(Cross-post from Outrun Change. This rate of inflation is corrosive, slowly eating away economic freedom.)
The Consumer Price Index, or CPI, shows a 0.4% increase in September 2021 for all-items with a core increase of 0.2%.
The rate of inflation for the last 12 months is 5.43% for all items and 3.86% for core inflation without food and energy.
Graph at top of this post shows the monthly increase in the all-items index along with the core change. Graph also shows an average of the preceding 12 months for all items.
Watch the green line increase from around 0.1% up to over 0.4% for the last five months.
The trailing 12 month average is also grim. It shows:
Rising costs and constrained shipping capacity is driving inflation and disrupting supply chain across the economy. Image courtesy of Adobe Stock.
Indicators I can see suggest inflation is going to continue at a high rate for quite some time. Here are a few of the articles I have read recently pointing towards ongoing rise in prices:
Rent component of CPI will increase substantially over the next year because of the way the index is calculated.
Shipping costs have already skyrocketed.
Multiple food producers are struggling with rapidly increasing costs.
Major food producer expects their costs go up 11% in the next year with prices they charge to go up by 4%.
The phrase “stagflation” is back in play. Oh joy, a possible (likely?) return to the Carter administration.
A friend of mine priced the apartment they are living in to help a relative who was moving into the area. Price for this exact unit is 50% more than when they signed their annual lease a number of months ago.
An acquaintance reports the price for renting a particular house went up while they were thinking about it for a day or so.
Two friends report landlords renting apartments expect six months rent in advance and some landlords renting houses are expecting a year in advance. A year.
Article mentioned above says the reports floating around in the media indicate rent hikes overall are around 10%. Yet the CPI shows only 2% increase in rent.
How can that be?
Fascinating detail of how the CPI is calculated explains the anomaly and also points towards dramatic increase in the rent component of CPI over the next year.
Modern Cargo container ship giving an idea of the amount of cargo that can be carried. Each of those containers is one semi-load on the freeway. Image courtesy of Adobe Stock.
Seems like most industries have a tangled supply chain. The entire transportation system is sorely distressed.
The elitists in federal and state governments have a staggering level of hubris. They think waving their hands, clicking away on their laptops, and issuing press releases will make the entire economy bend to their will. What they accomplish is willfully causing disruption in your life and in my life.
Here are merely a few of the recent articles describing the tangled impact of Covid dictats and sundry government policies:
Lots of cargo ships are waiting to unload off the California coast.
Large port operator expects disruptions to last into 2023.
Workers in transportation sector warn of possible system collapse.
Chip shortage for carmakers will last into late 2022.
Looks like it might take another 15 or 18 months to untangle the worldwide supply chain.
A tweet I saw this morning (10/9/21) from someone flying out of Long Beach indicated the individual counted 50 ships waiting to unload.
At around 10,000 containers per ship that is somewhere around 370,000 containers waiting to be unloaded back in the middle of August and is now currently somewhere in the range of half a million containers sitting off the coast.
Article says a few months ago it was only nine. Normally it is zero.
Random stock outages are still common. Image courtesy of Adobe Stock.
The supply chain in most industries is tangled up somehow somewhere.
The people in federal and state governments with the staggering level of hubris to think they can wave their hands and make the entire economy do their bidding are willfully causing disruption in your life and in my life.
I am struggling to figure out what’s going on around us in the economy. These are confusing times. That is why I blog. Digging into news reports and statistics deep enough to write something coherent (hopefully) pushes me towards understanding. Read more…
The facade of the Federal Reserve Bank. Image courtesy of Adobe Stock.
Another senior official in the Federal Reserve had odd trades in 2020. This brings to three the number of extremely senior Fed officials doing strange things.
On 2/28/20 the chairman of the Federal Reserve issued a statement saying that the evolving coronavirus would require close monitoring by the Federal Reserve. Unusual release also indicated there were risks emerging in terms of economic activity.
Such statements get close attention by the investment markets because they contain any hint of what the Fed is thinking and what the Fed might do. The market then responds to those statements, inferring what it means and what those actions might do to interest rates and the stock markets.
Major investigative effort by the Wall Street Journal revealed 131 federal judges who own stock in one of the firms appearing before them in 685 lawsuits.
The Journal found that about two thirds of all federal judges disclosed ownership in individual stock. Of those who made such disclosure about one fifth had a conflict of interest but did not recuse themselves.
For CPAs, this illustrates the importance of our independence rules, both independence in fact an independence in appearance.
What shall we call judges who were trading stock of litigants who were appearing in front of them? Perhaps a reasonable label would be integrity impaired fools. Even those judges who had a trivial investment and had a mere procedural motion in front of them have a serious appearance of conflict of interest and thus impaired integrity.
It would be wise for CPAs to read this story as a caution to keep a scrupulous eye on their own independence. The same lessons can be drawn by leaders of nonprofit organization.
The story doesn’t end with the federal judges, but we start there. More discussion in a moment about stock trading by presidents of two regional Federal Reserve Banks, who are the ultimate insiders.
Failures to recuse when federal judges have financial conflicts of interest
A 1974 federal law requires federal judges to monitor their investments, maintain personal awareness of those investments, and then recuse himself of any case in which they have a financial interest, no matter how small their interest may be.
In spite of a 40-year-old law and in spite of software that checks disclosed ownership against parties to the lawsuit, 12% of federal judges completely blew off the ethical obligation. That means one out of eight judges failed to recuse themselves when they had a financial interest in a case before them.
I’m wondering if there’s any group or category of people in this country who have significant power or influence who actually bother to follow the rules
Those little critters are smart enough to follow written instructions from the LA Department of Public Health. Image courtesy of Adobe Stock.
Those little Covid critters are really, reeeeeally smart.
How smart are they?, I hear you ask.
They are so smart that they accessed, read, and comprehended correspondence from the Los Angeles County Department of Health that all those people sitting shoulder to shoulder at the Emmys were perfectly safe without wearing any masks.
