The Fed Has Spoken


Armstrong Economics Blog/Central Banks Re-Posted Dec 17, 2021 by Martin Armstrong

The Federal Open Market Committee plans to taper its asset purchasing program by $30 billion per month. Starting in January, the central bank will begin buying $60 billion in bonds monthly, citing “inflation developments and the further improvement in the labor market.”

As for interest rates, the Fed is considering as many as three rate hikes in 2020, followed by two additional hikes in 2024. This comes after the Fed artificially lowered rates to near zero for the longest amount of time in the history of the Federal Reserve.

“With inflation having exceeded 2 percent for some time, the committee expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the committee’s assessments of maximum employment,” the central bank stated. Unemployment reached a post-pandemic low of 4.2% last month, but nearly 7 million Americans are still unemployed.  “Supply and demand imbalances related to the pandemic and the reopening of the economy have continued to contribute to elevated levels of inflation,” the statement continued. Now, the central bank believes inflation will somehow reach 2.6% in 2020, with core inflation dropping to 2.7%.

The central bank sees reduced GDP growth this year, dropping the forecast to 5.5% from 5.9%. GDP in 2022 is now estimated to reach 4%, and 2.2% in 2023.

Guilty Verdicts Delivered Against All Three Men in the Murder of Ahmaud Arbery


Posted originally on the conservative tree house on November 24, 2021 | Sundance | 276 Comments

A Georgia jury has found all three suspects in the shooting of Ahmaud Arbery guilty of murder. Travis McMichael, Gregory McMichael and William Bryan were all found guilty of murder.  Arbery was a black male victim and all three suspects -who claimed to be attempting to make a citizens arrest were white males.

Accusations of racism have propagated the framework of the case and the jury heard evidence that racism was a factor.  As with the Rittenhouse verdict, this verdict in Georgia was accurate to the details of the case.

GEORGIA – […] The jury found Travis McMichael, who fatally shot Arbery on Feb. 23, 2020, in a Brunswick, Ga., neighborhood, guilty of all nine counts brought against him, including malice murder.

His father Gregory McMichael, who was with him at the time of the shooting, was found guilty of four counts of felony murder, two counts of aggravated assault, one count of false imprisonment and one count of criminal attempt to commit a felony. 

William “Roddie” Bryan, who recorded the incident, was found guilty of three counts of felony murder, one count of aggravated assault, one count of false imprisonment and one count of criminal attempt to commit a felony. (read more)

Unfortunately, this case is again being exploited by a culturally Marxist media and those who promote race as a divisive business model.   The verdict against the three men was justified and accurate to the horrific events that culminated in the death of Arbery.  However, the exploitation of Arbery’s death to advance the divisive issue of race is destructive and damaging.

In the recent Waukesha, Wisconsin, mass killing and slaughter of people at the Christmas parade, the media went out of their way to deny the motive of race, because the accused driver of the vehicle, Darrell Edward Brooks Jr, was a black male targeting white people.  The racial motive was/is intentionally downplayed.

Contrast that purposeful media framework against the media narrative against Kyle Rittenhouse, a situation that had nothing whatsoever to do with race, and then overlay the events around the Arbery case, and it is clear the media has an agenda to promote racism in one direction only.

The New York Post provides one of multiple examples of the double standard that creates toxic division and conflict:

(story link)

Racism was likely a large part of the motive in the Georgia killing of Ahmaud Arbery, and The New York Post leads with that aspect.  However, racism was also likely the motive for Darrell Brooks in Waukesha Wisconsin, and yet the media avoids that entirely.

Race is only used as a promotional hook for the media story when the attacker is white and the victim is black.   When the races are reversed, the attacker is black and the victim white, suddenly political correctness dictates the racial dynamic is not safe for public discussion.  This type of cultural Marxism only makes racial animosity worse.

It is a very sad state of affairs when social division is beneficial for political and electoral manipulation.  Much of this intentional manipulation is what you find when you look into the conduct of the DOJ Community Relations Service (CRS), an agency within the DOJ civil rights division.

When the perpetrator is black and the victim(s) are white – the CRS activates quickly to instruct media and the judiciary system how to handle the racial component; the CRS goal is to downplay race as a motive.   However, when the perpetrator is white and the victim(s) black – the CRS activates to support the professional grievance activists who thrive on racism as a business model.  By approaching things this way, the DOJ-CRS actually flames racial animosity, the exact opposite of their presumed mission.

