- by New Deal democrat
My “Weekly Indicators” post is up at Seeking Alpha.
The big news this week was the continued surge in commodity prices, normally a sign of tight demand (but sometimes a shortage of supply, that does not seem to be the case now); and also higher interest rates showing up in corporate bonds and, as expected, mortgage rates.
As usual, clicking over and reading will bring you up to the virtual moment as to the forecast for and nowcast of the economy, and reward me just a little bit for my efforts.
And now a special bonus: I came across the below breakout of CPI components by economist Ernie Tedeschi on Thursday. It’s not worth its own separate post, but it does an excellent job showing how the two big components keeping YoY CPI above the Fed’s target are two lagging ones: shelter and motor vehicle insurance:
As I explained several months ago, here is why motor vehicle insurance lags: first, vehicle prices go up. That means the prices of the components, i.e., parts, also go up. Which means that when vehicles need repairs, the prices go up. More often than not, an insurance claim is made, and the increased price of repairs means that the payout goes up. Which does not go unnoticed by the insurance companies, which hike their prices for coverage. That’s where we are now.
Anyway, take out those two laggards, and consumer inflation is virtually non-existent.
