The latest Inflation reports are bad, but not a total disaster; still, there should be some truth remaining in the data when the Day is finished. I have just read a NYTimes article which stated that year-over-year Core inflation was slightly over 2%. Resurrection of the CBS tag line: Reality Check--the Inflation rate was over 4%, and closer to 5%. Core Inflation figures cannot be utilized in year-over-year evaluations, when the Volitile Product prices have not changed direction, or reduced, over the interval year. Those that contest that We are not in 1966 should realize We are talking about 1967: Military expenditures equally as high, another new Welfare program initiated (Proscription D), a high Inflation rate, and Profit Margins having nowhere to go but down. Manufacturing Orders are up, Unemployment is still high but going down, Commodity prices slowly going down, and a Trade balance reminding of a Friday the 13th movie.
Lowering Unemployment will raise the CPI without much impact from Fed rate increases. Corporate Profit margins of high order will not spur Investment, but Consumption, if there is lack of high-Profit investment in a climate of Consumer belief in loss of purchasing power of the Dollar. Transfer of Government funds to Health Care provision (Proscription D again) will incite a new round of Health Care inflation. Automobile Prices will reverse almost immediately upon a upward trend in Auto Sales. Discussion of Core Inflation will soon be a Lame Duck economic issue.
The real curitive of Inflation is Taxation: a Subject opposed by both President and Congress, to say nothing of State Legislatures. Nothing else will curb Consumption, nothing else will limit Investment to high-Profit Capital ventures. Taxation is the Golden Calf, which Everyone wishes were Iron Pirite. lgl