Morning Report: CPI rises more than expected

Posted on January 11, 2024 by Brent Nyitray

Vital Statistics:

Stocks are lower after the Consumer Price Index came in hot. Bonds and MBS are down.

Prices at the consumer level rose 0.3% month-over-month and 3.4% year-over-year. This was above Street expectations. The core rate rose 0.3% month-over-month and 3.9% year-over-year. Again, these numbers were hotter than expected.

The increase in shelter accounted for about half the increase, and has been the dominant factor in the price indices for some time. Another notable increase was car insurance, which was up 20% year-over-year.

The trend is still down for the core rate on an annual basis, although the decreases are becoming becoming smaller. Like losing weight, the first few pounds are pretty easy, but the last few can be a battle.

The reaction in the Fed Funds futures was pretty muted. The markets pretty much took the Jan hike off the table, however there is still a 64% chance of a cut in March. Longer-term the futures didn’t move that much.

For the Fed, inflation may be falling at a slower rate than expected, but it is still falling. That means inflation-adjusted interest rates are increasing even though the Fed has been holding the Fed Funds rate steady. This is why the Fed can cut rates even though inflation is higher than they would like. The real Fed funds rate is the highest in 15 years.

Retailers had a decent holiday season, according to numbers from the CNBC/NRF Retail Monitor. The index, which excludes gasoline rose 0.8% in November and 0.4% in December. The core gauge, which strips out restaurant spending rose 0.2% in December and 0.7% in November. On a year-over-year basis, spending rose 3.1%.

Filed under: Economy |

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35 Responses

  1. jnc4p's avatar
    jnc4p, on January 11, 2024 at 12:37 pm said:

    Given how this site came to be, it may be of interest here that Greg Sargent is no longer at the Washington Post.

    https://www.washingtonpost.com/people/greg-sargent/

    https://www.mediaite.com/media/longtime-wapo-political-columnist-greg-sargent-is-leaving-after-taking-voluntary-buyout/

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    • lmsinca's avatar
      lmsinca, on January 18, 2024 at 8:46 pm said:

      Hmmmm, this site came to be in spite of Greg Sargent. Thanks to Scott, Kevin and also me with an assist from a few others but especially Sue who is no longer with us. We worked hard in those days to make a place where all opinions were welcome and explored………….a futile experiment!

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      • ScottC's avatar
        ScottC, on January 19, 2024 at 1:40 pm said:

        lms:

        We worked hard in those days to make a place where all opinions were welcome and explored………….a futile experiment!

        I don’t think it was futile. It still is a place where all opinions are welcome.

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  3. jnc4p's avatar
    jnc4p, on January 11, 2024 at 6:14 pm said:

    Trump apparently did well in the Fox town hall.

    https://www.politico.com/news/2024/01/10/trump-iowa-fox-town-hall-00134936

    “This is what Trump gets about politics that his opponents don’t: Voters — and particularly his voters — want to be part of something outside of themselves. Trump has effectively commuted their frustrations about the world into a sense of optimism about how he’ll overcome or destroy those frustrations.”

    https://www.washingtonpost.com/politics/2024/01/11/trump-dishonesty-presidential-election/

    Bret Stephens tries to explain Trump’s appeal to the NYT readership:

    https://www.nytimes.com/2024/01/11/opinion/columnists/donald-trump-election.html

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    • Brent Nyitray's avatar
      Brent Nyitray, on January 11, 2024 at 7:39 pm said:

      It’s a good question. My pet theory is that, if Republican voters think the central problem in America today is obnoxious progressives, then how better to spite them than by shoving Trump down their throats for another four years? If somehow Nikki Haley were to win the nomination and then the general election, her victory would be a matter of disappointment for Democrats but not the wailing and gnashing of teeth that went with Trump’s victory in 2016. For many Republicans, the visceral satisfaction of liberal anguish at a Trump restoration more than makes up for his flaws.

      I think he gets close. But it is a function of R voters becoming sick and tired of Washington Generals conservatives like Mitt Romney who have the proverbial “kick me” sign on their backs. At least Trump recognizes that democrats are fighting a war against him and his voters, as opposed to most Republicans who seem to consider this a friendly game of squash.

      And I think he is naive about whoever the Republicans nominate. I have no illusions that Nikki Haley will become Pantsuit Hitler in the mainstream media, with social media moderators, with democrat politicians, etc. about six picoseconds after she gets the nomination. Anything she says will be considered hate speech.

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      • Let the mutherfuker burn!'s avatar
        Let the mutherfuker burn!, on January 11, 2024 at 7:49 pm said:

        What I cannot understand is how DeSantis and Hailey can keep a straight face saying that they’d not be subject to the legal onslaught that Trump is should either of them get the nomination, let alone win. Surely they don’t believe it and it seems cowardly to deny it.

        But they do.

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        • Brent Nyitray's avatar
          Brent Nyitray, on January 11, 2024 at 7:50 pm said:

          I think they are hoping that things return to normal after Trump is gone.

          IMO that is naive.

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        • Let the mutherfuker burn!'s avatar
          Let the mutherfuker burn!, on January 11, 2024 at 8:19 pm said:

          I’d like to think they’re smarter than that. Wouldn’t it behoove them to prepare Republican voters that the Democrat’s Total War approach against Trump will (and more or less already is) be used against all Republicans?

