Yesterday’s CPI report was good news, in the sense that it was lower than expected, which is obviously better than worse than expected. But I agree with this meme’s vibe, and don’t see any reason to celebrate based on the actual data.
▪️First, the CPI was up 0.4% in Oct, which was the same amount as Sept. Yet Sept was seen as “worse than expected” and terrible news. Meanwhile, the Aug CPI was flat and July was +0.1%, so if anything inflation is trending up in recent months, and 0.4% is a 5% annual rate, still high.
▪️Energy resumed its rise after 3 months of significant declines, up 1.8% in Oct. Energy’s decline was the primary reason for the recent slowing of inflation, but now seems unlikely to continue. If seems more likely that energy spikes again than that it falls.
▪️Shelter continues to climb, up 0.8% in Oct and 6.8% YoY, now a 40 year high. Remember, shelter makes up nearly 1/3 of the CPI, by far the biggest component, and it’s sticky. In the beginning of the inflation wave shelter actually kept numbers down, now it’s keeping them up.
▪️Even if housing prices come down, shelter could stay high due to higher interest rates and maintenance/material costs. Shelter is a function of the monthly payment, not just the value of the property.
▪️The major indexes that fell in price during Oct were used cars (-2.4%), energy services (-1.2%), apparel (-0.7%), medical care services (-0.6%) and airline fares (-1.1%). It seems doubtful these keep falling, but if shelter and energy keep climbing they must fall to keep inflation low.
▪️Despite record inflation, this past year saw the dollar strengthen considerably in relation to other currencies, as investors believed the Fed would aggressively raise rates to fight it. Thus, as bad as inflation has been, it was fighting a headwind of a strong dollar, keeping import prices down.
▪️If markets start thinking those high rates won’t materialize (which they’re currently indicating as the dollar index plunges) a weakening dollar would add a tailwind to inflation. Particularly since we import so many goods, a weaker dollar means we pay more for imported goods.
▪️Back in the 1970s, inflation went through a series of ups and downs, but was persistent. By 1974, it reached over 12%, but fell to just under 5% by 1976. This was short lived, though, and resumed its climb to 13% by 1979. Anyone cheering in 1974 was soon proven wrong.
▪️It’s naive to assume inflation will magically come down when the underlying fuel is still there. The Federal funds rate is still far below the inflation rate, and government spending is still running massive deficits in perpetuity. Declaring victory too soon ignores history and economics.
▪️The left keeps using this meme but they don’t actually believe it. If you believe SNAP subsidizes companies to pay below a “living wage” this implies that if you take food stamps away they would suddenly pay a higher, “living” wage. So why not get rid of food stamps, then?!
▪️Except they know, and everyone knows, this isn’t true. Wages are set by supply and demand, not some mythical “living wage” metric. Absent food stamps there would actually be downward, not upward, pressure on wages, because the reality is food stamps subsidize the poor to not work as much as they might otherwise need to.
▪️Without SNAP, some low income people would need to work more hours to make ends meet, increasing the availability of low-skilled labor and lowering wages (all else being equal).
▪️Plus, we all know the left loves and supports food stamps. Which means, by this meme’s logic, they love to subsidize corporate profits. But they don’t really, they just think this ...
▪️Wait, this is the guy libertarians and the new right rave about being a great historian?! This sounds like a clueless meme from The Other 98%, except they wouldn’t add in the bizarre defense of feudal lords. Feudalism didn’t deprive peasants of their livelihoods for abstract goals? This is total fantasy.
▪️Amazon employs 1.55M, so this is less than 2% of their workforce, although these cuts will be to corporate, which employs 350k, so 8.5% of that. The CEO says there is an excess of bureaucracy at Amazon, and AI can automate certain repetitive tasks. Also, much of the cuts will be to HR, which is expected shrink by 15%, yay. Managers and HR are peasants now?
▪️I don’t know the inner workings of Amazon, and neither does Darryl, but this seems to be normal management practice to keep a company efficient and competitive. Given the immense size of Amazon the numbers look large, but far bigger shakeups happen all the time in the private sector. Apparently, under the new ...
▪️This statistic is just made up. The reality is that there hasn’t been a real study on this since 2013, when Pew did a poll. They found that Democrats were actually more than twice as likely as Republicans to report ever using food stamps (22% vs 10%).
https://www.pewresearch.org/short-reads/2013/07/12/the-politics-and-demographics-of-food-stamp-recipients/
▪️Obviously, those percentages could have changed over the past decade, but it’s very likely that Dems still receive more SNAP benefits. Certainly, without an actual study or poll the claim should be thrown out, as it wildly contradicts a previous study.
▪️The meme probably comes from a 2024 analysis by Social Explorer, which found that 78.7% of US counties with the largest increase in SNAP since 2010 voted for Trump in 2020. But that tells us nothing about the actual number of Republicans (or Democrats) who are receiving benefits, just county-wide trends.
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