Is inflation back?

Just reread the definition of current expenditure more carefully and I think it includes the 2 subcategories mentioned above, but they are both worth highlighting anyway.

This graph makes it seem like it ain’t over yet

The wonders of the free market in action. Well, not so free when the government’s heavy hand is spreading largesse until everyone chokes on it.

Don’t worry, Dr. Jerome will cure it by making sure no one except the government can borrow money

Except for that jolt, seems that expenditures were moving along a path.
I wish they (gov’t) would stop spending so much on questionable investments (student loan forgiveness, simply giving money away for COVID-related stuff, etc.) and spend more on infrastructure that should help everyone (but really help some large construction firms). Bridges, mainly. And pipes of all types under cities.

In hindsight I’m sure more people would agree

Government expenditures should expand over time, as should money supply, due to inflation, investment returns*, and productivity gains. But it should be slow and steady. Keynesian thought says you should occasionally stimulate large amounts if demand decreases, but it looks like that was a misfire this time around - demand didn’t decrease nearly as much as it was stimulated.

*Investment returns: if people invest in machinery to produce 10% more than before over time, the government needs to increase money supply by 10% otherwise deflation will happen. As people constantly invest in new machinery, this is a large driver of the need for more money supply. Again, needs to be slow and steady or massive inflation happens.

On the other hand, if you view the recent government spending not as a demand stimulator, but as a way to make sure everyone was incentivized to stay home because they were getting money anyway, maybe it was a success. Too bad the side effect was massive inflation, right

Now this is what an inverted yield curve looks like…

No way they can lower rates. There is still a material amount of inflation in the pipeline.

Out of curiosity, what’s the 3 year forward of the 5 and 10 year rate?

It doesn’t look like that big of an inversion honestly

Classic remove origin from display fallacy.

You can play around with the source if you’d like.

Its just a website to visually see the US YC.

So it looks like US deficit spending is contributing about 0.5% to core inflation.

US deficit poses ‘significant risks’ to global economy, warns IMF - US deficit poses ‘significant risks’ to global economy, warns IMF via @FT

Yeah, I was just giving you a little guff. It is inverted, but not showing relative to 0 makes it seem steeper.

Oh, and dams:

I don’t buy that, unless it was just this past year, and doesn’t include the full 2020 -2023. It was definitely more than 0.5 annually over that time period.

It was just over 2023.

0.5% out of core of 3.9% (core inflation US 2023)

Thats 13% of the driver (so not huge but not tiny either)

Feel good article about inflation gifted below.

Looking at just the cost side of the inflation picture does help explain why Biden gets no credit for a strong economy.

A bit more on the housing lock in effect by the FT (gift article below)

from here:

The US housing ‘lock-in effect’ –quantified - The US housing ‘lock-in effect’ –quantified via @FT


FT also looked at inflation (cummulative) for the wealthier demographics since 2021.

This tracks with our own experience. Hotels, flights, and restaurant prices have materially increased at the premium end of the market.

Looks like US Inflation is persistent. Powell is looking to hold rates.

Fed’s Jay Powell hints interest rates will stay high as US inflation lingers - Fed’s Jay Powell hints interest rates will stay high as US inflation lingers via @FT

Not to my eye. Dig into the metric. Notice the weird impact of housing costs and the concept of rent equivalent. Conflating asset inflation with consumption is a fools errand.