything, not just food and energy, are impacted by a number of forces.
Energy does play a significant role in food prices, just as it does everything else.
Some will argue that there are labor disruptions due to President Trump's ICE raids, as agriculture has for a number of years employed disproportionate number of illegal aliens.
The myriad pricing pressures that are involved for all consumer goods, including food and energy, make drawing too many conclusions from any one month's inflation report. Far more meaningful are the longer term trends.
August was unusual for food because the inflation rate more than doubled--that's a significant spike for any sector in any month. However, the producer price index for food showed almost no change at all, which suggests that food prices are not going to move much higher in the fall, and might even fall back a bit. That would make August a bit of an outlier for food prices, and should be regarded as such.
We need to see what happens with food prices in particular in September and October.
Thanx Pete
Grace and peace to you Amigo
Semper Fortis!
“Now is not the time to say whether Donald Trump’s policies are a success or a failure. At present we do not know that and cannot know that.”
So I realize this is an unfair question to ask and expect you to answer in a few sentences, Peter, but what is your sense of how Trump should respond to this data? Should he stay the course (for now), make a drastic change, or tweak a few policies? You’re the only man I know who is smart enough to answer, Magnificent Man.
Manufacturing jobs are in decline and have been for the past several months.
Service job creation has been uneven and anemic.
Payroll hours have continued their years long decline.
That last point is crucial, because it means there is some labor "slack" even within the employed labor force. If payroll hours were rising that would itself be an impetus for more hiring and more job creation. Rising payroll hours necessarily produces organic job growth.
The economy needs more actual business activity. Consumption rose last month and that is definitely a force which powers business activity. Investment is another.
This is one reason Powell would help matters by trimming the federal funds rate. Loosening the federal funds rate will likely ease pressure on market interest rates for Treasuries and corporate bonds.
Lower interest rates expands credit across the board, and that can create a friendlier investment climate.
Pushing forward with regulatory relief and reform would also improve the business and investment climate.
Given that even after DOGE the federal budget is still an economic 800 pound gorilla, expanding small business access to federal projects and grants, to spur business formation and business expansion, would also improve business and investment in this country.
These are all "small ball" maneuvers, and that is really what is required now. The US economy is not (yet) in crisis, and it would be a mistake to undertake drastic changes in policy and strategic direction. That would b a crisis maneuver and very premature.
Business formation. Increased payroll hours. Job growth. As long as Trump is making these his economic priorities he will achieve the best economic results.
YOU ARE SO BRILLIANT.
I ask for a dime, you give me a thousand dollars. Thank you, Peter!
All one has to do is look at the data and consider the underlying economic activity it describes. After that it's a simple question of what measures will influence that activity in the desired direction.