The media continues to amplify a prevailing economic narrative. It’s a familiar tune…
…that the post-pandemic boom is thriving, growth is robust, and optimistic days lie ahead.
Yet, when you pay close attention, several dissonant notes emerge.
Recently, the Commerce Department announced that the Gross Domestic Product (GDP) grew at an annualized rate of 6.5 percent in the second quarter. While this may initially appear encouraging, it falls short of economists’ projections from Dow Jones, which anticipated an 8.4 percent increase. Once again, the consequences of heavy fiscal stimulus have begun to manifest, resulting in a discordant economic landscape.
The Federal Reserve’s approach to monetary policy is also less than harmonious. During a press conference following this week’s Federal Open Market Committee meeting, Fed Chair Jay Powell stated, “we’re some way away from having had substantial further progress toward the maximum employment goal.”
As a result, the Fed plans to keep the federal funds rate near zero. Additionally, it will persist in creating credit from nothing, continuing its monthly purchases of Treasuries and mortgage-backed securities at $120 billion—specifically, $80 billion and $40 billion, respectively. Continue reading
The current zeitgeist, perpetuated by media discussions, is marked by a climate of constant anxiety. The underlying tactic seems to be cultivating profound panic among the masses, as a frightened populace tends to be more compliant.
The latest specter haunting us is the delta variant of the coronavirus, now circulating among the population, as viruses typically do. Reports indicate that the lambda variant has also begun to spread.
However, a more insidious threat looms larger than any mutated virus: the contagion of fear itself. This contagion stems from overzealous central planners, who disseminate anxiety at a staggering pace.
Just last Sunday, Treasury Secretary Janet Yellen expressed concerns after a gathering of G20 finance ministers, stating her apprehension that “coronavirus variants could derail the global economic recovery,” urging a rapid acceleration in global vaccine distribution. Continue reading
What occurs when the chickens finally come home to roost?
This presents today’s critical inquiry. But what is the answer? Before we delve into potential insights, we must first examine the current situation.
This week, the Bureau of Labor Statistics revealed that consumer prices, as determined by the consumer price index, surged by 5.4 percent year-over-year in June—the fastest rate of inflation since 2008. Excluding food and energy, the year-over-year increase stood at 4.5 percent, marking the quickest rise since November 1991.
In truth, consumer price increases may be even more pronounced. The “unofficial” inflation rate, calculated using methodologies from 1980, suggests a staggering 14 percent. Such inflation is particularly harmful to retirees, savers, and workers.
Nonetheless, the Federal Reserve seems unfazed. Last Thursday, Chair Jay Powell informed the Senate Banking Committee he’s “not concerned” about rising living costs, maintaining that the inflation trend is temporary; he still believes that soon, used car prices will stabilize and inflation will dip below the Fed’s 2 percent annual target. Continue reading
“I want to talk about happy things, man.” – President Joe Biden, July 2, 2021
Lingering Crisis
While the prices of certain commodities have decreased, this decline is insufficient to declare the end of price inflation.
Lumber futures, for instance, fell more than 40 percent in June—the most significant drop for lumber since the 1970s. However, after skyrocketing from roughly $495 per thousand board feet in October 2020 to over $1,423 in April 2021, current prices of $718 remain nearly double the 30-year average.
Similarly, futures for lean hogs have also seen reductions. After soaring to 121.95 cents per pound on June 9, prices have now adjusted to 110.10. Despite this recent downturn, lean hog prices have still surged by over 57 percent since the start of 2021.
A year ago, raw sugar futures were priced at 11.76 cents per pound. By February, they peaked at a four-year high of 18.49. As of this writing, raw sugar futures stand at 17.45, with some of this increase attributed to concerns regarding drought conditions affecting Brazilian sugarcane production. Is it time to consider investing in your portfolio? Continue reading
