Here's a statement of the obvious: The opinions expressed here are those of the participants, not those of the Mutual Fund Observer. We cannot vouch for the accuracy or appropriateness of any of it, though we do encourage civility and good humor.
Rates: Fed funds held at 4.25-4.50%, bank reserves rate at 4.40% (generous), discount rate at 4.50%. Treasury QT continued -$5 billion/mo, MBS QT at -$35 billion/mo.
Inflation-expectations remain high now but should be headed down longer term. Rate increases cannot be ruled out, but they have very low probability for the next few years. Prospects of tariff-inflation are unclear. GDP growth has been distorted by abnormal imports/exports ahead of tariffs. Oil & gasoline prices have move up on Israel-Iran skirmishes, but those hikes may not stick (or, may). The US is almost self-sufficient in oil & gas, so it's less vulnerable to external disturbances.
Labor market is solid. Wage growth is moderate. The unemployment rate of 4.2% is still near full employment. Both labor supply & demand have deteriorated, but they remain in balance. This may explain why tougher immigration hasn't affected the labor data yet. However, it's harder to find new jobs or replacement jobs.
Housing has additional complexity in that its short- and long- term outlooks are different.
Uncertainties have diminished but remain elevated due to tariffs, trade, immigration & geopolitics. These have caused wider dispersions in the SEPs. However, pay more attention to short-term projections.
Effects of AI may be positive (general prosperity) or negative (deflationary). AI may augment the labor or replace it. But changes would be transformational.
Fed is data dependent but also forward-looking, so he couldn't be tied down to what the past data showed.
Economic data collection is important because good data benefits all - public, businesses, government. It's an investment in the future.
US fiscal policies & big global economic changes aren't within the purview of the Fed, so it will wait & react to those as they come.
New SEPs (summaries of economic projections) were released.
5-yr review of the Fed about policies & communications is almost complete. These reviews have been done since 2012 - they were done annually at one time, but now every 5 yrs. It's not affected by changes in Fed leadership. Fed staffing level has been reduced as the government shrinks overall. Powell declined comment on whether he will stay on as Fed Governor after his term as Chair expires (that may determine whether the new Fed Chair after 05/2026 may be internal or external); he also declined to address President Trump's comments about him in the media.
@Sven, since nobody else really showed up at the parade, a few soldiers could have done that and it's possible we'd never know!
The possibility of stagflation looms on the horizon, and the Fed must remain vigilant. Tariff talk alone has likely damaged the US as an international trade partner, and this summer's batch of economic reports may be telling.
I didn't pay much attention to the parade actually, but I did happen to see one photo of some heavy equipment (either tanks or Armored Patrol Vehicles) moving down the street. The hatches on the top were open and there were three service people standing and looking out from the hatches.
The person in the front hatch was a rather pretty young woman, who was smiling and obviously enjoying the whole thing.
You can't tell me that wasn't a statement by the Army to whoever happened to be watching... say, for instance, a person named Trump.
I didn't pay much attention to the parade actually, but I did happen to see one photo of some heavy equipment (either tanks or Armored Patrol Vehicles) moving down the street. The hatches on the top were open and there were three service people standing and looking out from the hatches.
The person in the front hatch was a rather pretty young woman, who was smiling and obviously enjoying the whole thing.
You can't tell me that wasn't a statement by the Army to whoever happened to be watching... say, for instance, a person named Trump.
I happened to watch the “stupid liar” remark on Bloomberg TV this morning. Bloomberg followed it immediately with a Liz Ann Saunders interview. What a contrast in class and decorum.
Saunders fears that if Powell or some new Trump appointed Fed Chair aggressively pursues rate cuts, the longer end (10+ years out) might actually move higher as it did a year ago. Sure wouldn’t be good news for the housing sector.
@JD_co, Agree with your assessment . Low growth and elevated inflation provides stagflation that could be really bad on multiple fronts. It took 100 days to destroy the western alliances that took several decades to form. Powell is doing the right thing on interest rates. As I mentioned earlier, I don’t expect a rate cut this year.
Is American Exceptionalism still persist? Will US dollar remain the main global currency? The views are changing fast for the worse in my view. 2026 mid-term election cannot come fast enough.
