CONK!
Note: If you become an annual paid subscriber, you will receive an autographed copy of my memoir. Please send me your address and I will mail you my book.
Robert Wright’s review of my book captures the essence of my journey in America.
“There is a right way and a wrong way, always choose the right way.” Abraham Sabrin (1914-2001)
We the People of the United States, in Order to form a more perfect Union, establish Justice, insure domestic Tranquility, provide for the common defence, (sic) promote the general Welfare, and secure the Blessings of Liberty to ourselves and our Posterity, do ordain and establish this Constitution for the United States of America. Preamble to the Constitution
The BLS reported today that the August CPI rose .06 percent, the fastest monthly rate in 2023. Prices increased 3.7 percent from a year ago. Gasoline prices rose 10.6 percent from a month earlier and fuel oil spiked 9.1 percent. Used car prices declined 1.2 percent, good news for anyone who was in the market for an affordable vehicle.
Motor vehicles and other “consumer capital goods” such as computers, cell phones, single family homes, condos and other long-lived goods should not be included in the CPI. There should be a separate price inflation category, because we do not buy these goods frequently and are not really part of our “cost of living.”
Motor vehicle insurance jumped 2.4 percent and skyrocketed 19.2 percent from a year ago. Motor vehicle maintenance and repair rose 1.1 percent last month and is up 12.0 percent from a year ago. In short, the cost of owning a motor vehicle is taking its toll on the average American family’s budget. One bright spot in the report, utility gas service has declined 16.5 percent from a year ago.
Nevertheless, the WSJ article highlights how most Americans have seen their real incomes fall precipitously in 2022. Bidenomics is a loser.
Will the uptick in consumer price inflation last month be the start of a new up cycle? No one knows for sure. With the price of oil in a new uptrend, consumer price inflation will probably stay elevated.
Another view of inflation calculated by the Cleveland Fed is considered a more accurate snapshot of inflation.
As FRED (https://fred.stlouisfed.org) explains, “Median Consumer Price Index (CPI) is a measure of core inflation calculated the Federal Reserve Bank of Cleveland and the Ohio State University. Median CPI was created as a different way to get a ‘Core CPI’ measure, or a better measure of underlying inflation trends. To calculate the Median CPI, the Cleveland Fed analyzes the median price change of the goods and services published by the BLS. The median price change is the price change that’s right in the middle of the long list of all of the price changes. This series excludes 49.5% of the CPI components with the highest and lowest one-month price changes from each tail of the price-change distribution resulting in a Median CPI Inflation Estimate.
“According to research from the Cleveland Fed, the Median CPI provides a better signal of the inflation trend than either the all-items CPI or the CPI excluding food and energy. According to newer research done at the Cleveland Fed, the Median CPI is even better at PCE inflation in the near and longer term than the core PCE.”
Statistically, the Median CPI focuses on prices that are not “volatile” month to month, and thus provides information about underlying price pressures in the economy. For the past year, the Median CPI rose 5.7 percent, two percentage points higher than the CPI. Inflation is a long way from the Fed’s 2 percent inflation target.
For you night owls I will a guest on Jim Peters podcast tonight at 11:25pm ET.
Tomorrow the PPI is reported.
****************************************************************************
My latest piece on the economy was published in Fortune, https://fortune.com/2023/03/27/ -2023-layoffs-tech-finance-unemployment-outlook-fed-rates-murray-sabrin/ This is an update of my 2021 forecast, ht tps://fortune.com/2021/12/09/next-recession-heres-everything-bubble-markets-2021-2022-covid-murray-sabrin/
*****************************************************************************
Murray Sabrin, PhD, is emeritus professor of finance, Ramapo College of New Jersey. Dr. Sabrin is considered a “public intellectual” for writing about the economy in scholarly and popular publications. His new book, The Finance of Health Care: Wellness and Innovative Approaches to Employee Medical Insurance (Business Expert Press, Oct. 24, 2022), and his other BEP publication, Navigating the Boom/Bust Cycle: An Entrepreneur’s Survival Guide (October 2021), provides decision makers with tools needed to help manage their businesses during the business cycle. Sabrin’s autobiography, From Immigrant to Public Intellectual: An American Story, was published in November, 2022.
and