Inflation Alert! Short and Medium-Term Inflation Expectations Continue to rise! Median short-term (one-year-ahead) inflation expectations increased by 0.1 percentage point in September to 5.3%, the eleventh consecutive monthly increase
Inflation Alert! Short and Medium-Term Inflation Expectations Continue to rise! Median short-term (one-year-ahead) inflation expectations increased by 0.1 percentage point in September to 5.3%, the eleventh consecutive monthly increase and a new series high since the inception of the survey in 2013!
https://www.newyorkfed.org/microeconomics/sce#/
https://www.newyorkfed.org/newsevents/news/research/2021/20211012
According to data released today, consumersโ median inflation expectations for one year from now jumped to 5.3% in September, the highest in the survey data going back to 2013 (11th month in a row it has increased). Inflation expectations for three years from now jumped to 4.2%, also the highest recorded by the survey... So, what is going on?
First, people seem to understand that transitory is a lie:
Interesting if you make less than $50k, your expectations of inflation are significantly higher. I imagine since it is everyone in this group (the majority of people) feeling the pricing squeezes now of 'transitory' inflaiton.
As you can see, inflation expectations are raised--something that makes JPow and his central banker friends nervous. 'Inflation Expectations' was mentioned 12 times in the recently released FOMC meeting minutes from July 27-28.
All of this in the background of people realizing costs are really going up and now expecting it:
I find it interesting people think the overall inflation rate one year from now will be 5.3%, when they expect the major factors that drive this rate to be way higher--from 5.9% for college education to 9.7% for rent:
- Rent: +9.7% (new record)
- Food prices: +7.0%
- Gas prices: +5.9%
- Health care: +9.4%
- College education: +5.9%.
- Home prices: dipped for the 4th month in a row to +5.5% (down from a peak of 6.2% in May).
All of these costs are going up in the background, but people are only expecting a 2.9% raise:
Inflation is going to eat any sense of a raise!
The Fed is still continuing to plow away with $120 billion in assets purchases each month:
$40 billion a month in mortgage-backed securities. This will continue to depress mortgage rates and only continues to add gasoline to the inflation fire.$80 billion in Treasury securities a month (with policy rates near 0%): represses short-term and long-term interest rates in general, and inflates asset prices and consumer prices, which further DESTROYS the purchasing power of the dollar.
TL:DR - The Dollar losing purchasing power + Inflation = Permanent Loss of purchasing power. Unless one of the many other catalysts triggers the MOASS, I believe inflation is the match that has been lit that will light the fuse of the rocket.
Buckle Up.
