US CPI Rises 7% year over year, fastest rate since 1982.

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This is a high number and warrants action. But when you account for 2020 base effects, it’s not as pronounced. Looking at Dec 2019 to Dec 2021, you get 4.2% annual inflation over than time period. Significantly higher than it should be, but certainly not a runaway inflation situation. Also notable that the main drivers of this increase were used cars (which will come down and normalize fairly quickly) and housing (which most certainly will not). This housing component is going to have a significant effect on elevated inflation for a good long while, as it takes many years for new housing initiatives to actually manifest into new supply on the market. That’s actually my biggest fear.

whiskey_bud

We “recovered” from the COVID19 recession through the Federal Government going further into debt to the tune of around 20% of annual GDP and distributing the money via a figurative helicopter. Individuals got money, business got money, states got money, airlines got money, all built on debt. Lots of the stimulus was entirely inefficient or straight-up fradulent. The other main component of our “recovery” has been real interest rates *far below* annual inflation; ie negative real rates. Something is going to give and, one way or another, there is going to be hell to pay.

takatu_topi