Hot CPI numbers as expected - inflation accelerated again in Aug; here’s a plain-English, deep dive thread explaining the real-life impact of inflation 🧵...
First the headlines: 3.7% increase in CPI and 4.3% increase in core CPI, over twice the 2% target; monthly CPI rose 0.6%, hottest monthly reading in 14 months, an annualized rate of 7.8% - at that pace, prices double every 9.2 years:
And those monthly numbers show we haven’t been trending to 2% but 3%+ while cumulative inflation under Biden is about 17%, an annualized rate of 6.1%, meaning prices double in less than 12 years:
However, prices for many consumer staples are up even more than that cumulative 17 percent:
Despite wages being up 13%, prices have risen so much faster that real (inflation-adjusted) hourly earnings are way down; average worker now paying more in inflation tax than federal income tax on his or her hourly earnings:
But hours have also been getting cut as business slows, so that real weekly earnings are down even more; typical American family’s weekly paycheck is about $230 bigger, but buys about $100 less:
Only 5 months of Biden’s presidency have seen real annual earnings growth outpace inflation:
For the typical American family, this means real annual earnings are down more than $5,100 while financing costs are up about $1,800; the equivalent of a $7,000 annual pay cut:
But that's just an average - if you're one of the poor suckers trying to buy a home today, it'll cost an extra $13,000 per year b/c the monthly mortgage payment on a median price home has doubled under Biden:
As we head into autumn and winter, things are poised to get worse for many families b/c the cost to heat a home is up 25.2% under Biden:
The massive drains to the strategic petroleum reserve were one of the few things (albeit unsustainable) that were keeping down inflation, but now we're right back on the roller coaster:
And there’s no end in sight to inflation b/c the spending just keeps going and the Fed isn’t drawing down the balance sheet fast enough – the inflation outlook sounds like a Clubber Lang fight prediction: “Pain.”
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For Labor Day, here's a plain English overview of America's labor market, context of where we are (including an alternative unemployment rate), and where we're headed 🧵...
Job openings (proxy for labor demand) have plummeted and previous levels revised down, level now below pre-pandemic trend for 1st time since Mar '21; job opening rate also below pre-pandemic trend too; lower demand means lower price (wages), implying slower wage growth:
There are now 1.5 openings for each unemployed person, 20% higher than the steady pre-pandemic level, but we need context about the size of the labor force and the number of unemployed today...
Terrible numbers in Aug #JobsReport and it gets worse with the increasingly suspicious "revisions"...
Here's a deep-dive, plain English 🧵 with what you need to know...
First, the headlines: 187k nonfarm payrolls added as unemployment rate climbs to 3.8%
But last two months just lost 110k jobs in downward revisions - meaning 59% of the jobs "gained" in Aug were jobs we thought we already had:
While we're on the "revisions" topic - every month this year has been revised down w/ a huge cumulative effect: 355k overestimation, and over 300k from preliminary benchmark, meaning total downward revision of 661k - that's 30% of all the jobs we thought we added this year:
Today's CPI print is further confirmation 3% inflation is the new normal - very troubling data being ignored while celebrating retreat from 40-year high inflation...🧵
First some important context: annual inflation has outpaced weekly earnings growth for 26 of last 30 months as people pay hidden tax of inflation:
The rapid rise in prices outpacing hourly earnings is why these lines diverge; consider the distance between them the hourly value of the hidden tax of inflation ($4.55/hr as of last month):
#JobsReport for Jun is lackluster and contains #recession indicators...
209k payrolls added - lowest in 2 and a half yrs
Unemployment rate: 3.6%, up 0.2% YTD
452k additional part-time jobs from economic reasons:
“partially reflecting an increase in the number of persons whose hours were cut due to slack work or business conditions..."
More people are trying to get full-time jobs at same time businesses are cutting them...
Multiple jobholders jumped again, up 233k - that accounts for the entire 209k increase in nonfarm payrolls, and twice the increase after removing last two month's revisions:
What is #Bidenomics? In a word, failure. Talking points aside, here's a thread of nothing but the facts on how the American people have been impacted...
Inflation went from 1.4% under Biden to 40-year highs, and remains "sticky" i.e., not going away; it has risen faster than wages for the last 26 months - a record; so your paycheck is bigger but buys less...
As hours are cut, the drop in purchasing power of weekly paychecks has dropped even more, down 5.1% under Biden:
From NY and Philly Fed Banks: manufacturing continues leading the way towards recession 🧵...
NY Fed manufacturing survey has gyrated violently recently but has averaged below zero (contraction territory) for a year; price increases have slowed but not stopped; labor market contracting; planned investment remains low:
Philly Fed manufacturing survey has shown contraction 10 months in a row w/ new orders (canary in coalmine) negative for over a year straight; employment flatlined this month but shortening of workweeks accelerated: