Graph shows January 2004 through March28, 2025
Kirk Lindstrom's Investment Letter
Despite President Biden's "Inflation Reduction Act of 2022" (estimated to contain $500B in new spending and tax credits) and the Federal Reserve keeping its Fed Funds Interest Rate at a 20-year high, inflation at 3.3% is 1.3% or 65% above the desired or "target rate" of 2.0%.
CPI-U: This morning the US Bureau of Labor Statistics announced, "The Consumer Price Index for All Urban Consumers (CPI-U) was flat in May on a seasonally adjusted basis, after rising 0.4 percent in April". and "Over the last 12 months, the all-items index increased 3.3 percent before seasonal adjustment."
Core CPI-U: "The index for all items less food and energy rose 0.2 percent in May, after rising 0.3 percent the preceding month" and "The all items less food and energy index rose 3.4 percent over the last 12 months."
Chart: CPI vs Fed Funds Rate vs Expected 10-Yr Inflation from 2004
Despite President Biden's "Inflation Reduction Act of 2022" (estimated to contain $500B in new spending and tax credits) and the Federal Reserve keeping its Fed Funds Interest Rate at a 20-year high, inflation at 3.4% is 1.4% or 70% above the desired or "target rate" of 2.0%.
CPI-U: This morning the US Bureau of Labor Statistics announced, "The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in April on a seasonally adjusted basis, after rising 0.4 percent in March". and "Over the last 12 months, the all items index increased 3.4 percent before seasonal adjustment."
Core CPI-U: "The index for all items less food and energy rose 0.3 percent in April, after rising 0.4 percent in each of the 3 preceding months." and "The all items less food and energy index rose 3.6 percent over the last 12 months."
Chart: CPI vs Fed Funds Rate vs Expected 10-Yr Inflation from 2004
Chart: Fed Funds Interest Rate vs S&P 500 - 1993 through today
Chart: Fed Funds Interest Rate vs S&P 500 - 2019 through today
WASHINGTON, May 14 (Reuters) - President Joe Biden is hiking tariffs on $18 billion in Chinese goods including electric vehicles, batteries, semiconductors, steel, aluminum, critical minerals, solar cells, ship-to-shore cranes, and medical products, while retaining Trump-era tariffs on over $300 billion in goods.
The United States Trade Representative's Office told Reuters it anticipates the effective date will be in approximately 90 days.
The bear market that began at the start of the year continues with all four major markets I follow down over 20% from their peaks.
CPI up 8.2% in September📈🔥
CPI-U Inflation came in at 8.6% in May with core inflation at 6.0% over the past year. The Energy Index rose 3.9% in May and was up 34.6% on the year. Gasoline rose another 4.1% in May and is up 48.7% on the year. If you think buying a new, more fuel efficient ICE auto or EV will solve your inflation problem, think again as new car prices are up 12.6%, if you can get one, while used cars soared 16.1% on the year.
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| Chart 1. One-month percent change in CPI for All Urban Consumers (CPI-U) |
CONSUMER PRICE INDEX - MAY 2022
The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.0 percent in May on a seasonally adjusted basis after rising 0.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.6 percent before seasonal adjustment.
The increase was broad-based, with the indexes for shelter, gasoline, and food being the largest contributors. After declining in April, the energy index rose 3.9 percent over the month with the gasoline index rising 4.1 percent and the other major component indexes also increasing. The food index rose 1.2 percent in May as the food at home index increased 1.4 percent.
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| Chart 2. 12-month percent change in CPI for All Urban Consumers (CPI-U) |
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| Table A. Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city average |
The index for all items less food and energy rose 0.6 percent in May, the same increase as in April. While almost all major components increased over the month, the largest contributors were the indexes for shelter, airline fares, used cars and trucks, and new vehicles. The indexes for medical care, household furnishings and operations, recreation, and apparel also increased in May.
The all items index increased 8.6 percent for the 12 months ending May, the largest 12-month increase since the period ending December 1981. The all items less food and energy index rose 6.0 percent over the last 12 months. The energy index rose 34.6 percent over the last year, the largest 12-month increase since the period ending September 2005. The food index increased 10.1 percent for the 12-months ending May, the first increase of 10 percent or more since the period ending March 1981.
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| Gasoline Nearing Eight Dollars Per Gallon in Menlo Park California |
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| Biden Barometer Natural Gas, Oil Price & Stock Market Performance under President #46 Joe Biden |
Sadly, I see little relief in the short term as gasoline prices have continued to soar in June. Hopefully you followed my newsletter advice to own some US Treasury Series I Bonds that are currently paying us 9.62% for new issues and I own some that are paying 12.76% due to their base rate of 3.0% plus inflation.
CPI-U Inflation came in at 8.3% in April with core inflation at 6.2% over the past year. Energy, up 30.3% year-over-year, fell 2.7% in April. The 0.3% monthly change in CPI-U is the lowest since August 2021.
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.3 percent in April on a seasonally adjusted basis after rising 1.2 percent in March, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.3 percent before seasonal adjustment.
Increases in the indexes for shelter, food, airline fares, and new vehicles were the largest contributors to the seasonally adjusted all items increase. The food index rose 0.9 percent over the month as the food at home index rose 1.0 percent. The energy index declined in April after rising in recent months. The index for gasoline fell 6.1 percent over the month, offsetting increases in the indexes for natural gas and electricity.
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| Table A. Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city average |
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| Chart 1. One-month percent change in CPI for All Urban Consumers (CPI-U), seasonally adjusted, Apr. 2021 - Apr. 2022 |
The index for all items less food and energy rose 0.6 percent in April following a 0.3-percent advance in March. Along with indexes for shelter, airline fares, and new vehicles, the indexes for medical care, recreation, and household furnishings and operations all increased in April. The indexes for apparel, communication, and used cars and trucks all declined over the month.The all items index increased 8.3 percent for the 12 months ending April, a smaller increase than the 8.5-percent figure for the period ending in March. The all items less food and energy index rose 6.2 percent over the last 12 months. The energy index rose 30.3 percent over the last year, and the food index increased 9.4 percent, the largest 12-month increase since the period ending April 1981.
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| Chart 2. 12-month percent change in CPI for All Urban Consumers (CPI-U), not seasonally adjusted, Apr. 2021 - Apr. 2022 |
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