Inflation data updates (like shark TV programming) come in weekly spurts. Recently (April 9), we received the updated data for the Producer Prices Index, which tracks inflation for the cost of inputs for businesses. Then last Tuesday, April 13, we got the star of the show, the Consumer Price Index data. Monetary policy is looking like a Great White and dollar purchasing power like an unlucky baby seal.
In March alone, consumer prices rose 0.62 percent. If that rate continued, that translates into an annualized rate of 7.4 percent. Year-to-date CPI inflation is running just a tad short of 5 percent.
The Producer Price Index is even worse. The Producer Price Index for final demand was up a full 1 percent in March alone, as it had been in April. Those are monthly numbers, not annual. (Producer Price Index News Release summary [bls.gov]).
The PPI for All Commodities was up 3.7 percent in March; again, that’s a monthly, not annual, number.
To the degree that doves have argued against inflation concerns based on the assertion that inflation hasn’t spiked yet, to that degree recent data have turned against them.
Of course, these are backward-looking inflation data that we are looking at. The main focus should be forward-looking.
Let’s take a look at the much-debated five-year treasury TIPS spread. We see that it has been trending in the wrong direction (upwards) since the depths of the COVID shutdown, as well as year-to-date. Monthly inflation expectations as of last month are at the highest level since June 2008, and only two basis points below that high point.
Inflation is rising quickly. Inflation expectations as reflected in TIPS yields are rising quickly. Inflation expectations as expressed in other markets such as commodities and foreign exchange have also risen dramatically. Inflation risks are clearly to the upside, which is exactly what one would expect given massive expansion in circulating domestic money supply.
Jerry Bowyer is a Forbes contributor, contributing editor of AffluentInvestor.com, and Senior Fellow in Business Economics at The Center for Cultural Leadership.
Jerry has compiled an impressive record as a leading thinker in finance and economics. He worked as an auditor and a tax consultant with Arthur Anderson, as Vice President of the Beechwood Company which is the family office associated with Federated Investors, and has consulted in various privatization efforts for Allegheny County, Pennsylvania. He founded the influential economic think tank, the Allegheny Institute, and has lectured extensively at universities, businesses and civic groups.
Jerry has been a member of three investment committees, among which is Benchmark Financial, Pittsburgh’s largest financial services firm. Jerry had been a regular commentator on Fox Business News and Fox News. He was formerly a CNBC Contributor, has guest-hosted “The Kudlow Report”, and has written for CNBC.com, National Review Online, and The Wall Street Journal, as well as many other publications. He is the author of The Bush Boom and more recently The Free Market Capitalist’s Survival Guide, published by HarperCollins. Jerry is the President of Bowyer Research.
Jerry consulted extensively with the Bush White House on matters pertaining to the recent economic crisis. He has been quoted in the New York Times, The Wall Street Journal, Forbes Magazine, The International Herald Tribune and various local newspapers. He has been a contributing editor of National Review Online, The New York Sun and Townhall Magazine. Jerry has hosted daily radio and TV programs and was one of the founding members of WQED’s On-Q Friday Roundtable. He has guest-hosted the Bill Bennett radio program as well as radio programs in Chicago, Dallas and Los Angeles.
Jerry is the former host of WorldView, a nationally syndicated Sunday-morning political talk show created on the model of Meet The Press. On WorldView, Jerry interviewed distinguished guests including the Vice President, Treasury Secretary, HUD Secretary, former Secretary of Sate Condoleezza Rice, former Presidential Advisor Carl Rove, former Attorney General Edwin Meese and publisher Steve Forbes.
Jerry has taught social ethics at Ottawa Theological Hall, public policy at Saint Vincent’s College, and guest lectured at Carnegie Mellon’s graduate Heinz School of Public Policy. In 1997 Jerry gave the commencement address at his alma mater, Robert Morris University. He was the youngest speaker in the history of the school, and the school received more requests for transcripts of Jerry’s speech than at any other time in its 120-year history.
Jerry lives in Pennsylvania with his wife, Susan, and the youngest three of their seven children.
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