patrick.net

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https://www.msn.com/en-us/money/markets/u-s-money-supply-is-doing-something-it-hasn-t-done-in-90-years-and-it-may-signal-a-big-move-for-stocks/ar-AA1axP9c

M2 money supply which includes savings accounts and certificates of deposit has taken a major drop recently.

This could help to decrease demand enough to slow down the rate of inflation.

My cousin works for Dotty's in Las Vegas and she has noticed a major decrease in tips over about the last 6 months. Also she works part time and has noticed that the full time workers are calling in sick less and taking less unpaid time off because they need as many work days as possible.

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Interesting as the big techs tighten their budget belt and do go on hiring spree in order to prevent tech workers from working at their competiton....

This should reduce the rate of inflation as there is less money for them to buy shit on Amazon and buy second homes in Sedona, Arizona, Breckinridge, Colorado, Boise, etc.... anybody saw the recent M2 money supply graph lately ?

https://www.wsj.com/articles/tech-workers-arent-as-rich-as-they-used-to-be-d2292d64

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ad says

anybody saw the recent M2 money supply graph lately ?

Patrick says

And take back more than they gave you.

Trucking industry says we are in a trucking recession. Lesser trucks on the road means the price of diesel (and also gas) should go down.

https://www.businessinsider.com/frieght-recession-trucking-companies-struggle-to-stay-afloat-2023-5

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Also the Baltic Dry Bulk Index is a good indicator for forecast a recession seems to have stalled after bottoming recently to around 550.
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https://rudy.substack.com/p/noted

Patrick says

https://rudy.substack.com/p/noted

That is why people have to downgrade in other areas to afford housing such as eat less quality food, and not go on vacation.

Or they have to lower their housing standards like share their home with a roommate.

All of this is just quality of life or standard of living getting progressively reduced as annual wage growth is +1% less than CPI :-(

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https://www.calculatedriskblog.com/2023/05/update-framing-lumber-prices-down-57.html

Framing Lumber Prices Down 57% YoY, Below Pre-Pandemic Levels

https://www.homedepot.com/p/2-in-x-4-in-x-8-ft-Prime-Whitewood-Stud-058449/312528776
Shows $3.35 in my area.

CPI (or 12 month inflation)is 4.9% for April 2023. CPI peaked around 9.1% back in June 2022.

I suspect the CPI for June 2023 will be much lower than 4.9% given how high prices were in June 2022.

What is promising is the Fed Funds rate is at 5.25% and is finally higher than CPI. This is the first time this has happened since 2007.

Recall CPI averaged 1.5% for Obama's 8 years in office, yet the Fed Funds rate was kept for about 7.5 years at 0.25%.

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zzyzzx says

Framing Lumber Prices Down 57% YoY, Below Pre-Pandemic Levels

Lumber is at 2005 price levels. This will help to drive down housing costs.

I wonder also if this price drop in lumber is in part due to a 20% drop in housing construction.

https://fred.stlouisfed.org/series/HOUST

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ad says

Lumber is at 2005 price levels. This will help to drive down housing costs.

Lower lumber costs will not lower house costs as the cost of labor more than makes up for it. Talk to someone who recently contracted a home improvement.

HeadSet says

Lower lumber costs will not lower house costs as the cost of labor more than makes up for it. Talk to someone who recently contracted a home improvement.

Perhaps labor inflation has peaked and will at worse remain constant.

With a major drop in material for construction, then that should help reduce housing construction costs.

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Have you all noticed food prices at least stabilizing ? CNN reports egg prices are declining.

The biggest egg producer, Cal Maine Foods, stock price is down about 30%.

https://www.cnn.com/2023/05/15/business/egg-prices/index.html

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This Alabama lumber mill (Thorsby Wood Manufacturer) had planned to cut 200 jobs. But it decided not to as 40 workers left due to attrition and the economy is doing well enough not to lay off workers.

https://www.bizjournals.com/birmingham/news/2023/05/15/thorsby-wood-manufacturer-lay-off-construction.html

But check out how much lumber prices have crashed over the last few months.

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So if you’ve got space to hoard it, and you’ve been planning a project, now’s probably a good time to buy your lumber order huh? Or wait more???

Yep. Prices now really affordable. Post was for $42, now. $12.

ForcedTQ says

So if you’ve got space to hoard it, and you’ve been planning a project, now’s probably a good time to buy your lumber order huh? Or wait more???

Dollar cost average. Buy and store some lumber each month.

I think there is more downside to lumber prices but no more than 10 to 15% below current price.

I don't see housing construction stopping in the Florida panhandle.

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Personal Consumption Expenditure is more comprehensive than Consumer Product Index such as it takes also into account non urban area inflation.

The latest 12 month PCE is 4.4%, so its been slowly trending down from the annual peak PCE of 7% in 2022. I would not be surprised if the Federal Reserves readjusts its annual inflation target to 3% to 3.5% (from originally 2%).

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From copper to wheat to natural gas, the cost of some of the world’s most important products is crashing, bringing long-awaited relief for consumers that were stung by last year’s soaring prices.
The commodity crunch unleashed by Russia’s invasion of Ukraine has taken a sharp reversal, with a Bloomberg gauge dropping more than 10% since the start of the year to the lowest since 2021.

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For households and businesses, the benefits are already starting to show up as headline inflation rates fall, taking some pressure off central banks to keep aggressively raising borrowing costs.

