William Katz:  Urgent Agenda

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THE INFLATION BALLOON:  The new inflation statistics are out, and they aren't good for the country, or the administration.  From CNBC:

Shoppers paid sharply higher prices for a variety of goods in June as inflation kept its hold on a slowing U.S. economy, the Bureau of Labor Statistics reported Wednesday.

The consumer price index, a broad measure of everyday goods and services related to the cost of living, soared 9.1% from a year ago, above the 8.8% Dow Jones estimate. That marked the fastest pace for inflation going back to November 1981.

Excluding volatile food and energy prices, so-called core CPI increased 5.9%, compared with the 5.7% estimate. Core inflation peaked at 6.5% in March and has been nudging down since.

On a monthly basis, headline CPI rose 1.3% and core CPI was up 0.7%, compared to respective estimates of 1.1% and 0.5%.

Taken together, the numbers seemed to counter the narrative that inflation may be peaking, as the gains were based across a variety of categories.

"CPI delivered another shock, and as painful as June's higher number is, equally as bad is the broadening sources of inflation," said Robert Frick, corporate economist at Navy Federal Credit Union. "Though CPI's spike is led by energy and food prices, which are largely global problems, prices continue to mount for domestic goods and services, from shelter to autos to apparel."

The inflation reading could push the Federal Reserve into an even more aggressive position.
Traders upped their bets on the pace of interest rate increases ahead. For the July 26-27 meeting, a full percentage point move now has a better than even chance of happening, according to the CME Group's FedWatch tool as of 10:40 a.m. ET.

"U.S. inflation is above 9%, but it is the breadth of the price pressures that is really concerning for the Federal Reserve." said James Knightley, ING's chief international economist. "With supply conditions showing little sign of improvement the onus is the on the Fed to hit the brakes via higher rates to allow demand to better match supply conditions. The recession threat is rising."

Energy prices surged 7.5% on the month and were up 41.6% on a 12-month basis. The food index increased 1%, while shelter costs, which make up about one-third of the CPI rose 0.6% for the month and were up 5.6% annually. This was the sixth straight month that food at home rose at least 1%.

Rental costs rose 0.8% in June, the largest monthly increase since April 1986, according to the BLS.

Stocks mostly slumped following the data while government bond yields surged.
Much of the inflation rise came from gasoline prices, which increased 11.2% on the month and just shy of 60% for the 12-month period. Electricity costs rose 1.7% and 13.7%, respectively. New and used vehicle prices posted respective monthly gains of 0.7% and 1.6%.

Medical-care costs climbed 0.7% on the month, propelled by a 1.9% increase in dental services, the largest monthly rise ever recorded for that sector in data that goes back to 1995.

COMMENT:  Read the rest for the full picture.  Americans are going through increasingly tough times.  Will their pain be reflected in the November midterms?  Yes, but it's hard to predict by how much.  The Republican Party is not, right now, coming out with great ideas.  It is spending its time sniping at the president.  It will take more than that to create the Republican windstorm that our side is dreaming about for November.  We need a new contract with America, a list of exactly what Republicans plan to do for the people if elected in the midterms.  We can't just be naysayers.

July 13, 2022