Inflation

Gas Prices Push Up Inflation Rate – The New York Times

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CPI Report Live Updates: Gas Prices Push Up Inflation Rate – The New York Times

Federal Reserve officials are likely to remain wary about the outlook for inflation following a report released Wednesday: Overall price increases sped up because of a pop in gas prices in August, and a more closely watched index that strips out volatile food and fuel prices climbed at a faster monthly pace than expected.

The Consumer Price Index climbed 3.7 percent in the year through August, the report showed. That was both faster than the 3.2 percent July reading, and slightly quicker than the 3.6 percent that economists had expected.

Inflation Reduction Act didn’t contribute to lower inflation

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Inflation Reduction Act didn’t contribute to lower inflation

Even President Joe Biden has some regrets about the name of the Inflation Reduction Act: As the giant law turns 1 on Wednesday, it's increasingly clear that immediately curbing prices wasn't the point.

While price increases have cooled over the past year — the inflation rate has dropped from 9% to 3.2% — most economists say little to none of the drop came from the law. What You Need To Know

Even President Joe Biden has some regrets about the name of the Inflation Reduction Act. “I wish I hadn’t called it that because it has less to do with reducing inflation than it has to do with providing alternatives that generate economic growth,” Biden said Thursday at a fundraiser in Utah

As the giant law turns 1 on Wednesday, it’s increasingly clear that immediately curbing prices wasn’t the point

Price increases have indeed cooled over the past year, with the inflation rate dropping from 9% to 3.2%

But economists say little to none of the drop came from the law. Harvard University economist Jason Furman says he can't “think of any mechanism” by which the law would have reduced inflation

“I can’t think of any mechanism by which it would have brought down inflation to date," said Harvard University economist Jason Furman, who added that the law could eventually help to lower electricity bills.

Alex Arnon, an economic and budget analyst for the University of Pennsylvania’s Penn Wharton Budget Model, offers a similar assessment.

“We can say with pretty strong confidence that it was mostly other factors that have brought inflation down,’’ he said. "The IRA has just not been a significant factor.’’

That shouldn't come as a surprise.

When the Inflation Reduction Act was proposed, the Congressional Budget Office said its impact on inflation would be “negligible."

So why the name? It may ultimately help to hold down prices in the future — and it fit the politics of the moment.

Ebbing inflation eases rate hike fears on Wall Street | Reuters

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Ebbing inflation eases rate hike fears on Wall Street | Reuters

all Street rose on Thursday after producer prices data provided further evidence of inflation cooling in the world's largest economy, and stoked hopes that the Federal Reserve will soon end its monetary policy tightening.

U.S. producer prices barely rose in June and the annual increase in producer inflation was the smallest in nearly three years.

Keeping a lid on optimism, a separate report showed weekly jobless claims unexpectedly fell last week, indicating that the labor market remains tight.

Prices Rise 3% As Inflation Continues to Cool – The New York Times

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June CPI Report: Prices Rise 3% As Inflation Continues to Cool – The New York Times

Some investors believe that a recession warning that has been flashing on Wall Street for the past year may be sending a false signal and that the Federal Reserve will be able to tame inflation and still escape a deep downturn.

The signal — called the yield curve — has continued to reverberate in 2023 and is now sending its strongest warning since the early 1980s of a coming downturn. But despite the alarms becoming louder, the stock market has rallied and the economy has remained resilient, prompting some analysts and investors to rethink its predictive power. On Wednesday, the Consumer Price Index report showed a sharp decline in inflation last month, further buoying investor optimism and pushing stocks higher.

Don’t buy commodities these days 🛢

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A lot of advertising is popping up these days urging folks to buy various commodities to fight inflation. Sounds like a dumb idea as commodities are likely already overpriced and at some point in the future will come crashing back down.

While I wish now that I had bought more energy stock years ago, I stayed away from adding more due to the high level of dividend payments. Paying taxes on dividends you reinvest sucks. It’s just money out of your pocket to the tax department every four months that your not seeing until you cash out. My original idea was to hedge against inflation but I feel like it just makes you more vulnerable to the ups and downs of one sector rather than cheaper index funds.

Inflation is a problem it kind of bites. The markets are down although nothing like what they’ve been up the past ten years. A slight dip today shouldn’t take away from long term thinking. It’s sucks to look at your portfolio and think your spinning wheels, with values only increasing slightly over the past year even though the total number of shares actually is getting a boost due to the down markets.