Diversity At the Fed and ECB? There is None, It’s a Big Self-Serving Lie

Link: https://mishtalk.com/economics/diversity-at-the-fed-and-ecb-there-is-none-its-a-big-self-serving-lie

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At the ECB, you better be gung-ho pro-EU. You better believe negative interest rates are a good idea. And you must back the idea that targeting 2% inflation makes sense.

Finally, if somehow you find yourself at the ECB disagreeing with any of those things, you are expected to shut your mouth so the consensus view never shows any dissent.

….

At FRBNY, I recall the people who ran Treasury markets, money markets, etc. literally had no relevant experience or expertise. The job of staff was to make them appear competent, but it didn’t really matter what they did because Fed can’t fail and they can’t get fired.  

This creates a culture where anyone with talent or ambition GTFO ASAP. There are exceptions, but those who rise tend to be those who have no where else go. It’s a weird structure where the higher you go, the more incompetent you are.

So it’s no surprise Fed is failing

Author(s): Mike Shedlock

Publication Date: 13 May 2022

Publication Site: Mish Talk

The Fed’s Preferred Measure of Inflation Jumps to 6.6%, a 40-Year High

Link: https://mishtalk.com/economics/the-feds-preferred-measure-of-inflation-jumps-to-6-6-a-40-year-high

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The PCE price index for March increased 6.6 percent from one year ago, reflecting increases in both goods and services. 

Energy prices increased 33.9 percent

Food prices increased 9.2 percent. 

Excluding food and energy, the PCE price index for March increased 5.2 percent from one year ago.

Author(s): Mike Shedlock

Publication Date: 30 April 2022

Publication Site: Mish Talk

How Much Free Money Stimulus Still Hasn’t Been Spent?

Link: https://mishtalk.com/economics/how-much-free-money-stimulus-still-hasnt-been-spent

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The question is not as straight forward as it looks. The gap between spending and income isn’t constant. 

Free money that goes to bottom rung households tends to immediately get spent. The higher the rung, the more the savings. This is complicated by the fact that most of the money was supposed to go to lower tiers, and further complicated by corporate fraud, especially in round one. 

More importantly, personal spending does not count mortgage paydowns, stock market or Bitcoin purchases, capital expenses for businesses, drug money, other illegal uses, or money sent to relatives overseas. 

….

The Peterson Foundation reports direct checks were $292 billion in round one, $164 billion in round two, and $411 billion in round three.

There was $850 billion of direct payments to taxpayers with the biggest and most unwarranted round the last.

Spending data suggests free money, at least most of direct payments, already did enter the economy. 

However, that does not factor in unpaid rent via eviction moratoriums or SNAP (Supplemental Nutrition Assistance Program), formerly Food Stamps, which I will address in a separate post. 

So yes, there still could be a pile of unspent stimulus savings, possibly much higher than my $2 trillion summation estimate, again with my caveats on investments, sending money overseas, etc.  

Author(s): Mike Shedlock

Publication Date: 22 Apr 2022

Publication Site: Mish Talk

CPI Jumps Most Since February 1982, Up at Least 0.5% 9 Out of Eleven Months

Link:https://mishtalk.com/economics/cpi-jumps-most-since-february-1982-up-at-least-0-5-9-out-of-eleven-months

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The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.6 percent in January on a seasonally adjusted basis.

The index for all items less food and energy also rose 0.6 percent in January, the same increase as in December. 

This was the 9th time in the last 11 months the CPI increased at least 0.5 percent.

Increases in the indexes for food, electricity, and shelter were the largest contributors to the seasonally adjusted all items increase in January.

Author(s): Mike Shedlock

Publication Date: 10 Feb 2022

Publication Site: Mish Talk

Despite Rising Bond Yields the Yield Curve is Still Flattening

Link:https://mishtalk.com/economics/despite-rising-bond-yields-the-yield-curve-is-still-flattening

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Economists like to watch the 2-10 spread because that is one of the most reliable recession indicators.

Seemingly, inversions are far away, but that is mostly an illusion.

The 2-10 spread has been sinking like a rock. That spread was 1.58 percentage points on March 19, 2021 as shown in the lead chart. It’s now down to 0.61 percentage points.

If the Fed gets in as little as two hikes, the 2-10 spread will invert as it typically does before a recession. 

Of course, the 10-year yields may keep rising, but the problem is 2-year yields have risen faster. 

Author(s): Mike Shedlock

Publication Date: 8 Feb 2022

Publication Site: Mish Talk

Producer Prices Rise 9.7% for 2021, the Most in Series History

Link:https://mishtalk.com/economics/producer-prices-rise-9-7-for-2021-the-most-in-series-history

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The Producer Price Index for final demand increased 0.2 percent in December. This rise followed advances of 1.0 percent in November and 0.6 percent in October.

On an unadjusted basis, final demand prices moved up 9.7 percent in 2021, the largest calendar-year increase since data were first calculated in 2010.

