{"id":47790,"date":"2019-08-14T14:00:59","date_gmt":"2019-08-14T19:00:59","guid":{"rendered":"https:\/\/olduvai.ca\/?p=47790"},"modified":"2019-08-14T14:01:02","modified_gmt":"2019-08-14T19:01:02","slug":"want-to-see-what-stagflation-looks-like","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=47790","title":{"rendered":"Want To See What Stagflation Looks Like?"},"content":{"rendered":"\n<h3 class=\"wp-block-heading\"><a href=\"https:\/\/www.zerohedge.com\/news\/2019-08-14\/want-see-what-stagflation-looks\">Want To See What Stagflation Looks Like?<\/a><\/h3>\n\n\n\n<p class=\"wp-block-paragraph\">Another undoubtedly firm inflation report as the tariff effect works its way through the pipeline. This means one thing; the stagflation narrative only strengthened today as the US economy slows in the face of supply side inflation.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>Want to see what stagflation looks like?<\/strong><\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>6m Avg. NFP = green<\/li><li>Non-Manufacturing PMI = black<\/li><li>Leading Index (YoY) = blue<\/li><li><strong>CPI ex-food and energy = pink<\/strong><\/li><\/ul>\n\n\n\n<figure class=\"wp-block-image\"><img decoding=\"async\" src=\"https:\/\/zh-prod-1cc738ca-7d3b-4a72-b792-20bd8d8fa069.storage.googleapis.com\/s3fs-public\/inline-images\/stag1.jpg\" alt=\"\"\/><\/figure>\n\n\n\n<p class=\"wp-block-paragraph\">In theory this puts the Fed in a quandary. In reality, you should recognize that:<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>1) The data today implies Core PCE (the Fed\u2019s inflation metric which they derive policy from) at somewhere in the 1.60% to 1.65% range<\/strong>. Firmer than where we were in 2Q, but still below the Fed\u2019s mandate. Therefore, today\u2019s data does not hold the Fed back from easing.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>2) The new core of the Fed has a completely new mindset when it comes to inflation\u00a0<\/strong>where they intend to \u201cmake up\u201d for the time core inflation remained below 2% by letting inflation run hot. For example:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Williams: \u201cmy view is any way that keeps the average inflation rate at 2%\u201d<\/li><li>Evans: \u201cought to communicate comfort with 2.5% core inflation\u201d<\/li><li>Brainard: \u201cwe make some pre-commitments to making up so that inflation gets to 2% on average over time in a more sustained basis\u201d<\/li><\/ul>\n\n\n\n<p class=\"wp-block-paragraph\">So the Fed will not pivot policy by any means with their preferred measure of core inflation not only below their mandate on a one-off basis, but nowhere near their new Average Inflation Targeting mindset.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><strong>3) At this stage of the cycle (very late with some recession signals), is supply side inflation positive for the economy?\u00a0<\/strong>It could actually add to the malaise especially with wages now off the highs as seen in AHE, ECI, and even the latest real AHE which is down to 1.3% from a high of 1.9% earlier this year.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&nbsp;\u2026click on the above link to read the rest of the article\u2026<\/p>\n","protected":false},"excerpt":{"rendered":"<p>Want To See What Stagflation Looks Like? Another undoubtedly firm inflation report as the tariff effect works its way through the pipeline. This means one thing; the stagflation narrative only strengthened today as the US economy slows in the face of supply side inflation. Want to see what stagflation looks like? 6m Avg. NFP = [&hellip;]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_monsterinsights_skip_tracking":false,"_monsterinsights_sitenote_active":false,"_monsterinsights_sitenote_note":"","_monsterinsights_sitenote_category":0,"footnotes":""},"categories":[2],"tags":[26527,26528,1808,4318],"class_list":["post-47790","post","type-post","status-publish","format-standard","hentry","category-economics","tag-mark-orsley","tag-prismfp","tag-wages","tag-zerohedge"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47790","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcomments&post=47790"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47790\/revisions"}],"predecessor-version":[{"id":47791,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/47790\/revisions\/47791"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=47790"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=47790"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=47790"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}