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Energy prices have been at the forefront of this year’s commodities plunge, particularly in Europe, where natural gas futures have tumbled by about two thirds this year after shooting to records last summer. 
Even oil and its derivatives have gotten cheaper, despite an agreement by producing countries to curb crude output. Diesel prices in the US have fallen more than 30% from their 2022 peak, providing relief for truckers, farmers and consumers in the world’s largest economy.
In Germany, inflation slowed more than forecast in May, driven by energy, according to data published Wednesday. Price growth is cooling across the region, a trend expected to be seen in euro-area numbers due Thursday.

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Futures for wheat have more than halved from last year’s record high.

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Brazil is collecting its biggest-ever corn and soybean crops, tempering feed bills for chicken and hog herds. And vegetable oil prices have dropped sharply.
Restaurants and retailers are starting to take note. Last week, the chief financial officer of US burger chain Red Robin Gourmet Burgers Inc. said on an earnings call that commodity inflation was less strong in the first quarter than expected and should continue to moderate. The head of BJ’s Wholesale Club Holdings Inc. said the retailer has “seen disinflation across the business.”

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“I would expect food prices to fall over the next six months, that’s certainly the forecast here in the US,” said Joseph Glauber, senior fellow at the Washington-based International Food Policy Research Institute. “All the signs on the commodity side still point to essentially lower prices by the end of the year with the new harvest in. It’s just taking a while for this inflation at the consumer level to abate.”

-- Bloomberg

The drop in commodity prices isn't as dramatic when priced in other currencies.

As bad off as the dollar is with our banks sitting on about $620 billion of unrealized losses (that's not even factoring in non-payment losses), what sorta passes as currency in the rest of the world has been going down against the dollar.

https://rudy.substack.com/p/the-calm-before-the-storm

"I don't feel the pain of inflation anymore. I see prices rising but I have enough... I sometimes balk at the price of things, but I don't find myself in a space where I have to make tradeoffs because I have enough, and many Americans have enough."

- SF Fed President Mary Daly




In 2021, Mary Daly made $500K, just in salary. There were 1,800 employees at the San Francisco branch alone. She had 140 'other officers’ making an average of $272k each, plus juicy benefits, bonuses and pensions.

Yeah, she has enough, so fuck the plebes.

"'I don't feel the pain of inflation anymore. I see prices rising but I have enough... I sometimes balk at the price of things, but I don't find myself in a space where I have to make tradeoffs because I have enough, and many Americans have enough.' - SF Fed President Mary Daly "

Patrick says

"Yeah, she has enough, so fuck the plebes. "

Yes, she makes $790,135 /year so she has enough! https://www.salary.com/research/company/federal-reserve-bank-of-dallas/president-chief-executive-officer-salary?cjid=9245696

Ripped off from another thread:

zzyzzx says

Ripped off from another thread:

Since the photo has palm trees in it, that house may be in southern California. Minimum wage in the 1950s was about $1 per hour, today it is about $16 per hour. Therefore, in the 1950s it would take 7,900 hours to buy that home, but assuming that home is worth $350,000 today it would take 21,875 hours. Even if the home cost $200,000 today and working at $20/hr, it would take $10,000 hours.

60 days after this June 30, student loan debt are no longer in deferment, and have to be paid.

source: https://www.nerdwallet.com/article/loans/student-loans/federal-student-loan-forbearance-extended-yet-again

Also read below. This will likely have a more positive impact as far as lowering inflation in certain segments or aggregates such as less demand for cars, electronics, upscale groceries, etc. It may cause them to try to haggle to lower the rent for their luxury apartments.

" The end of the student loan deferment program, which allowed consumers to save an average of over $15,000 since March 2020, will have a significant impact on consumer spending. With 64% of the $1.7 trillion student loan debt remaining in forbearance, the resumption of payments will create a cash flow shock for many households, particularly among the 25 million Americans ages 18-44 who have deferred their payments. This demographic plays a crucial role in driving consumer spending, and the sudden increase of approximately $393 per month in loan payments will likely lead to reduced discretionary income and a potential decrease in spending capacity. "

source: https://zerohedge.com/markets/bullwhip-effect-cracking-us-imports-peak-season-again

ad says

This demographic plays a crucial role in driving consumer spending, and the sudden increase of approximately $393 per month in loan payments will likely lead to reduced discretionary income and a potential decrease in spending capacity. "

Good. This will make things more affordable for actual working people.

I was reading Wolf Street's blog post today about Fed Chair Jerome Powell stating core inflation has at best slowly decreased as is not where the Fed wants it to be.

That's a lot because there are not enough qualified worker and capacity to meet the demand. Maybe there are too stupid and lazy people starting out in workforce.

Its a 3rd world economic environment, where the services and goods that you took for granted in the past are more expensive and less available today.

As a country we got to put less emphasis on woke and social justice and more on innovation and productivity gains.

We have to learn how to be more self-sufficient at the family and individual unit level from fixing things at home instead of throwing them out, and growing our own food. This is somewhat of a homesteading mindset.

Also bring back more manufacturing capabilities.

Patrick says

True Patrick, as it is relative to last 12 months ago.

Awaiting if 12-month or annual Consumer Price Index and Personal Consumption Expenditure will be below 3% next year and remains below 3% for a couple of years.

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