Inflation continues to eat up your paycheck.
For the 21st month in a row, average hourly earnings failed to keep up with rising prices.
The US government ran an $85 billion budget deficit in December, according to the Monthly Treasury Department Statement. That was much lower than November’s massive $248.5 billion shortfall, but don’t be deceived by the drop. December is typically a low deficit month. The relatively big shortfall indicates the federal government is on a trajectory to blow past the $1.38 trillion fiscal 2022 deficit.
Based on the headline numbers, price inflation cooled again in December, boosting market optimism that the Federal Reserve will continue to ease off the pedal on its monetary tightening. But this could be setting the stage for more price inflation down the road.
And a deeper look at the data reveals that a lot of inflationary pressure remains despite the optimistic headlines.
We’re just a few days into the new year. How are resolutions going?
Mine are going fantastic!
I didn’t make any.
The Federal Reserve’s favorite inflation indicator came in slightly higher than expected for November. This is another indication that while price inflation appears to be easing some, the data indicates it is far from whipped.
Just before Christmas, Congress passed a massive omnibus spending bill. This is yet another blow to the Federal Reserve’s feckless fight against inflation.
The Federal Reserve would like you to think that it is scientifically guiding the economy with carefully calculated monetary policy.
The truth is the Fed is making things up as it goes along.
The US housing bubble continues to lose air at a rapid rate. Existing home sales fell for the 10th straight month in November. This stretch of declining home sales is longer than the housing bust preceding the 2008 financial crisis.
While most central banks around the world have tightened monetary policy in an attempt to bring price inflation under control, Japan has done the exact opposite. But in a surprise move, the Bank of Japan widened its target range for 10-year Japanese bond yields, effectively raising the interest rate.
The move strengthened the yen, put more pressure on a weakening dollar, and rattled the global bond market.