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        • Brent Nyitray's avatar
          Brent Nyitray, on January 11, 2024 at 8:22 pm said:

          I hope so, but I don’t think they understand the democrats are not your father’s democrats.

          We haven’t seen these types for over 100 years. But they are back.

          EDIT: that doesn’t sound exactly right. I think the garden variety democrat politician probably isn’t a cultural marxist. But the people who call the shots in that party definitely are.

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        • jnc4p's avatar
          jnc4p, on January 13, 2024 at 9:33 am said:

          “But the people who call the shots in that party definitely are.”

          I’d say it’s the activist base. And the base would respond that they don’t call the shots, as evidenced by Biden and most elected Democrats support for Israel.

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        • Brent Nyitray's avatar
          Brent Nyitray, on January 13, 2024 at 7:36 pm said:

          Nb>And the base would respond that they don’t call the shots, as evidenced by Biden and most elected Democrats support for Israel.</b>

          That’s boilerplate leftism. It can get 99.999% of what it wants and still bitch that it got nothing.

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      • ScottC's avatar
        ScottC, on January 12, 2024 at 5:42 am said:

        Brent:

        I have no illusions that Nikki Haley will become Pantsuit Hitler in the mainstream media, with social media moderators, with democrat politicians, etc. about six picoseconds after she gets the nomination. Anything she says will be considered hate speech.

        But she will be OK with that because, as you suggest, she’ll see it as just part of the game being played. When it’s over they’ll all still be friends. Romney is the perfect example. He’s chums with the same people who in 2012 were telling people he wanted to reintroduce black slavery.

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        • Let the mutherfuker burn!'s avatar
          Let the mutherfuker burn!, on January 12, 2024 at 5:25 pm said:

          ut she will be OK with that because, as you suggest, she’ll see it as just part of the game being played. When it’s over they’ll all still be friends.

          This is where we disagree. I do not believe this will actually happen and I have a hard time believing she does either.

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        • ScottC's avatar
          ScottC, on January 13, 2024 at 6:19 am said:

          So you think it will be different than it was with Romney?

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    • jnc4p's avatar
      jnc4p, on January 14, 2024 at 11:50 am said:

      “Hundreds of Biden administration employees and federal staffers from more than two dozen agencies are set to walk off the job next week in protest of the White House‘s handling of the Middle East crisis. 

      An anonymous internal cabal calling itself ‘Feds United for Peace’ have organized the strike for Tuesday, marking 100 days of Israel‘s siege on Gaza, according to AI Monitor.”

      One wonders if the anonymous organizers will be among those walking out. Presumably, they will cease to be anonymous at that point.

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    • Brent Nyitray's avatar
      Brent Nyitray, on January 14, 2024 at 9:56 pm said:

      Nothing says “democracy” like trying to throw your biggest political opponent in prison, using lawfare to keep him off the ballot, and then pre-emptively ensuring that the military can’t consider him commander in chief if he wins.

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  6. jnc4p's avatar
    jnc4p, on January 15, 2024 at 1:29 pm said:

    Brent, here’s another category for your realignment of US politics:

    Right wing progressives

    https://theupheaval.substack.com/p/the-rise-of-the-right-wing-progressives

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  7. jnc4p's avatar
    jnc4p, on January 15, 2024 at 3:34 pm said:

    Democrats can’t seem to make up their mind on their Trump messaging. The NYT Editorial page admonishes Republicans in Iowa to make a choice other than Trump while the governor of Illinois argues that there’s no difference between Trump and the other candidates.

    https://www.nytimes.com/2024/01/15/opinion/iowa-caucus-trump.html

    “llinois Gov. J.B. Pritzker (D), appearing in Des Moines on behalf of the Biden campaign, slammed Republicans running for president Monday and argued that there was no difference between former president Donald Trump, Florida Gov. Ron DeSantis and former U.N. ambassador Nikki Haley.

    “It’s simply a question of whether you like your MAGA Trump agenda wrapped in the original packaging or with high heels or with lifts in their boots,” Pritzker said.”

    https://www.washingtonpost.com/politics/2024/01/15/iowa-caucus-live-updates/#link-66YISXBS55ATLDMTKNI5TZC3Q4

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  11. Brent Nyitray's avatar
    Brent Nyitray, on January 16, 2024 at 1:06 pm said:

    Found it interesting that the media called Iowa for Trump early. They only do that for candidates they want to win.

    Certainly there is a financial incentive for them however i figure the partisan incentive would be bigger

    Shows their handwringing over the Trump “threat to democracy” is just an act. Or, they are so confident that Trump cannot win that they are throwing caution to the wind and looking at the profits.

    Who knows, maybe the US presidential election is pro wrestling now, with the winner pre-determined.

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  12. Brent Nyitray's avatar
    Brent Nyitray, on January 16, 2024 at 5:44 pm said:

    You can always rely on Tom Nichols to fail to understand the right.

    https://www.theatlantic.com/newsletters/archive/2024/01/trump-wants-revengeand-so-does-his-base/677147/

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