At Sven. As I have repeated too many times we are only the next “national emergency “ from the 2026 mid-term elections being called off. The regime is not ruling as if it cares about any future election…… if we are counting on the mid terms saving us we might be tragically disappointed.
Inflation is among us!! I don't know about you but everything I buy on Amazon is 1 or 2 bucks more even stuff I just bought like 6 months ago. Example today: roach stuff $7.99 in Nov 24, now $9.79 Gas used to be $2.89 all over the place, now it's all $3:09 even with oil prices lower. Summer increase? Just because they are saying inflation is down, I'm not buying it. Can't wait to see what my insurance premiums will be. They all renew in July. Low inflation... I call BS... are they fudging the numbers?
Isn’t that why we invest? To keep up with inflation? My first new car, a ‘70 full sized Plymouth Fury in 1970 cost $2,800. My second new car, a beautiful ‘73 Mercury Montego in ‘73 cost $3,200. I bought a beautiful new F100 pickup in ‘82 for $8,000. A slightly larger new F150 in ‘90 cost a bit over $11,000. In 2005 I bought a similar sized GMC Sierra for just under $20,000. In 2018 a new Honda Accord cost me $26,000, and in 2024 I paid nearly $40,000 for a new Toyota Camry. From 1970 to 2024 the cost of a brand new vehicle for me went from $2,800 to nearly $40,000.
OK - you can knock a few K off the last one. It has AWD. None of the others did. And knock another few K off to compensate for the latest safety and driver comfort items on cars today compared to 1970. However, cars in 1970 were designed to get you from point A to point B just as they are today. And the ride might have been a bit better in those days before weight was reduced. And even in 1970 with proper maintenance a car would go 100,000 miles or more. For some perspective, a good friend recently related that his latest new vehicle, a ‘24 Chevy pickup, cost him around $60,000. I haven’t bought a new truck in recent years, so thought that worth noting.
You can do the same thing with houses, hamburgers, paper towels or whatever. As Gomer Pyle would say: “Surprise!” - Paper currencies over time lose value. Reason we invest.
Inflation is among us!! I don't know about you but everything I buy on Amazon is 1 or 2 bucks more even stuff I just bought like 6 months ago. Example today: roach stuff $7.99 in Nov 24, now $9.79 Gas used to be $2.89 all over the place, now it's all $3:09 even with oil prices lower. Summer increase? Just because they are saying inflation is down, I'm not buying it. Can't wait to see what my insurance premiums will be. They all renew in July. Low inflation... I call BS... are they fudging the numbers?
Glad somebody else is seeing what I am seeing. The official inflation numbers seem to be based on a different reality.
Hi @hank Change the year to 1970, enter the $2,800 cost then and select Calculate. the calculator is based upon CPI, not PCE.
We can't do magic with this, especially with vehicles and the changes over the years for adds to vehicles (i.e., anti lock brakes and everything else that has become standard equipment.)
Thanks Catch. I got $23,200 for the ‘70 Plymouth at today’s prices. I do not believe you can buy that nice a car today for that price. Sorry to disagree with your inflation calculator.
@hank I wasn't trying to value the Plymouth today, but the cost of any similar car today; as with the cost of the Camry. The calculator is close and you have a very much nicer vehicle.
But the Plymouth Fury was a very fine auto for the day. Held the road real well at 80-85 MPH.
Link to new cars under $25,000 today. The Toyota Corolla is one mentioned. I’ve driven them. In no way, shape or form is a Corolla the equivalent of a full sized ‘70 Plymouth.
Thanks for the examples you cited. No argument. Oil has been on a roller coaster the past couple weeks due to the Mid-East turmoil. Climbed to over $80 in the past week or so, but fell sharply back down to $63 today. That’s close to where it’s been running for several months. Hopefully, those gas prices will go back down.
What T’s me off is when enough fresh Romaine lettuce for a large salad costs $5 or $7 at the grocery store - just the lettuce! . Do not understand that at all. I usually pass on it.
Hi @gman57 If more workers don't show for work in the agri business, one won't only have higher prices; but perhaps 'nothing' for some items in the produce section.
YUP, $7 or $8 for 10oz of spinach. Crazy... well at least bananas are still cheap. In a few years that 10 oz of spinach will be about $20. Time and costs march on....
