Ben Chu Profile picture
May 12, 2021 7 tweets 3 min read Read on X
BREAKING: US consumer price inflation for April comes in at 4.2% y/y - above average estimate of economists polled by Reuters of 3.6%

Core inflation 3% y/y vs estimate of 2.3%
👇
....Highest rate of inflation in US seen since Sep 2008...
...in response, 10 year US Treasury yields up a couple of basis points to 1.645%...

dollar index spikes...

Suggest markets pricing in possibility of Fed rate hike sooner than expected...
...Manifestly big base effects at work - look at those massive y/y energy price rises (reflecting price slumps at the height of the pandemic/lockdowns)...bls.gov/news.release/c…
...though also true that core inflation (excluding energy prices) also up sharply, highest reading since 1996...
...So the $20 trillion question: should the Federal Reserve/the world be getting worried about US inflation?

Answer: Probably not yet.

Short-term spikes in prices are consistent with supply bottlenecks created by booming economy coming out of severe slump....
...time to worry is when high inflation expectations become baked in among public & Fed shows unwillingness/inability to act in response - no sign of that yet.

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More from @BenChu_

Oct 17
The Times report, apparently reflecting HMT thinkining, suggests raising Capital Gains Tax on second homes would lose the Treasury money...

thetimes.com/uk/politics/ar…
The report cites the scoring of the March 2024 Budget's cut in the rate... Image
But it's worth noting that the Treasury scorecard from the March Budget makes it clear that the revenue gain is a purely short term boost due to people bringing forward sales - by the end of the forecast period there's essentially no impact on revenues in either direction... assets.publishing.service.gov.uk/media/65e8578e…Image
Read 6 tweets
Sep 24
🏘️👷🧱Residential planning permissions in England hit a new record low in the second quarter of 2024 - with just 7,609 projects granted approval by local councils.

What does that mean for the Government’s house building targets?

Thread...🧵1/14 Image
Labour’s manifesto promised 1.5m net additional dwellings in England over this Parliament, equivalent to 300k a year.

A considerable step up from what’s currently being delivered.

The most recent full financial year data for 2022-23 shows 234k created - a deficit of 66k...2/14 Image
So the fact Labour inherits a record low number of planning approvals is clearly not a strong base to deliver that, to put it mildly.

Starmer has pledged to take on so-called “NIMBY” activists opposing new housing developments...3/14 bbc.co.uk/news/av/uk-pol…
Read 15 tweets
Sep 23
The Chancellor Rachel Reeves on @BBCr4today this morning was pressed about what her Labour Conference pledge of "no return to austerity" means and would only say "there will not be real terms cuts to government spending"...1/5
But this is the same fiscal position as was outlined in Jeremy Hunt's March 2024 Budget - which pencillled in 1% per year real terms increases in overall spending from 2025-26...2/5
And the implications of that *overall* public spending envelope for *unprotected* departments - including justice and local government was this - a further 10% fall in real terms per capita budgets according to @resfoundation...3/5 resolutionfoundation.org/app/uploads/20…
Image
Read 5 tweets
Sep 12
This is probably the most important projection in the latest UK fiscal risks report from the Office for Budget Responsibility.

It shows health spending rising by around 1% of GDP every decade...🧵1/8 obr.uk/frs/fiscal-ris…
Image
Which would mean health likely taking an ever larger share of total government spending - this is what Health Secretary @wesstreeting means when he talks about the danger of the UK becoming "an NHS with a country attached"...2/8 Image
The @OBR_UK breaks down what's driving the projected 3% year inflation adjusted annual increase on state health spending over the coming decades.

And it's not all about the commonly cited culprits of an ageing population (orange bars) or chronic worse health (green bars)...3/8 Image
Read 9 tweets
Sep 10
Just how many pensioners will the Government’s plan to means test the Winter Fuel Payment (WFP) affect?

And how many poor pensioners will it impact?

There’s been a lot of confusing numbers flying around so let’s break it down...1/9

🧵
Let’s start with the total number of pensioners.

There are roughly 12 million people above the state pension age in the UK...2/9 Image
At the time of the March budget, 10.8 million of these were projected to receive WFPs in 2024-25 at a total cost to the taxpayer of £1.4bn.

These two figures are pretty similar because this is a universal benefit, paid alongside the state pension...3/9 Image
Read 11 tweets
Jul 16
Five key crises for the Government.

And why what's NOT in the #KingsSpeech tomorrow could be as signficant as what is...

🧵
Before the election was called Labour warned, via the @FinancialTimes, of a series of crises that they would likely inherit.

The items on what was referred to as a "sh*t list" have not got any less urgent....
ft.com/content/b95976…
First, decisions on public sector pay for 2024-25 have to be taken by the end of this month.

The @TheIFS estimates that to stop the gap between public sector and private sector pay getting worse the Government would have to find another £7bn/year... ft.com/content/bee669…
Image
Read 14 tweets

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