What, if any, is the significance of the designation of urban consumers? Urban as compared to whom? Also I am curious as to your thoughts on the impact, if any, of the removal of undocumented persons on inflation, housing, and labor data.
The data does give regional and state granularities as well, although for reasons of brevity I rarely highlight those in these analyses.
That being said, the constant caveat when looking at the "official" CPI data is that your mileage WILL vary. Some people will see higher rates for some items, and some people will see lower rates. Broadly speaking, however, the overall trends should be fairly consistent across all states and regions, and it is the trends that matter, not the index values nor individual percentage points of change for any given month. The 2.7% figure for inflation is less significant than the fact that it's a 0.3pp drop from 3%.
As for as the removal of undocumented persons impacting inflation, housing, and labor data--it is an easy extrapolation to say there is an impact. Is some of the drop in inflation due to Tom Homan's deportation push? Quite possibly. Given the instances of federal benefit dollars flowing to illegal aliens, a drop in the population of illegal aliens of over 2 million is certainly removing a lot of "free money" from the equation, which would remove an inflationary pressure.
Housing we would expect to follow a similar trajectory, although the shelter components of the CPI tend to be trailing indicators, so I would caution against pointing to any one cause as the reason for the downward trend in shelter prices.
On jobs--the employment data indicates that in recent months all new jobs are going to native born citizens. However, the data is not clear on whether that translates to a clear and substantial uptick in the Employment-Population Ratio or the Labor Force Participation rate.
It is not unreasonable to extrapolate that there would be such effects, but the empirical data such as we have does not establish that yet. With the data disruptions from the Silly Schumer Shutdown it may be a few months before we can conclusively point to a deportation effect on employment.
I’m delighted that the inflation rate is decreasing, of course. I’m wondering about the deflation in the prices of goods, however.
During the COVID lockdown years, when Biden was throwing around trillions of dollars and every normal metric of the economy was discombobulated, inflation soared. Now that we are in a more “normal” economy, I don’t know how much of change is due to macroeconomic corrections to the insanity of those Biden years. Peter, are you concerned about the deflation signs, or do they seem to be more of a longterm correction?
I live in Minneapolis, so yes, this theft is of high concern to me! There have been obvious fraud, deception, and political corruption going on here for at least twenty years, but the Democratic Party is such an iron-clad machine that there’s been no way to bring it out into the light. Now the Somalians have so blatantly ripped everyone off that the fraud is out in the open. I am optimistic that FINALLY the Democrats may lose their monopoly in political power. Even the good-hearted, well-meaning liberals are waking up to “Hey- we’ve been SCAMMED!”
Wouldn’t it be great if uncovering the fraud in MN, Maine, CA, and other specific places led to the exposure, arrests, and convictions of corrupt players throughout the country? I’d love to see the next social movement be people demonstrating with placards saying, “Clean Government Now!” “Expose the Corruption!” No More Fraud!” Etc.
The real question is how much culpability do the politicians and government bureaucrats have in this fraud.
Were any of them bribed to look the other way? Fraud on the scale that is being reported seems difficult to produce without greasing a few government palms along the way.
Does the drop in the inflation rate indicate the US is heading into a stagflationary/deflationary cycle?
That would certainly be the pessimistic view of the data, and there have been other indicators that deflation or stagflation may be in America's not-too-distant future, most notably the continued negative data with respect to manufacturing from multiple sources.
However, if China Vanke implodes and Beijing does not manage the fallout well, the financial contagion could play holy Hell with their manufacturing base (which is already struggling), producing a slew of supply chain dislocations with global impacts. Such a scenario is difficult to gauge precisely, but if that does happen deflation would be off the table for the US for at least a little while.
If the jobs situation in this country does not start to improve substantially, I suspect we will be facing a deflation scenario at some point. As with all things economic, however, we won't know that's happening until it does.
What, if any, is the significance of the designation of urban consumers? Urban as compared to whom? Also I am curious as to your thoughts on the impact, if any, of the removal of undocumented persons on inflation, housing, and labor data.