A pound of organic baby spinach is a mere 6 bucks per pound down the streets at Sprouts. No doubt it's cheaper across the street at Aldi where it might not be organic. But I live close to where these things are grown.
Prices on a lot of produce items have gone up at Aldi. They don't mind mentioning that the items are from Mexico. I also notice the differences when I shop at my local Latino, Asian, and Halal groceries.
I stopped shopping at Safeway when they were selling single onions for 69 cents each. So I believe what y'all are reporting, but there might be other venues available. I can buy pounds of onions for a buck at multiple places.
But then I doubt that my parents, or grand parents, expected all manner of produce at reasonable prices throughout the year. Heck, I don't remember flats of blackberries available at any price when I was shopping in San Francisco in the late 20th century; not even at the Marina Safeway.
Is there a guarantee economic conditions will always create the abundance and variety that some of us have been able to enjoy? Will I ever see fresh blackberries under 2 bucks again?
My wife and I have often thought that not even the greatest of ancient kings and rulers were able to enjoy the vast selection of excellent fresh fruits and vegetables that we enjoy, often year around from different countries. Sometimes expensive, yes, but we do have the choice to buy them or not.
My wife and I have often thought that not even the greatest of ancient kings and rulers were able to enjoy the vast selection of excellent fresh fruits and vegetables that we enjoy, often year around from different countries. Sometimes expensive, yes, but we do have the choice to buy them or not.
Yes we do. But thanks to tariffs, some of us have to spend a greater proportion of our income on fresh fruits and vegetables so that others with more income can enjoy tax breaks.
Whether or not tariffs cause inflation, they are a pernicious regressive tax on fresh fruits and vegetables when we are supposedly trying to make America healthy again.
Well. Maybe we can put all of the indebted students to work picking blackberries, spinach, and romaine.
For me a salad is a complete meal - topped with seafood, grilled chicken or occasionally cheese. So it’s a really big platter. Sometimes stores mark lettuce down substantially (more than 50%) when it nears its expiration date. I like deals like that. Hasn’t killed me yet. I’ll confess I picked up a 3-pack of fresh Romaine today that was on sale for only $3.00. Great bargain. So prices vary.
Just wondering if the apprehension of / fear tactics toward migrants is affecting the labor supply in the ag produce industry and leading to higher prices?
”Maybe we can put all of the indebted students to work picking blackberries, spinach, and romaine.” - Don’t say that too loudly or someone might seize upon the idea.
Comments
Rates: Fed funds held at 4.25-4.50%, bank reserves rate at 4.40% (generous), discount rate at 4.50%. Treasury QT continued -$5 billion/mo, MBS QT at -$35 billion/mo.
Inflation-expectations remain high now but should be headed down longer term. Rate increases cannot be ruled out, but they have very low probability for the next few years. Prospects of tariff-inflation are unclear. GDP growth has been distorted by abnormal imports/exports ahead of tariffs. Oil & gasoline prices have move up on Israel-Iran skirmishes, but those hikes may not stick (or, may). The US is almost self-sufficient in oil & gas, so it's less vulnerable to external disturbances.
Labor market is solid. Wage growth is moderate. The unemployment rate of 4.2% is still near full employment. Both labor supply & demand have deteriorated, but they remain in balance. This may explain why tougher immigration hasn't affected the labor data yet. However, it's harder to find new jobs or replacement jobs.
Housing has additional complexity in that its short- and long- term outlooks are different.
Uncertainties have diminished but remain elevated due to tariffs, trade, immigration & geopolitics. These have caused wider dispersions in the SEPs. However, pay more attention to short-term projections.
Effects of AI may be positive (general prosperity) or negative (deflationary). AI may augment the labor or replace it. But changes would be transformational.
Fed is data dependent but also forward-looking, so he couldn't be tied down to what the past data showed.
Economic data collection is important because good data benefits all - public, businesses, government. It's an investment in the future.
US fiscal policies & big global economic changes aren't within the purview of the Fed, so it will wait & react to those as they come.
New SEPs (summaries of economic projections) were released.