All of this is very unsettling… and THAT division is the tool of Marxists, in politics and media.

Inflation to Rise into 2034?


Armstrong Economics Blog/Economics Re-Posted Oct 14, 2021 by Martin Armstrong

Inflation continued to surge, reaching 5.4% in September. Janet Yellen has never been right about anything and keeps calling this “transitory,” as if it will vanish in a few weeks. The Labor Department’s Consumer Price Index, which is supposed to measure a basket of goods and services as well as energy and food costs, came in at 5.4% in September from a year earlier, well beyond expectations. However, our model was projecting a rise in inflation into 2021 which is 13 years up from the November 2008 low. It is interesting how the COVID restrictions with lockdowns came in on target with our computer’s forecast. Curious how events seem to fulfill the forecast when it is done by a computer rather than human judgment.

Nevertheless, as you can see from the chart, inflation has bounced on a month/month basis, but it has not yet reached the Downtrend Line. The long-term forecast beyond a mere decade projects the historical high will be due in 2034, which should exceed all previous highs. A month/month number above 1.05% will signal that inflation is breaking out, and we will indeed make all-time record highs going into 2034.

4.3 Million Quit Jobs in August – Vaccines?


Armstrong Economics Blog/Vaccine Re-Posted Oct 14, 2021 by Martin Armstrong

The numbers are out — 4.3 million people in the US quit their jobs in August. This is the largest number since 2000. The leading sector is hotels and restaurants. I have a friend who has a daughter who had two jobs. She worked as a waitress/bartender at night and at a health food store during the day. She was very industrious, to say the least, and quite impressive. However, she quit the health food job because they demanded a vaccine. She said the bar owner was going to impose a vaccine rule and more than 50% of the staff said they would quit.

Meanwhile, New York’s bars and restaurants are hurting for business because of the vaccine mandates. Our most honorable leaders, who are most likely taking money from Pfizer lobbyists worldwide, are realizing that resistance is not futile. You can mandate vaccines and pretend they are 100% safe, but the truth always surfaces. The people can bring down the entire system if they simply refuse to participate.

Many journalists are too busy selling Biden’s propaganda about the vaccines. The FDA admits there are risks, but they, in their sole discretion, announced they “believe” the benefits outweigh the risk without any explanation of the analysis or a single word of caution (e.g., if you have certain conditions, you should not take the vaccine) despite doing so for other vaccines. So while the press and the Biden Administration are ignoring the facts and the trend, this only raises the question: How much has Pfizer and Moderna paid you?

Jen Psaki Tells Stunning and Dangerous Lies About Transitory Inflation, Claims Price Increases Will Stop – They Won’t


Posted originally on the conservative tree house on October 13, 2021 | Sundance | 249 Comments

I do not expect White House Spokesperson Jennifer Psaki to understand how her bosses policies are driving massive price increases; nor do I expect Psaki to understand economics and inflationary impacts.  However, the scale of her false statements surrounding inflation are not just false, they are now dangerous.

Following the release of the consumer price index [SEE table 2], in her press briefing today, Jen Psaki outlined the White House perspective on inflation, and specifically the Fed claims surrounding “transitory inflation.”

In her statements today, Psaki referenced people comparing the prices of 2021 consumable goods to 2020 and 2019.  [Video prompted below] Within the statements, the scale of falsity is off the charts.  WATCH [Video at 19:00 to 22:42, prompted]

There is not one single thing about that three minute verbal exchange that is accurate.  Fast turn consumable goods, groceries etc., did not drop in 2020 during the first year of the pandemic.  Factually, all goods but especially consumable goods increased in price throughout the pandemic, because demand actually increased and the supply chains were unable to keep up.

Example.  A loaf of bread at $2.50 in 2019, climbed to $3.00 in 2020.  That price jumped again to $3.75 this year (2021) and will likely continue rising as monetary policy driven inflation continues devaluing our currency.

Even if, as Psaki claims, inflation slows down  (not likely) – “decelerating inflation” does not mean declining prices; it means a slower rate of price increase.   Stuff still costs more, it just costs more at a slower rate.  Consumable goods will cost more in 2022 than they do this year.  The 2022 loaf of bread likely to climb to $4.00; it will never return to the 2019 price of $2.50 because the dollar is worth less.

