Thursday morning brought more bad economic news when the Producer Price Index — measuring inflation in costs for producers upstream from consumers — blew past estimates to rise 1.1 percent in June from the previous month and 11.3 percent in the last 12 months. The number was only expected to rise 0.8 percent month-over-month and 10.7 percent year-over-year.
??11% WHOLESALE INFLATION??Producer prices surging 11.3% in June from a year ago.??
— Dagen McDowell (@dagenmcdowell) July 14, 2022
The spiking inflation for producers comes as the White House tries to undermine its own Bureau of Labor Statistics' data as "out of date," a patronizing attempt to avoid criticism for a tanking economy that implies Americans are too simple to understand the pain of inflation they're feeling and won't remember the White House's feeble explanation when the next month's data shows even more inflation — as almost all inflation reports since Biden took office have shown.
The red-hot inflation for producers follows Wednesday's estimate-beating Consumer Price Index print for June that was worse than the what White House said would be "highly elevated" and showed 40-year-high inflation setting a new record at 9.1 percent while still accelerating. It also showed that, over the last 12 months, Americans had taken a four percent cut to their real wages under President Biden's economic policy.
Mirroring the acceleration in consumer prices, the 1.1 percent jump from May to June is greater than the 0.8 percent increase from April to May.
Not for nothing, the fact that PPI is showing hotter inflation than the CPI suggests that producers — companies, manufacturers, et al. — are bearing more of the pain caused by rising prices than American consumers, refuting President Biden and the White House's claims that "greedy" corporations are being unpatriotic and taking advantage of Americans.
Since the PPI measures inflation upstream from consumers, its acceleration in June means relief from inflation for consumers is still months off, somewhat debunking House Speaker Nancy Pelosi's (D-CA) claim this week that inflation was "peaking" and prices were "going to be going down from here." Pelosi's comments are set to age about as well as President Joe Biden's claim in December that inflation had peaked at just 7% at the end of 2021.
The Federal Reserve previously announced a 75 basis point interest rate hike aimed at slowing the American economy that already recorded negative GDP growth in the first quarter. The economy is already projected to have further shrunk in the second quarter, meaning a "soft landing" for Americans who are already struggling under President Biden's "Build Back Better" agenda is increasingly unlikely. The Fed is expected to announce another significant rate hike later in July, likely another 75 basis points but potentially even as high as 100 basis points. That seemingly unavoidable reality as a reaction to Biden's runaway spending and printing monetary policy that triggered inflation's surge is going to cause only more pain and, according to some, will plunge the U.S. into a recession lasting from November's midterms until 2024's presidential election cycle.
The higher inflation is, the more the Federal Reserve must raise interest rates. That will kill housing and the economy. NO WAY AROUND IT. A recession that would last into 2024.
— Dagen McDowell (@dagenmcdowell) July 14, 2022