What are folks predicting regarding tomorrow’s official inflation number? My guess: 4% annual.
What’s the real rate? Let’s look at this Microplane cheese grater, a combination of U.S. and Mexican manufacturing. It was $12.95 in November 2014.
Adjusted to official CPI, it should be about $18.50 today. In fact, however, it had gone up to only $12.99 at the end of June when I decided to see how much sharpness these things lose after 12 years of abrasion in the dishwasher.
Does this prove Elon Musk at least partially correct? If everything can be done by machine then perhaps we won’t have epic inflation anymore. If we continue our addiction to population growth via immigration we could still host raging real estate inflation (“they’re not making any more land”), though even that could be ameliorated with construction robots (“they’re not making any more condos,” as my bond hedge fund manager friend likes to say in response to the classic line, which is certainly a great lesson for anyone investing in Florida (it can be tough to give away older condos right now, but single-family homes remain valuable and so do condos in new or new-ish buildings)). And maybe we could have inflation in food prices because food production is limited by how much damage we are willing to inflict on the environment, e.g., dumping fertilizer-rich water into the Gulf of America, which paradoxically, creates the Gulf of Mexico Dead Zone.
On the bright side, Narcan is “free” (not “taxpayer-funded”) in Cambridge, Maskachusetts:
> “they’re not making any more land”
Except they are!
https://en.wikipedia.org/wiki/Land_reclamation
(Partially filled with dull truffle graters, of increasingly poor quality. I wish vape rigs were getting cheaper.)
Your 4.0% CPI forecast for July (for the *official* July YoY% # to be reported tomorrow) will almost surely be way high vs. what is reported. The consensus today is 3.4% and consensus rarely differs by as much as .6% (zero times in past 5 years). Also, over the past 12 months consensus has overestimated it in 8 months, underestimated it in 1 month and matched it in 3 months.
The official number will be 3%. 10% durable goods – 7% wage deflation. If production was unlimited, the fed would print money until inflation covered the national debt anyway. Deflation is not allowed under monetary policy.