WASHINGTON (MaceNews) – Be brave, it’s peak fraidy-cat week for inflation horrors to descend upon us, or rather, to show up in the data, having plagued us last month.
If the price-pressure nightmares show up as expected, the Fed folks will be forced to accelerate their consideration of tapering at the very least (Wharton’s Jeremy Siegel).
And for whom would it be good news? Those upstarts at Coindesk say, of course, “a fixed-supply cryptocurrency is likely to become more attractive.” Yes, let’s forget about that 46% decline in Bitcoin.
May’s Consumer Price Index annualized out to a 5% consumer inflation rate so if the rate through June tops that by much, like beating 2008’s peak 5.8%, some talking heads might explode on live TV.
The business inflation rate – not just wholesale any more – as measured by the Producer Price Index annualized at 6.6% through May so the wild blue sky’s inflation bar is even higher there.
But wait, just a day later after the CPI report is released Tuesday will come the calm reassuring intonations of Mr. Transitory himself. Jay Powell’s remarkably well-timed appearance before Rep. Maxine Waters’ Financial Services Committee will remind us to be strong, to steel ourselves against the hysterics of the inflation hawks.
The highest inflation numbers since 1982, he might say, are not persistent. Yes, some prices are “sticky” but that’s not enough to fuel inflation, which is a rate of change, not simply the higher levels we’re reaching.
Powell, or somebody on the large committee (54 members asking questions) may mention the U.S. 10-year yield, which in the past week as dropped as low at 1.248%. Of course, if it skyrockets after the CPI on Wednesday, the benchmark’s disconcertingly sudden cooling won’t be such a compelling talking point.
And around the fringes there are still those who say there’s some fundamental misunderstanding of inflation. That prolific tweeter of economic verities Michael Pettis, who loves to challenge the accepted wisdom about China, where the Carnegie Fellow professor is based, said supply disruptions are actually not inflationary.
“If consumers are forced to pay more for some goods, they will spend less on other goods, which puts downward pressure on those prices.” He continued Thursday, “Inflation is one of the balancing mechanisms that prevents total demand from rising faster than total supply.”
So when Powell is finished answering maybe four and a half hours of questions Wednesday, the PPI arrives Thursday morning. And an hour later, he’ll be back, telling members of the Senate Banking Committee that they too should calm down.
He’s likely to turn the conversation to jobs, perhaps repeating some factoids from that labor participation rate sidebar in the Fed’s printed recap of monetary policy sent to Capitol Hill Friday.
Labor participation remains “especially low” for the U.S. and in relation to other developed economies, particularly for those 55 and older, Hispanics and Latinos. And we’re repeatedly told the Fed watches labor participation as well as the unemployment rates and payrolls and more to decide the degree of slack. At least until his term as chair ends, as early as February, Powell very likely won’t flinch on jobs vs. inflation.
As if CPI, PPI, Wednesday’s Beige Book, Thursday’s industrial production, the Philly Fed and Empire State manufacturing surveys weren’t enough, there’s Friday’s retail sales report.
Mastercard says sales rose 11% over the year through June, with restaurants up 55%, specialty apparel up 62%, department stores up 67%, jewelry up 108%, lodging 107%. The retaildive.com site marked up that annual growth through June to 23%.
Thursday’s Fed consumer credit report showed that in May, Americans were borrowing big time again, with revolving credit up at an annual rate of 11%. And why not, with interest rates so low and pent-up demand so high?
Yet May’s government measure of retail was down 1.3% for that month which, again, retaildive.com translated into a 6.4% monthly increase. Take your choice, but stores are busy, busy, busy as anyone checking out the parking lots can tell. And those Amazon Prime vans zipping past us show e-commerce is booming too. The consumption-driven GDP, now higher than its pre-pandemic level, reflects the flush summer. And all that with many million fewer workers on the job, what Atlanta Fed President Rafael Bostic this past week called almost a productivity miracle.
The full list of the upcoming week’s very full data schedule follows:
UPCOMING ECONOMIC DATA AND FEDERAL RESERVE EVENTS
Sunday, July 11 – 9:20a ET Fed Vice Chair/Supervision Quarles speaks in Venice on financial stability and climate
Monday, July 12 – 9:30a NYFed’s Williams speaks, Bank of Israel
Tuesday, July 13 – 6A NFIB Mnthly small biz optimism index
Tuesday, July 13 – 8:30a ET June CPI
Tuesday, July 13 – 8:55s Redbook wkly retail activity
Tuesday, July 13- 12 noon ET Atl Fed’s Bostic speaks, “Racism & Economy”
Tuesday, July 13 – 2p ET – US Tsy Monthly Treasury Statement
Tuesday, July 13 – 2:30p ET Atl Fed’s Bostic speaks
Tuesday, July 13 – 2:50p ET Boston Fed’s Rosengren speaks w/Bostic
Wednesday, July 14 – 7a ET US MBA wkly mortgage apps
Wednesday, July 14 – 8:30a ET June PPI
Wednesday, July 14 -10a ET Atl Fed inflation expectations
Wednesday, July 14 – 10:30a ET US EIA weekly oil stocks
Wednesday, July 14 – 12 noon ET Fed Chair Powell semiannual testimony/Hse FinSvcs
Wednesday, July 14 – 2p ET Fed’s Beige Bk
Thursday, July 15 – 8:30a US Philly Fed mfg index
Thursday, July 15 – 8:30a ET Empire State mfg survey
Thursday, July 15 – 8:30a ET wkly initial jobless benefit claims
Thursday, July 15 – 8:30a ET US imports/export prices
Thursday, July 15 – 9:15a ET June industrial production
Thursday, July 15 – 9:30a ET Fed Chair Powell testimony/Sen Banking
Thursday, July 15 – 11a ET ChiFed’s Evans q&a/GIC
Friday, July 16 – 8:30a US June retail sales (-1.3% May)
Friday, July 16 – 9a ET NYFed’s Williams speaks at NYFed
Friday, July 16 – 10a UMich prelim consumer sentiment (prvs 85.5)
Friday, July 16 – 10a ET US business inventories
Friday, July 16 – 1p ET US wkly Baker-Hughes rig count
Friday, July 16 – 4p ET US Tsy TICS
—
Contact this writer: denny@macenews.com.
Content may appear first or exclusively on the Mace News premium service. For real-time delivery contact tony@macenews.com. Twitter headlines @macenewsmacro.