♦ Ask the White House: Why did Joe Biden increase food assistance benefits by 25% if inflation was transitory?

[The Consumer Price Index was released today.  The producer price index for Sept will be released tomorrow]

This massive inflation is a direct result of the multinational agenda of the Biden administration in combination with the spending spree.  Inflation is a feature not a flaw, and it has nothing whatsoever to do with COVID. The first group to admit what was obvious were banks, specifically Bank of America, because the monetary policy is the primary cause.

You might remember, when President Trump initiated tariffs against China (steel, aluminum and more), Southeast Asia (product specific), Europe (steel, aluminum and direct products), Canada (steel, aluminum, lumber and dairy specifics), the financial pundits screamed at the top of their lungs that consumer prices were going to skyrocket. They didn’t. CTH knew they wouldn’t because essentially those trading partners responded in the exact same way the U.S. did decades ago when the import/export dynamic was reversed.

Trump’s massive, and in some instances targeted, import tariffs against China, SE Asia, Canada and the EU not only did not increase prices, the prices of the goods in the U.S. actually dropped. Trump’s policies led the largest deflation in consumer prices in decades. At the same time, Trump’s domestic economic policies drove employment and wages higher than any time in the past forty years.

With Donald Trump’s policies, we were in an era where job growth was strong, wages were rising and consumer prices were falling.  The net result was more disposable income for the middle class, more demand for stuff, and ultimately that’s why the U.S. economy was so strong.

Going Deep – To retain their position, China and the EU responded to U.S. tariffs by devaluing their currency as an offset to higher prices. It started with China, because their economy is so dependent on exports to the U.S.

China first started subsidizing the targeted sectors hit by tariffs. However, as the Chinese economy was under pressure, they stopped purchasing industrial products from the EU, that slowed the EU economy and made the impact of U.S. tariffs, later targeted in the EU direction, more impactful.

When China (total communist control over their banking system) devalued their currency to avoid Tariff price increase, it had an unusual effect. The cost of all Chinese imports dropped, not just on the tariff goods.

Imported stuff from China dropped in price at the same time the U.S. dollar was strong. This meant it took less dollars to import the same amount of Chinese goods; and those goods were at a lower price. As a result, we were importing deflation…. the exact opposite of what the financial pundits claimed would happen.

In response to a lessening of overall economic activity, the EU then followed the same approach as China. The EU was already facing pressure from the exit of the U.K. from the EU system; so, when the EU central banks started pumping money into their economy and offsetting with subsidies, they essentially devalued the euro. The outcome for U.S.-EU importers was the same as the outcome for U.S.-China importers. We began importing deflation from the EU side.

In the middle of this, there was a downside for U.S. exporters. With China and the EU devaluing their currency, the value of the dollar increased. This made purchases from the U.S. more expensive. U.S. companies who relied on exports (lots of agricultural industries and raw materials) took a hit from higher export prices. However, and this part is really interesting, it only made those companies more dependent on domestic sales for income. With less being exported, there was more product available in the U.S for domestic purchase…. this dynamic led to another predictable outcome, even lower prices for U.S. consumers.

From 2017 through early 2020, U.S. consumer prices were dropping. We were in a rare place where actual deflation was happening. Combine lower prices with higher wages, and you can easily see the strength within the U.S. economy.

For the rest of the world this seemed unfair, and indeed they cried foul – especially Canada.  However, this was America First in action. Middle-class Americans were benefiting from a Trump reversal of 40 years of economic policies like those that created the rust belt.

Industries were investing in the U.S., and that provided leverage for Trump’s trade policies to have stronger influence. If you wanted access to this expanding market, those foreign companies needed to put their investment money into the U.S. and create even more U.S. jobs. This was an expanding economic spiral where Trump was creating more and more economic pies. Every sector of the U.S. economy was benefiting more, but the blue-collar working class was gaining the most benefit of all.

♦ REVERSE THIS… and you now understand where we are with inflation.

The JoeBama economic policies are exactly the reverse. The monetary policy that pumps money into into the U.S. economy, via COVID bailouts and ever-increasing federal spending, drops the value of the dollar and makes the dependency state worse.

