Bad News for Biden...Worse for Us.

The September CPI report was bad news for Joe Biden.

It was worse for the rest of us.

Source: https://apnews.com/

Consumer prices actually accelerated between August and September.

Prices were up .4% month to month in September.

They were up only .1% in August.

It all added up to an 8.2% annual inflation rate over the last year.

Core inflation, which excludes food and energy costs, increased .6% in the last month and 6.6% over the last year. That is the highest core inflation rate in over 40 years.

However, the cost of items that have the greatest impact on the daily lives of most people are food, gasoline and home energy costs.

Each has gone up well above the 8.2% headline number over the last year.

Food at home    +13.2%

Gasoline            +18.2%

Electricity.         +15.5%

Nat Gas              +33.1%

Fuel Oil              +58.1%

This is the full list of CPI increases by major expenditure category in the September, 2022 report.

Source: https://www.bls.gov/news.release/pdf/cpi.pdf

Shelter costs are still only showing a 6.6% annual increase in the CPI numbers but this is due to the peculiar manner in which home costs and rental prices are calculated for purposes of the index. There is a significant lag between rises in these costs and when they are reflected in the index.

As I explained in an earlier blog post, this number is sure to rise in future months as the index calculation catches up with reality.

House prices rose almost 20% in 2021 and rents were up over 10% in calendar 2021 (per Harvard University's Joint Center for Housing Studies)  but shelter in the CPI index was only +4.1% in the calculation for that year. Shelter also accounts for the largest factor in the CPI calculation--almost one-third of the total.

Source: https://www.jchs.harvard.edu/rents-and-home-prices

House prices and rents may begin to soften but the CPI shelter calculation undercounts as prices rise and overcounts as prices decline. 

Yesterday's CPI report was also bad news for interest rates.

It appears that the interest rate increases that the Federal Reserve has initiated have done little to tame inflation.

More interest rate increases can be expected if the Fed is serious about bringing down inflation to anywhere near its 2% target.

Of course, 30 year mortgage rates have already more than doubled this year alone.

Credit: https://www.mortgagenewsdaily.com/mortgage-rates/30-year-fixed

When I googled 30-year mortgage rates this is what came up for Ohio.

7.7%!

And this data was before the new CPI report.

Real average weekly earnings (earnings adjusted for the effect of inflation) have decreased by 3.8% over the last year according to the Bureau of Labor Statistics. That is a deterioration from last month's decrease of 3.4%.

It is further proof that the average American is getting further and further behind due to inflation.

Source: https://www.bls.gov/news.release/realer.t01.htm

What was Joe Biden doing in the aftermath of the CPI report?

He was in California extolling the passage of the Inflation Reduction Act.

He was also on Twitter claiming that a key reason he ran for President was because Americans were being squeezed by high costs.

Yes, really.

This was from the press release from The White House as Biden was on his way to the West Coast.

Over the next three days, the President will participate in events in Colorado, California, and Oregon highlighting the progress we have made from passing a historic Bipartisan Infrastructure Law to passing the Inflation Reduction Act, which will lower prescription drug costs.

You can judge for yourself how Biden is doing on keeping the costs of living down for Americans compared to the 2017-2020 period.

What are Democrats in Congress doing?

They are holding another hearing on January 6th.

I dare say that the threat of inflation is many, many times more dangerous to the people of the United States, our way of life and our democracy than anything that occurred on January 6th.

Would this not be a good time to focus more on fixing inflation than worrying about something that happened two years ago?

After all, didn't Hillary Clinton even once say this when questioned about something that happened a couple years earlier?

Never mind.

Much is said by politicians.

However, when all is said and done, much more is always said than done.