"Urban" just means the data is a cross section of all US cities, and pulls from this data table:
https://fred.stlouisfed.org/release/tables?rid=10&eid=34483#snid=34484
The data does give regional and state granularities as well, although for reasons of brevity I rarely highlight those in these analyses.
That being said, the constant caveat when looking at the "official" CPI data is that your mileage WILL vary. Some people will see higher rates for some items, and some people will see lower rates. Broadly speaking, however, the overall trends should be fairly consistent across all states and regions, and it is the trends that matter, not the index values nor individual percentage points of change for any given month. The 2.7% figure for inflation is less significant than the fact that it's a 0.3pp drop from 3%.
As for as the removal of undocumented persons impacting inflation, housing, and labor data--it is an easy extrapolation to say there is an impact. Is some of the drop in inflation due to Tom Homan's deportation push? Quite possibly. Given the instances of federal benefit dollars flowing to illegal aliens, a drop in the population of illegal aliens of over 2 million is certainly removing a lot of "free money" from the equation, which would remove an inflationary pressure.
Housing we would expect to follow a similar trajectory, although the shelter components of the CPI tend to be trailing indicators, so I would caution against pointing to any one cause as the reason for the downward trend in shelter prices.
On jobs--the employment data indicates that in recent months all new jobs are going to native born citizens. However, the data is not clear on whether that translates to a clear and substantial uptick in the Employment-Population Ratio or the Labor Force Participation rate.
It is not unreasonable to extrapolate that there would be such effects, but the empirical data such as we have does not establish that yet. With the data disruptions from the Silly Schumer Shutdown it may be a few months before we can conclusively point to a deportation effect on employment.
I’m delighted that the inflation rate is decreasing, of course. I’m wondering about the deflation in the prices of goods, however.
During the COVID lockdown years, when Biden was throwing around trillions of dollars and every normal metric of the economy was discombobulated, inflation soared. Now that we are in a more “normal” economy, I don’t know how much of change is due to macroeconomic corrections to the insanity of those Biden years. Peter, are you concerned about the deflation signs, or do they seem to be more of a longterm correction?
I begin to suspect that much of that Biden money was outright stolen. Estimates are now that it may be $9 billion in Minnesota alone.
I live in Minneapolis, so yes, this theft is of high concern to me! There have been obvious fraud, deception, and political corruption going on here for at least twenty years, but the Democratic Party is such an iron-clad machine that there’s been no way to bring it out into the light. Now the Somalians have so blatantly ripped everyone off that the fraud is out in the open. I am optimistic that FINALLY the Democrats may lose their monopoly in political power. Even the good-hearted, well-meaning liberals are waking up to “Hey- we’ve been SCAMMED!”
It is astonishing. It is not just Minnesota though.
Wouldn’t it be great if uncovering the fraud in MN, Maine, CA, and other specific places led to the exposure, arrests, and convictions of corrupt players throughout the country? I’d love to see the next social movement be people demonstrating with placards saying, “Clean Government Now!” “Expose the Corruption!” No More Fraud!” Etc.
Hee hee.
The real question is how much culpability do the politicians and government bureaucrats have in this fraud.
Were any of them bribed to look the other way? Fraud on the scale that is being reported seems difficult to produce without greasing a few government palms along the way.
Exactly, Peter. Governor “Tampon Tim” Walz is going DOWN!
Does the drop in the inflation rate indicate the US is heading into a stagflationary/deflationary cycle?
That would certainly be the pessimistic view of the data, and there have been other indicators that deflation or stagflation may be in America's not-too-distant future, most notably the continued negative data with respect to manufacturing from multiple sources.
However, if China Vanke implodes and Beijing does not manage the fallout well, the financial contagion could play holy Hell with their manufacturing base (which is already struggling), producing a slew of supply chain dislocations with global impacts. Such a scenario is difficult to gauge precisely, but if that does happen deflation would be off the table for the US for at least a little while.
If the jobs situation in this country does not start to improve substantially, I suspect we will be facing a deflation scenario at some point. As with all things economic, however, we won't know that's happening until it does.