With the FED pumping money into the U.S. system, the dollar value plummets.  Now the value of the Chinese and EU currency increases. This means it costs more to import products, and that is the primary driver of price increases in consumer goods.

Simultaneously, a lower dollar value means cheaper exports for the massive multinational conglomerates who now control our farms and farming resources (Big AG and raw materials). China, SE Asia and even the EU purchase U.S. food and raw material at a lower price. That means less food and raw material in the U.S. which drives up prices for U.S. consumers.

It is a perfect storm.  Higher costs for imported goods (durable goods) and higher costs for domestic consumable goods (food). Combine this dynamic with massive increases in energy costs from ideological Green New Deal policy, and that’s fuel on a fire of inflation.

Annualized inflation is now around 8 percent, and it will likely keep increasing in the short term. This is terrible for wage earners in the U.S. who are now seeing no wage growth and higher prices. Real wages are decreasing by the fastest rate in decades. We are now in a downward spiral where your paycheck buys less. As a result, consumer middle-class spending contracts. Eventually, this means household purchasing of durable goods drop because people have less disposable income.

Gasoline costs more (+50%), food costs more (+10% at a minimum) and as a result, real wages drop; disposable income is lost. Ultimately this is the cause of Stagflation. A stagnant economy and inflation. None of this is caused by COVID-19. All of this is caused by economic policy and monetary policy sold under the guise of COVID-19.

This inflationary period will not stall out until the U.S. economy can recover from the massive amount of federal spending.

If the spending continues, the Fed keeps printing money.  The dollar continues to be weakened.  As a result the inflationary period continues. It is a spiral that can only be stopped if the policies are reversed…. and the only way to stop these insane policies is to get rid of the Wall Street democrats and republicans who are constructing them.

Tucker Carlson hit this point very well last night:

Friends – Who Needs Them?


Armstrong Economics Blog/New Norm Re-Posted Sep 28, 2021 by Martin Armstrong

QUESTION:  Marty, computers in schools started to appear in the ’90’s. Do you see any relationship between societal shifts and classroom learning? Bill Gates influence?

LP

ANSWER: I don’t think so. I outfitted the grade school I went to with computers in the early 90s. I think it improved their skills to be able to function in the 21st century. However, the introduction of smartphones has changed the game. Now a 7-year-old is teaching their mother, who was in those classes in the 90s, how to forward and take pictures. There are a lot of studies now showing that young adults have fewer friends. Then there are studies saying that the average American has not made a new friend in 5 years.

I live on the beach. I see people walking the beach alone while on the phone. It is rather strange.

The World Of PC/WOKE


Armstrong Economics Blog/Politically Correct Re-Posted Sep 17, 2021 by Martin Armstrong

Ok, now they are saying we should no longer refer to incidents with sharks as an “attack.” That unfairly demonizes them as killers. Instead, we should refer to such incidents as an “encounter.” So if someone kills another at gunpoint in a robbery, he is not a killer, it was just an encounter. Interesting logic since a shark is not a ruthless killer; it is just hungry. So a thief is not a robber; he is a materially deprived person entitled to what you have because “equality” makes it just.

Kroger CFO Notes More and Faster Food Inflation Coming in Next Several Months


Posted originally on the conservative tree house on September 12, 2021 | Sundance | 78 Comments

This is not a surprise data-point for readers here.  However, it is good to see honest statements from corporate executives on what to expect with food inflation.

As noted by Kroger Chief Financial Officer Gary Millerchip in a call with financial media, we can expect to see even more rapid inflation in food prices overall in the next several months:

MSM – Cincinnati-based Kroger Co., which had $132 billion in sales last year, says inflation is running hotter than management previously anticipated and that expectations are now for prices to rise 2% to 3% over the second half of this year.

Kroger is “passing along higher cost to the customer where it makes sense to do so,” said CFO Gary Millerchip on the company’s second-quarter earnings call on Friday. (read more)

The reason for more inflation is not too difficult to understand.  Fresh foods show fast price increases immediately because they have almost no pre-existing inventory.  Fresh foods go from field to fork the fastest, and price increases show up immediately.  The same applies to restaurants.

However, processed foods and shelf stable foods have a deeper inventory, the turns on that inventory take longer, and as a consequence, it takes longer for the price increases to show up.  Millerchip is simply saying the total supply chain price increases are going to hit, and they are going to hit even harder than the last few months, as the new processed inventory carries a higher cost.

