{"id":58265,"date":"2021-06-15T07:08:47","date_gmt":"2021-06-15T12:08:47","guid":{"rendered":"https:\/\/olduvai.ca\/?p=58265"},"modified":"2021-06-15T07:08:47","modified_gmt":"2021-06-15T12:08:47","slug":"it-gets-ugly-dollars-purchasing-power-plunged-at-fastest-pace-since-1982-its-permanent-not-temporary-wont-bounce-back","status":"publish","type":"post","link":"https:\/\/olduvai.ca\/?p=58265","title":{"rendered":"It Gets Ugly: Dollar\u2019s Purchasing Power Plunged at Fastest Pace since 1982. It\u2019s \u201cPermanent\u201d not \u201cTemporary,\u201d Won\u2019t Bounce Back"},"content":{"rendered":"
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It Gets Ugly: Dollar\u2019s Purchasing Power Plunged at Fastest Pace since 1982. It\u2019s \u201cPermanent\u201d not \u201cTemporary,\u201d Won\u2019t Bounce Back<\/a><\/h3>\n<\/header>\n
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The Consumer Price Index jumped 0.6% in May, after having jumped 0.8% in April, and 0.6% in March \u2013 all three the steepest month-to-month jumps since 2009, according to the\u00a0Bureau of Labor Statistics<\/a>\u00a0today. For the three months combined, CPI has jumped by 2.0%, or by an \u201cannualized\u201d pace of 8.1%. This current three-month pace of inflation as measured by CPI has nothing to do with the now infamous\u00a0\u201cBase Effect,\u201d which I discussed in early April<\/a>\u00a0in preparation for these crazy times; the Base Effect applies only to year-over-year comparisons.<\/p>\n

On a year-over-year basis, including the Base Effect, but also including the low readings last fall which reduce the 12-month rate, CPI rose 5.0%, the largest year-over year increase since 2008.<\/p>\n

In terms of the politically incorrect way of calling consumer price inflation: The purchasing power of the consumer dollar \u2013 everything denominated in dollars for consumers, including their labor \u2013 has dropped by 0.8% in May, according to the BLS, and by 2.4% over the past three months, the biggest three-month plunge in purchasing power since 1982:<\/p>\n

\"\"<\/p>\n

On an annualized basis, the three-month drop in purchasing power amounted to a drop of 9.5%, and this eliminates the Base Effect which only applies to year-over-year comparisons.<\/p>\n

That plunge in purchasing power is \u201cpermanent\u201d not \u201ctemporary.\u201d<\/strong><\/p>\n

Yup, the current plunge in purchasing power is permanent. And the plunge in purchasing power in the future is also permanent.<\/p>\n

The only thing that might make a small portion of it \u201ctemporary\u201d is if there is a period of consumer price deflation, which has happened for only a few quarters in my entire life, for example in the last few months of 2008, which is indicated in the chart above. So I\u2019m not getting my hopes up.<\/p>\n

\u2026click on the above link to read the rest of the article\u2026<\/p>\n<\/div>\n","protected":false},"excerpt":{"rendered":"

It Gets Ugly: Dollar\u2019s Purchasing Power Plunged at Fastest Pace since 1982. It\u2019s \u201cPermanent\u201d not \u201cTemporary,\u201d Won\u2019t Bounce Back The Consumer Price Index jumped 0.6% in May, after having jumped 0.8% in April, and 0.6% in March \u2013 all three the steepest month-to-month jumps since 2009, according to the\u00a0Bureau of Labor Statistics\u00a0today. For the three […]<\/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":[1055,172,426,13351,659,839,4254,4255],"class_list":["post-58265","post","type-post","status-publish","format-standard","hentry","category-economics","tag-consumer-price-index","tag-cpi","tag-inflation","tag-price-inflation","tag-purchasing-power","tag-us-dollar","tag-wolf-richter","tag-wolfstreet"],"_links":{"self":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/58265","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=58265"}],"version-history":[{"count":1,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/58265\/revisions"}],"predecessor-version":[{"id":58266,"href":"https:\/\/olduvai.ca\/index.php?rest_route=\/wp\/v2\/posts\/58265\/revisions\/58266"}],"wp:attachment":[{"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fmedia&parent=58265"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Fcategories&post=58265"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/olduvai.ca\/index.php?rest_route=%2Fwp%2Fv2%2Ftags&post=58265"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}