In another sign that the inflation train is far from running out of steam, producer prices were up big again in February.
The Producer Price Index (PPI) for final demand surged 0.8% month on month. This was close to the expectation. The annual increase in producer prices came in at 10%, tying the all-time record.
The Fed is supposedly about to step into the ring to fight inflation. But all indications are it’s going to be a feckless fight.
Last week, we got another big jump in consumer prices with the February CPI data. Peter Schiff appeared on Fox News with Tucker Carlson to talk about the rampant inflation. He said it’s only going to get worse. Inflation only has one way to go.
Up.
The credibility of the dollar is taking some self-inflicted blows. And the world is watching.
Could this hasten the end of the greenback as the world’s reserve currency?
Gold pushed above $2,000 an ounce on Tuesday and made a run at the all-time record high. The yellow metal was up $54 on the day, closing at $2,052 despite some selling after it nudged the all-time high. Some of this is clearly safe-haven buying due to the situation in Russia, and a lot of analysts think gold will fall back to earth once that situation resolves. But Peter Schiff doesn’t think so. In his podcast, he explains why gold would be going up even if Russia never invaded Ukraine.
The trade deficit shattered records in 2021. Things didn’t slow down any as we rolled into 2022. The January trade deficit hit another all-time record high.
But nobody really seems to care.
We should.
You’re getting less for more every time you pull out your wallet. Inflation is chewing up the average person’s paycheck. In this episode of the Friday Gold Wrap podcast, host Mike Maharrey talks about the real pain of inflation. He also talks about Jerome Powell’s testimony before Congress, the trajectory of monetary policy, the strength of the economy, and he breaks the February jobs report live.
Inflation continues to chew up your paycheck.
While consumer prices rose 0.7% in January, income from all sources, including wages, salaries, interest dividends, rental income, unemployment, Social Security, etc. was essentially flat.
And when adjusted for inflation, real personal income fell by 0.5%.
On Tuesday, the Atlanta Fed cut its GDP estimate for the first quarter of 2022 to zero.
Just a few days ago, the estimate was for 0.6% growth. That was down from 1.3% just a few days before that.
This is not an encouraging trend.
The Russian invasion of Ukraine has completely changed the market dynamics. In his podcast, Peter talked about the impact the situation is having on the markets and the global economy. He also looked ahead, saying Russia can now serve as a convenient excuse for the Fed to back off its planned monetary tightening. Of course, that will have consequences of its own.