The skyrocketing prices at the grocery store are predictable based almost entirely on Joe Biden’s pro-Wall Street and Multinational Corporation policies.  Main Street is getting hammered, and the working class is suffering as a direct result.

Their specific accountability for these outcomes is why the Biden administration is trying to distract and blame COVID-19 for supply chain issues.  However, it is not COVID driving the prices, it’s Joe Biden policies that benefit multinationals.  {Go Deep}

Food products are fast-turn consumable goods, and the inflation in the food sector is jaw-dropping already.  However, fresh and processed foods turn at different inventory levels.

Obviously fresh foods spoil fastest (think produce, fish, meats and dairy), so they are replenished more quickly, and the thin supply chain (field to fork) passes along increased costs fast. Processed foods have a longer shelf life (boxed, canned, frozen, etc), and as a consequence, have a much larger inventory level in manufacturing, warehousing and retail storerooms/shelves.  Within processed foods, there is a lag between cost increase at origination and that cost hitting the stores.

The problem identified within the current ‘producer price index’, is that price increases in the raw material and intermediate material are building into the supply chain.  Keep in mind, the entire supply chain is dependent on energy costs and the fuel prices that impact transportation.

The retail consumer supply chain for manufactured and processed food products includes bulk storage to compensate for seasonality.  There are over 800 commercial and public warehouses in the continental 48 states that store frozen products (2020 data).  The previously processed food price increases are currently reflected on store shelves (already hurting).  However, the coming processed processed food price increases will be much, much higher.  We will see even higher prices on processed foods in the supermarket.

The same price increases happen for restaurants, albeit faster as they follow the similar supply chain to fresh foods.

Pro Tip – Buy your Thanksgiving and Christmas holiday shelf-stable items now (spices, condiments, flour, sugars, dried foods etc.) before the prices go up in the next few months.

Consumer Spending Unexpectedly Collapses in July as Essential Purchases Become Primary Focus of Working Class, Inflation is The Underlying Problem and It Will Get Worse


Posted originally on the conservative tree house on August 17, 2021 | Sundance | 228 Comments

The U.S. Census Department releases retail sales data today showing a strong contraction in consumer spending for July [MSM LINK].  The out-of-touch financial pundits were looking for a 0.3% decline; however, the drop was four times greater with a contraction of 1.1% in spending.

“The slide in retail sales comes after Friday’s preliminary consumer sentiment report from the University of Michigan showed one of the largest drops on record, leading some strategists and economists to warn of downside risk to the sales data.” (link)

This should not be unexpected for those who read here.  Massive price inflation on essential goods is eating up wages.  Food, fuel and energy price increases are changing consumer spending habits.  Non-essential purchases have stopped….. they haven’t slowed, they have stopped. ←Emphasize this because it is not showing up yet in the data lag.

The data reflects that auto sales were the primary contributor to the decline in spending (-4.3%).  This should make sense to people because auto purchases are the largest general consumer purchase outside of home purchasing.

When purchase decisions are made by families; and food and fuel prices are skyrocketing; replacing a vehicle is not essential.  Auto sales are a key indicator of consumer confidence and income.

Overall inflation is the primary driver.  Real wages are declining (wages – inflation), and disposable income is dropping quickly.  Americans need to start talking very deliberately about what is about to happen.  CTH predicted this and has been walking through the visible outcomes as each set of new data surfaces {SEARCH BOX}.  Nothing happening right now is unforeseen or not easily understandable.

There is a cascading effect that happens within the economy.  Income shrinks, then spending shrinks, then employment shrinks and work hours reduce.  It is an unavoidable outcome inside the middle-class economy.

Two-thirds of our national economy (GDP) is dependent on middle-class consumer spending.  Any impact to that spending cornerstone triggers downstream consequences. Large ticket items (like cars) are the first to drop. [Car sales have declined 10.4% from their peak in April.]  Luxury goods in general come next.

Wage-earners, families around the table, husbands and wives, start making decisions on finances based on income outlays.  The roof over your head is the priority; then comes food, and the prices are rising;  then gasoline, and again rising prices; finally facilitating expenses for work and school.

