Quo Vadimus?

We are either in recession already or about to enter one. Lakshman Achuthan of ECRI thinks we’re in a Roadrunner moment – we’re off the cliff but  haven’t looked down yet. It sure feels like that – too many analysts are supremely confident that inflation will fall away, the Fed will pivot back to money-printing and everything will be back to the way it was – the “new normal.” It just sounds too good to be true.

Powell isn’t fighting inflation. Dinky little increases in interest rates are an attempt to build confidence that the Fed is doing something. This excellent article makes a good case that he’s channeling Arthur Burns, not Paul Volcker.

The massive government deficit hasn’t gone away. Sure, it has moderated somewhat, but the Biden administration still firmly believes that it can spend whatever it wants without consequences. Biden is channeling Nero.

The “climate change” idiocy continues. No need to repeat previous posts on this subject, other than to observe that reducing the availability of fossil fuels without providing a new base load infrastructure is economic suicide.

Tight labor markets mean that the wage/price feedback loop can – and will – be sustained.

The housing market continues manic, despite rising mortgage rates. Of course the individual first-time buyer is affected, but institutional buyers with cash have moved in. Shelter is the largest component of CPI and is a lagging indicator.

This spring and summer’s crops were planted with last year’s fuel and fertilizer costs. These costs will bite with the fall harvest. And by the way the west of the country is in severe drought.

Other than that, Joe, how’s it going? Joe? Anybody home?

Both comments and trackbacks are currently closed.