What I do not understand is the Fed was created to be a lender of last resort. In a bank run, banks could take loans with good collateral and sell them at the FED repo window in order to reliquary themselves. Seems like that should have been the first resort.
Both are problematic and difficult to deal with, but doubly problematic when they occur in tandem . What controls inflation is sure to worsen deflation, and vice versa.
We are definitely seeing slower growth, but those pesky unemployment numbers are not cooperating…
…and neither are the PCE numbers…
The tariff terror hadn’t had a chance to impact in only a few weeks. But go ahead, claim you victory while you can. There won’t be many more chances. Like none.
Its not a victory, nor a defeat…its just the current state of the economy. You may very well get a chance in the future to celebrate the recession that you are desperately hoping for…
I am seeing the first item happening, but not the other two…
Anyone seeing inflation or unemployment going up ?
Inflation… I see it headed up because of a shortage of high-demand-low-availability goods. That always equals higher prices.
Unemployment… Empty shelves equals fewer jobs, canceled imports equals fired employees, no parts equals no assembly line, DOGE cuts equal people on the streets. I don’t see anything changing that in time to prevent really bad employment numbers. Do you?
I don’t need to see the numbers, that ship has sailed.
I look at the actual numbers…not the MSM and not political hacks. When the facts change then I will change my opinion.
I remember someone promoting a healthcare policy saying that I would save $2,500 on my health insurance. A lot of people fell for that one…but the facts tell a much different story.
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My wife had a pre-existing condition. Saved us many thousands more than the $2,500. I’m sure we weren’t the only ones saved by ACA.
A reminder:
(Inflation + Unemployment) + Supply Shocks = Stagflation
Federal Reserve Warns Against Stagflation: “The Federal Reserve opted to leave interest rates unchanged on Wednesday, citing heightened risks of rising inflation and slowing growth, which have prompted renewed warnings about stagflation.”
Inflation is not there yet…maybe next month…
It also appears some tariff revenue is being collected…
They were reporting April inflation… the April inflation was still on the high seas… or maybe more accurately said, “the usual disinflation being imported from China was being interdicted on the high seas during April”.
Nothing has happened yet. It’s about to. Now, with tariffs off for 90 days, importers are probably going to do more inventory building. With this Administration, throw a dart at the dartboard as far as knowing what policity will emerge. No businessperson can do any kind of planning. All you can do is hedge and protect.
And whose wallet did that new-found tariff revenue come from?
That’s just it…if we are collecting revenue from tariffs…I would expect to see a higher CPI…
Maybe next month we will see it…
Distributors and manufacturers are most likely to be the ones paying the added tariffs right now. The ones supplying critical import items with short supply queues probably brought in some items they were sure would sell despite the price increase and folks using imported components for assembly here in the US would probably not stop production if those components did not make up a substantial cost to the finished products.
Regardless of the delay, the end user will most likely bear the brunt of the tariffs and most of the cost of the tariffs will end up being paid by those who can least afford it.