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Whip It! Univ of Michigan Inflation Remains Unchanged at 2.6% (But Declines To 2.5% For 5-10 Yr Ahead)

This is a syndicated repost courtesy of Snake Hole Lounge. To view original, click here. Reposted with permission.

The University of Michigan survey of consumers just released their montly update on inflation expectations. If only The Fed’s Janet Yellen was watching consumer inflation expectations because consumers expect more inflation than The Fed’s inflation target of 2%. Apparently, The Fed is having trouble whipping inflation above 2%.


Now The Balance Begins To Shift

The balance between QE and Treasury supply will begin to shift in July. The underlying bid it has provided for stocks and Treasuries will begin to fade.

This report tells why, and what to look for in the data and the markets.  GO TO THE POST


Consumer inflation expectations remained at 2.6% for August, but the expectations for inflation down the road fell to 2.5%.

michinfl

Of course, 2.6% inflation is higher than The Fed’s target inflation rate of 2%. All inflation measures of core prices (excluding home prices, education, healthcare, etc) are under 2%.

inflationugh

As I mentioned, home prices are left out of the core inflation calculation. But if home prices WERE included, for example, we could have substantially greater inflation since YoY home price growth ranges from 5.7% to 6.9%. Wage growth is only about 2.36 – 2.5%. This indicates that home prices are growing around 2.5x wage growth.

wageshouding.png

It is clear that consumers are pricing in non-core inflation into their forecasts, such as home prices, rent, food, healthcare, tuition, textbooks, childcare, etc.

costs since 1996

Whip it (inflation) good, Janet!

yellenwhipit

Wall Street Examiner Disclosure: Lee Adler, The Wall Street Examiner reposts third party content with the permission of the publisher. The opinions expressed in these reposts are not those of the Wall Street Examiner or Lee Adler, unless authored by me, under my byline. I curate posts here on the basis of whether they represent an interesting and logical point of view, that may or may not agree with my own views. Some of the content includes the original publisher's promotional messages. No endorsement of such content is either expressed or implied by posting the content. All items published here are matters of information and opinion, and are neither intended as, nor should you construe it as, individual investment advice. Do your own due diligence when considering the offerings of information providers, or considering any investment.

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