May CPI at 3.3% Is Still Above Fed's 2.0% Target

 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

Chart: CPI vs Fed Funds Rate vs Expected 10-Yr Inflation from 2020

Table: Raw Inflation Data from November 2023:

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In-N-Out Burger Prices

Today the Channel 2 Fox News in SF/Oakland CA showed the prices for In-N-Out Burger after California raised the minimum wage to $20 per hour for workers at fast food restaurants.

Here are the prices for a:

• Double-Double $6.05
• Cheeseburger $4.25
• Hamburger $3.75
• French Fries $2.40

Next, they showed the prices for an "In-N-Out Double Double Meal" by city which includes a soda.

• San Francisco: $13.60
• Alameda: $11.96
• San Jose: $11.81
• Pittsburg: $11.42

Healthy (ahem) hint: Skip the soda and drink a free water to keep your price under $10.

Discuss the prices on my FB Investing for the Long-Term Group. 

McDonald's Prices according to CNBC

April CPI Still Hot at 3.4% vs Fed's 2.0% Target

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: CPI vs Fed Funds Rate vs Expected 10-Yr Inflation from 2020

Table: Raw Inflation Data from October 2023

Chart: Fed Funds Interest Rate vs S&P 500 - 1993 through today

Chart: Fed Funds Interest Rate vs S&P 500 - 2019 through today

Tariffs and Inflation:  Perhaps I should have included President Trump's tariffs as a contributor to inflation stubbornly remaining above the desired 2.0% target.

If so, then President Biden's new tariffs will make inflation worse.

Yesterday President Biden announced new tariffs on goods manufactured in China. 

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.

Spending $500B to "reduce inflation" and then implementing new tariffs then listening to others debate the merits...

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Discuss this article at my Investing for the Long Term Facebook group.

Worst Inflation in 40 Years - Bear Market Continues

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.

• 

It is hard to get excited about the economy when gasoline in CA is over $7 per gallon for regular in many areas with the "cheap stations" in the Silicon Valley over $6.00 per gallon.

CPI up 8.2% in September📈🔥

• CORE CPI UP 6.6%
• Monthly CPI and Core CPI up 0.4% and 0.6%, respectively in September
• Full report at https://www.bls.gov/news.release/cpi.nr0.htm

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Welcome Back Carter - 8.6% Inflation is the Highest since 1981

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.

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.  

Chart 2. 12-month percent change in CPI for All Urban Consumers (CPI-U)

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

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.

• Current Rates for New & Older I Bonds
  
  
• More about iBonds and how rates are calculated at Current Series I Bond Rates

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More Articles by Kirk Lindstrom:

• Fed Funds Rate vs US Stock Market Indexes - Historical Charts
  
  
• Market Update - Gasoline Nearing Eight Dollars Per Gallon in Menlo Park California
  
  
• New & Old Series I Bond Rates are 9.62% to 13.39%

CPI Quotes and table from https://www.bls.gov/news.release/pdf/cpi.pdf

Record Gasoline Prices Still Rising with California Over $6 per Gallon and No Relief In Sight

We are seeing record gasoline prices with Californians paying over $6 a gallon on average for regular gasoline. The San Jose Mercury News said there is "no relief in sight" either while others say prices could reach $10 this year!

Link to Full Story

Some stations in Southern California are charging over $7 per gallon!

Link to Twitter Post

Some think gasoline prices could double again!

“Some gas stations across the country are already bracing for the Next Big Thing involving surging fuel prices, namely the price per gallon potentially exceeding $10."  Senator Melissa Melendez, May 18, 2022

Link

Despite President Biden's best efforts to lower energy prices, crude oil prices remain very high.

Energy Secretary Jennifer Granholm stated during the hearing that the Biden administration was doing everything possible to increase oil production and supply in the United States. Senator Sullivan quotes the actions of the Biden administration in the last three weeks which are exactly the opposite of the energy secretary claims. WATCH:

Questions:

1. Have gasoline prices peaked? 
2. Have high gasoline prices caused to to change behavior? 
3. What would you do to get more supply? 
4. Can President Biden do anything more to lower energy prices NOW?
5. Will high energy prices change how you vote in the next election?

Discuss those questions on my "Investing for the Long Term" Facebook group.

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Inflation Hot at 8.3% but Monthly Readings Much Lower with Energy Falling

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. 

Table A. Percent changes in CPI for All Urban Consumers (CPI-U): U.S. city average

Chart 1. One-month percent change in CPI for All Urban Consumers (CPI-U), seasonally adjusted, Apr. 2021 - Apr. 2022

Green Shoots: Inflation MAY be peaking.  See Chart 2 below.  While the CORE inflation is higher than expected, the MONTHLY all items CPI-U number at 0.3% is the lowest BY FAR for the last six months with energy falling by 2.7%.  0.3% annualized is a much tamer 3.6% inflation.  Of course energy is up again this month so this will be hard to repeat without gasoline prices stabilizing or falling.

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. 

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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Quotes and table from https://www.bls.gov/news.release/pdf/cpi.pdf