Welcome to Stagflation-land

Watch out Bard. Somebody might not like those numbers and have you fired.


But in all seriousness, I don’t think this is a surprise and I think we still get 25 bps. I also think we might see inflation over 3% before year end. Who knows what we do then.

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Despite this, I still think we get .25 next week.

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I feel like this is probably what's going to happen, but I'm going to try and free up some cash for just in case.

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as the Fed is in a very tight spot

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Yea seems like they are trapped.

Either accept stagflation or a recession. I don't see how both can be avoided

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Personally, I think it’s a fundamental flaw in the Fed’s “soft landing” BS. Jobs have to be lost, consumers have to spend less, and the economy has to slow to get inflation under control. IOW, you can’t tame inflation without economic pain.

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I'm wondering if that isn't the plan. We've been in a growth environment inflation-wise since April and last month saw us easing back up to just below 3%. Last year when rates were cut .5, we were in an environment where inflation's growth was shrinking (and had been since March 2024).

While the BLS revisions have been ridiculously bad, there was still positive job growth over the last 12 months (only 2 out of the 12 were negative).

So a .25 cut in this scenario should cause a similar increase in inflation, especially if that's followed up with the two extra cuts this year some are expecting.

I don't think any job growth from the cuts will be enough to balance for the increase in inflation.

No idea what is happening in Texas. My guess is they are seeing a major contraction in their economy driven by aggressive deportation.

When you deport someone, your economy shrinks by the amount of output they produce. Thus, if you deport 500k people that produce economic output of $50k each your economy shrinks by $25B

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SVDTiger

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“Too Late is a U.S. American who can’t read a graph because most U.S. Americans don’t have graphs like South Africa and the Iraq and like everywhere such as. He needs to help the Iraq to cut rates and build up our future.”

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Better be more than a .25%

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Last year's .5 cut, in an shrinking inflationary environment jumped inflation up ~.6% by January. Granted, that was kept moving by two more cuts before the end of the year, but that turnaround happened the very next month after the .5 cut.

Doing that in our current environment where inflation has already been growing would likely mean

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Arent they using 3.6 for shelter when rents are 2.2?

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Removing Shelter from the equation entirely puts CPI at 2.3%, which is what it was for July as well. The greater context though is that CPI sans Shelter has been growing every month since at least March through July. When we had the .5 cut last year, it was the opposite in that the same statistic had been dropping every month since at least March of that year (2.34% in March 2024 to 1.09% in August 2024).

Cutting rates by .25 is already going to push inflation up, cutting by .5 would drive it up further and faster than what we saw last year.

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This is just ridiculous and wrong as always

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Like how inflation wouldn't come back after last year's .5 cut?

I believe the real question is, how many cuts this year. 2 or 3?