I said in June, at a macro level home prices had reached their peak (last two weeks of May, first two weeks of June was apex).  Obviously, there are some geographic home value increases still happening as COVID related regional issues and work opportunities are shifting populations.  There is also a lag and ripple effect that takes time to work through the economy.  The macro-apex will not be visible until next year.

People go where the work is, and the work is in the freedom zones (red states/regions).  Population shifts keep some area home prices increasing.  However, on a national macro-level the apex has been reached.  People cannot afford higher mortgage payments and simultaneously deal with massive inflation on essential purchases.

Economic pressure works to the benefit of the command and control authority who wish to force vaccinations upon people.  The fear of losing a job becomes more of an issue for people when income security is threatened and they see food prices rising so quickly.  It is unnerving, unsettling and for paycheck-to-paycheck families extremely stressful.  This creates leverage for corporations to require vaccinations for employment.  I wish I had the answers; alas, I do not.

Bottom line is…  Depending on your personal situation,  prepare yourself now for prices to continue rising on both consumable and durable goods.  In the longer term, specifically due to a lack of purchasing, durable good prices will level and eventually drop.  Less people buying stuff makes prices drop as competition triggers and businesses selling durable goods look to survive.  Unfortunately at that point we are usually headed to a recession.

The downside for a drop in durable good purchasing is the workforce behind the manufacturing, distribution and sale of those goods are at risk of losing employment.  Again, a natural outcome.  For the auto-industry, and heavy industrial manufacturing, this is the time of year when retooling is taking place and some manufacturing and production lines are closed.  However, when they return to production those companies might be shocked to find fewer purchase orders for the goods they produce.

Employment is currently stable (especially in the freedom zones); but we should watch for continued signs of consumer spending contraction.  Any employment contraction will be made worse by the millions of illegal aliens now purposefully permitted to enter our nation.

Keep in mind, the Federal Government is pumping money into their command and control economy.  This short-sighted (I would say purposeful and ideological) monetary and economic policy is contributing to massive inflation.

Inflation puts pressure on incomes and savings…. which puts demands on government to support income losses…. which leads to govt pumping more money.  This is the dependency and welfare cycle that seems intentionally being deployed by Biden and the socialists behind him.

FORBES – “Consumers spent less last month than economists had expected, buying fewer things online and holding off on car purchases, the Census Bureau reported Tuesday morning, following Friday’s report of “a stunning loss of confidence

[…]Consumers spent 1.1% less in July than June, more than the 0.3% decline economists cited by MarketWatch had been expecting, after increasing 0.7% the previous month. The decline was driven by the lack of motor vehicle sales, which fell 4.3%.  Nonstore retailers, which includes online shopping, fell 3.1%” (link)

Shortages & Unemployment


Armstrong Economics Blog/Economics Re-Posted Aug 13, 2021 by Martin Armstrong

The Federal Reserve’s take on the coin shortage says that there are ample coins in the economy, but the banks have also been closed so there was a shortage also created by the fact that businesses could not get coins from a local bank that was operating only in a virtual mode. This also contributed to the problem. So banks, mints, transportation, and mines were all shut down which has created the problem you see in coin shortages, but this similar problem has infected all of the economies. So we have shortages in just about everything.

What COVID has done is tapped into those who prefer welfare and have no problem not working as long as everything is free. Organizations have been formed to keep living for free with no consideration of what that really means to the economy as a whole. They are out in full force to prevent evictions and they only look at this from their perspective. If the landlords are not paid, then they cannot pay their mortgages, and then the banks foreclose. Living free is not a long-term solution but we can easily see how many would love Guaranteed Basic Income with no responsibilities. Without rents, landlords can’t pay mortgages but also repairs. So they will demand landlords repair their place but refuse to pay for anything. What will happen is simple. They will convert private property into state housing and then you will have converted New York City to one giant ghetto.

Everywhere you look there is help wanted signs yet unemployment will not decline. I get a lot of emails from small businesses that cannot go back to normal because there is not enough staff. We even have Judges who have totally lost their mind ordering Maryland must continue to pay the extra unemployment benefits. This is raising unemployment costs in taxes upon those who are working.

You really can’t make up this nonsense. Nobody in their right mind would have created such a system – even a socialist, which would just argue to confiscate property to prevent evictions. Those of us who are working will pay more in taxes to support those who want a free lunch and everything else.