In December, the advance in the final demand index can be traced to a 0.5-percent increase in prices for final demand services.

Conversely, the index for final demand goods decreased 0.4 percent.

Prices for final demand less foods, energy, and trade services rose 0.4 percent in December following a 0.8-percent increase in November.

In 2021, the index for final demand less foods, energy, and trade services moved up 6.9 percent, following a 1.3-percent advance in 2020.

Author(s): Mike Shedlock

Publication Date: 13 Jan 2022

Publication Site: Mish Talk

In Absolute and Percentage Terms, Consumer Credit Jumps the Most Ever

Link:https://mishtalk.com/economics/in-absolute-and-percentage-terms-consumer-credit-jumps-the-most-ever

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The monthly credit increase of $39.99 billion was the biggest jump ever. 

Revolving credit surged by $19.84 billion, the most ever.

The month-over-month percentages rose by the most ever.

New outstanding total in nonrevolving credit.

Author(s): Mike Shedlock

Publication Date: 8 Jan 2022

Publication Site: Mish Talk

The Fed Delivers a Baby, Gold Jumps

Link: https://mishtalk.com/economics/the-fed-delivers-a-baby-gold-jumps

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The Fed Delivers a Baby

Actually, it was obvious 7 months ago that it was time to move away from “emergency” conditions.

The Fed decided to deliver a baby instead. 

In two more months, the Fed will finally finish tapering. Then we see what kind of baby steps the Fed makes. 

Author(s): Mike Shedlock

Publication Date: 11 Jan 2022

Publication Site: Mish Talk

Bond Yields Surge to Start 2022, What’s Ahead?

Link: https://mishtalk.com/economics/bond-yields-surge-to-start-2022-whats-ahead

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I find the prospect of 7 rate hikes in 2022 more than a bit amusing.  Here’s a good way of looking at things.

0 to 2 hikes: 33.8%

3 hikes: 30.2% 

4 or more hikes: 36.0%

The median projection is now a bit more than 3 hikes this year. 4 and 2 rate hikes are at nearly equal odds, but 5, 6, an 7 hikes rated a combined 13% vs 0 to 1 hike at a combined 10.8%

The change in rate hike odds today reflect the surge in yields that also happened today.

Author(s): Mike Shedlock

Publication Date: 3 Jan 2022

Publication Site: Mish Talk

In the Next 10 Years, Nearly All the Population Increase Will Be Age Group 65+

Link: https://mishtalk.com/economics/in-the-next-10-years-nearly-all-the-population-increase-will-be-age-group-65

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The above stats from Census Bureau Projects U.S. and World Populations on New Year’s Day.

Looking ahead to the next decade the percentage of those 60 and over will rise from 23.29% to 25.93%. 

Meanwhile, the prime working age population age 20-59 declines from 52.06% to 50.75%.

And this is happening with public union pension plans severely stressed despite huge stock market gains. 

Author(s): Mike Shedlock

Publication Date: 3 Jan 2022

Publication Site: Mish Talk

New Census Data Shows Population Increased at Lowest Rate in US History

Link:https://mishtalk.com/economics/new-census-data-shows-population-increased-at-lowest-rate-in-us-history

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The population of the United States grew in the past year by 392,665, or 0.1%, the lowest rate since the nation’s founding. 

The slow rate of growth can be attributed to decreased net international migration, decreased fertility, and increased mortality due in part to the COVID-19 pandemic.

Between July 1, 2020, and July 1, 2021, the nation’s growth was due to natural increase (148,043), which is the number of excess births over deaths, and net international migration (244,622). 

This is the first time that net international migration (the difference between the number of people moving into the country and out of the country) has exceeded natural increase for a given year.

The voting-age resident population, adults age 18 and over, grew to 258.3 million, comprising 77.8% of the population in 2021.

Author(s): Mike Shedlock

Publication Date: 21 Dec 2021

Publication Site: Mish Talk

Major Divergences: ECB Says No Hikes in 2022, Fed Sees 3 Hikes, BOE Hiked Today

Link:https://mishtalk.com/economics/major-divergences-ecb-says-no-hikes-in-2022-fed-sees-3-hikes-boe-hiked-today

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How many rate hikes are coming? The Fed thinks 6 by the end of 2023. I am unconvinced the Fed gets in any hikes in 2022 and certainly not 6 by the end of 2023.

These ridiculous predictions assume there will not be another recession in “the longer run”. 

Central banks like to pretend they will hike, but by the time comes, they have delayed so long they find an excuse to no do so. 

Possible excuses: A recession, stock market plunge, another pandemic, global warming, global cooling, or an asteroid crash. 

Central banks will find some excuse to delay hikes. But the most likely excuse is a recession or stock market crash. 

Author(s): Mike Shedlock

Publication Date: 16 Dec 2021

Publication Site: Mish Talk