5-yr review of the Fed about policies & communications is almost complete. These reviews have been done since 2012 - they were done annually at one time, but now every 5 yrs. It's not affected by changes in Fed leadership. Fed staffing level has been reduced as the government shrinks overall. Powell declined comment on whether he will stay on as Fed Governor after his term as Chair expires (that may determine whether the new Fed Chair after 05/2026 may be internal or external); he also declined to address President Trump's comments about him in the media.
https://ybbpersonalfinance.proboards.com/post/2048/thread
I took care of the 'one finger salute' for Mr. Powell at about 10am this morning.
The possibility of stagflation looms on the horizon, and the Fed must remain vigilant. Tariff talk alone has likely damaged the US as an international trade partner, and this summer's batch of economic reports may be telling.
The big crybaby wants his rate cuts NOW.
Stand firm, Mr. Powell. Stand firm.
The person in the front hatch was a rather pretty young woman, who was smiling and obviously enjoying the whole thing.
You can't tell me that wasn't a statement by the Army to whoever happened to be watching... say, for instance, a person named Trump.
Saunders fears that if Powell or some new Trump appointed Fed Chair aggressively pursues rate cuts, the longer end (10+ years out) might actually move higher as it did a year ago. Sure wouldn’t be good news for the housing sector.
Is American Exceptionalism still persist? Will US dollar remain the main global currency? The views are changing fast for the worse in my view. 2026 mid-term election cannot come fast enough.
OK - you can knock a few K off the last one. It has AWD. None of the others did. And knock another few K off to compensate for the latest safety and driver comfort items on cars today compared to 1970. However, cars in 1970 were designed to get you from point A to point B just as they are today. And the ride might have been a bit better in those days before weight was reduced. And even in 1970 with proper maintenance a car would go 100,000 miles or more. For some perspective, a good friend recently related that his latest new vehicle, a ‘24 Chevy pickup, cost him around $60,000. I haven’t bought a new truck in recent years, so thought that worth noting.
You can do the same thing with houses, hamburgers, paper towels or whatever. As Gomer Pyle would say: “Surprise!” - Paper currencies over time lose value. Reason we invest.
Having trouble trusting the information provided.
Hi @hank Change the year to 1970, enter the $2,800 cost then and select Calculate. the calculator is based upon CPI, not PCE.
We can't do magic with this, especially with vehicles and the changes over the years for adds to vehicles (i.e., anti lock brakes and everything else that has become standard equipment.)
Standard CPI calculator
portions deletedBut the Plymouth Fury was a very fine auto for the day. Held the road real well at 80-85 MPH.
Link to new cars under $25,000 today. The Toyota Corolla is one mentioned. I’ve driven them. In no way, shape or form is a Corolla the equivalent of a full sized ‘70 Plymouth.
Cost of different items in 1970
Thanks for the examples you cited. No argument. Oil has been on a roller coaster the past couple weeks due to the Mid-East turmoil. Climbed to over $80 in the past week or so, but fell sharply back down to $63 today. That’s close to where it’s been running for several months. Hopefully, those gas prices will go back down.
What T’s me off is when enough fresh Romaine lettuce for a large salad costs $5 or $7 at the grocery store - just the lettuce! . Do not understand that at all. I usually pass on it.
Prices on a lot of produce items have gone up at Aldi. They don't mind mentioning that the items are from Mexico. I also notice the differences when I shop at my local Latino, Asian, and Halal groceries.
I stopped shopping at Safeway when they were selling single onions for 69 cents each. So I believe what y'all are reporting, but there might be other venues available. I can buy pounds of onions for a buck at multiple places.
But then I doubt that my parents, or grand parents, expected all manner of produce at reasonable prices throughout the year. Heck, I don't remember flats of blackberries available at any price when I was shopping in San Francisco in the late 20th century; not even at the Marina Safeway.
Is there a guarantee economic conditions will always create the abundance and variety that some of us have been able to enjoy? Will I ever see fresh blackberries under 2 bucks again?
Whether or not tariffs cause inflation, they are a pernicious regressive tax on fresh fruits and vegetables when we are supposedly trying to make America healthy again.
Well. Maybe we can put all of the indebted students to work picking blackberries, spinach, and romaine.
Just wondering if the apprehension of / fear tactics toward migrants is affecting the labor supply in the ag produce industry and leading to higher prices?
”Maybe we can put all of the indebted students to work picking blackberries, spinach, and romaine.” - Don’t say that too loudly or someone might seize upon the idea.