The final pre-midterms Consumer Price Index dropped this morning, and it was bad -- worse than expected, in fact, as were wholesale prices earlier in the week. Both figures increased by double the consensus estimates. Inflation is getting hotter, with core inflation surging even more than the headline CPI number. Whatever the Fed has been doing to combat inflation is looking insufficient, raising the likelihood of more painful actions to stifle the US economy. The possibility of a semi-miraculous "soft landing" now appears more even remote. We have already met the definition of a technical recession, no matter how often the president and his administration try to pretend that's not the case. But what might be coming down the pike looks worse. Some lowlights from the new report, in case you missed it:
Just In: Inflation rose 8.2% in the past year. That down from the 40-year high of 9.1% in June, but it’s still way too high.— Heather Long (@byHeatherLong) October 13, 2022
In September alone, inflation rose 0.4%, which is up from 0.1% in August.
Food and rent prices continue to climb, even as gas has come down somewhat.
Real average hourly earnings are falling again, down 0.1 percent month over month in September. They'd been rising in July & August on the back of falling gas prices, but today's hot CPI print pushed real earnings down again.— Daniel Zhao (@DanielBZhao) October 13, 2022
Source: https://t.co/uIZgg4DGJY pic.twitter.com/ZU4Y59sEvw
Inflation WORSE than expected.— Jacki Kotkiewicz (@jackikotkiewicz) October 13, 2022
Overall CPI: +8.2% y/y
Core CPI: +6.6%
Fuel Oil: +58.1%
Meat, Poultry, & Fish: +7.7%
Baby Food: +11.8%
Airline Fares: +42.9%
Real Average Hourly Earnings: -3%
Bottom line on inflation: September was another tough month that came in worse than expected.— Heather Long (@byHeatherLong) October 13, 2022
Services inflation is picking up, even as some goods prices begin to cool.
**Services inflation is up 7.4% in the past year, the most since 1982** pic.twitter.com/MK9Z7fmlyt
A seemingly continuous grab bag of four-decade worsts. Obviously, this is unwelcome news for the ruling party in Washington, whose actions have made the problem worse. Top Democratic economists have called their party's multi-trillion-dollar "rescue plan" a massive, inflationary mistake of historic proportions. Other experts continue to agree:
“Excessive fiscal stimulus provided during the pandemic, particularly the last $1.9T package at the end of March 2021 just as the economy was already emerging from the lockdowns . . . was what turbocharged consumption and drove inflation to 40-year highs.” — Morgan Stanley https://t.co/j2eeEHJMVF pic.twitter.com/8rTOgbOjRl— Charles C. W. Cooke (@charlescwcooke) October 13, 2022
As John McCormack reminds us, Chuck Schumer opted against witnesses in Trump's second impeachment trial in order to clear the calendar to pass this inflation bomb. Because Democracy, of course. Meanwhile, President Biden has been boasting about the "Inflation Reduction Act" that Americans rightly do not see as legislation that will achieve what it name suggests. Biden was bragging just this week about all the trillion-billion-millions Democrats have just spent on combating climate change. They can call that "inflation reduction" until they're blue in the face. The law actually spends a boatload of new money, so the juxtaposition of the president cheering the new spending, side-by-side with awful new inflation, is...suboptimal, politically:
Will the White House bring in a celebrity musician for an inflation reduction celebration on the South Lawn today, or are they evolving in their approach? With the prospect of more punishing Fed actions on the horizon, and growing chatter about a deeper, painful recession, President Biden insisted that he doesn't anticipate any recession (we are already in one), and if one does materialize (we are already in one), it will be "slight:"
BIDEN: "There’s no guarantee that there's gonna be a recession—I don’t think there will be a recession. If it is, it will be a slight recession. That is, we’ll move down slightly." pic.twitter.com/T22TUI9Xcv— Townhall.com (@townhallcom) October 12, 2022
The trouble with this spin, even if it turns out to be correct -- which I seriously doubt, unfortunately -- is that he has zero credibility on any of this. He said inflation wouldn't happen at all, then it would be "transitory," then it had peaked, and was someone else's fault. He won't even acknowledge the existing recession, which might meet the "slight" definition he's projecting into the future -- that very well could be a lot worse than "slight." A large majority of Americans say they feel the recession that's already here. Biden buries his head in the sand and makes new assurances that have absolutely zero value. Republicans' task is to remind voters that this isn't just about Biden. Every single Democrat in the House, except for one, voted to pass a 'Build Back Better' monstrosity that would have made the existing inflation drivers look like child's play. All vulnerable 2022 Senate Democrats supported it too, and voted for the other insane spending measures. The November elections are 26 days away. I'll leave you with this:
Treasury Secretary Janet Yellen, two days ago: On the economy, "I think the United States is doing very well!" pic.twitter.com/Apwi3Mx6hI— RNC Research (@RNCResearch) October 13, 2022
UPDATE -- One more thought:
…and Tim Ryan, who voted for trillions *more* in the House, with BBB. All the others would have too, if they’d been given the chance in the Senate. Today’s inflation report is brought to you by Congressional Dems — who also unanimously voted for the “Inflation Reduction Act.”— Guy Benson (@guypbenson) October 13, 2022