Unfortunately, all of today’s data releases have reported bad news:
The Consumer Price Index increased by .4% in August, seasonally adjusted. That’s double the expectation. On an annualized basis, the index has increased by 3.8%.
Last week there were 428,000 initial unemployment claims. That’s up from last week’s figure of 417,000.
The Philadelphia Federal Reserve reports that manufacturing is continuing to contract and their index is weaker than expected, coming in at -17.5 rather than -15.0.
The New York Federal Reserve’s Empire State Manufacturing Survey showed continued contraction with the general business conditions index dropping by a whole point to -8.8.
We’re not alone. The Euro Area’s Harmonized Index of Consumer Prices (HICP) rose by 1.1% in August over the previous month.
Isn’t that what a number of people have been calling for, a period of mild sustained inflation to deal with our balance sheet issues?
But yeah, overall the economic news of late has been in the not good category. Personally, I wouldn’t be surprised to see another recession in then next couple of quarters unless things turn around.
I think there’s an irony there. Kenneth Rogoff, for example, has been calling for sustained mild inflation, 4-6%. It doesn’t appear to me that it will take much to accomplish that based on where we are. Another perfectly good theoretical suggestion shot to hell.
IMO sustained low inflation is a good idea in theory, just as benevolent monarchy is a good idea in theory. Unfortunately, you can no more ensure that inflation remains low than you can that monarchy will remain benevolent.
Isn’t that what a number of people have been calling for, a period of mild sustained inflation to deal with our balance sheet issues?
Sustained mild inflation will only work if there is wage inflation too. And that ain’t happenin’ with the current UE situation. MSI is just going to be yet another chance for the majority to get reamed for the benefit of those at the top.