Private Eyes

They were watching you from the top of the charts the last time inflation was as high as it is today. Yes, Darryl Hall and John Oates were rocking away the last time the cost of life was rising as fast as it is today. Anyway, in the least surprising news ever... Economists were wrong again...estimating inflation would peak at 8.8% last month. Instead, it popped to 9.1% as energy costs reached record highs during June. While I remain in awe of how incredibly incompetent most economists are, and how they still somehow retain employment, I’m not the least bit surprised by what was just reported. In my May 13th top three takeaways, as I explained why and how inflation would shoot north of 9% prior to peaking, I said this: It's worse, way worse, than what we’re already paying for. Yes, the Consumer Price Index came in at 8.3%. Yes, we’re at 41-year high inflation. Yes, the average household is 2.8% worse off, when adjusting for income growth, than a year ago. But it could be, and very well may be, much worse going forward. Yesterday’s PPI, or Producer Price Index, came in at a flaming hot 11%. What’s more is that the CORE rate, which excludes food and energy, rose 0.6% during the month. Meaning non-potentially transitory inflation at the wholesale level is surging. Yikes. That’s a problem. And when you factor in the fact that gas prices in real-time are at record highs... Yeah, there’s no doubt that inflation – as brutal as it's been – is only worse in real-time. But then there’s the view of the possible. Companies, which are so often derided by President Biden, as opposed to being engaged to seek solutions – have continued to shield us, as consumers, from the full effect of inflation. Companies ate 2.7% of the inflation rate as opposed to passing it through to us. So as bad as it's been, it could have been much worse. But here’s the thing. And it is a thing. You may have noticed the stock market is in bear-market mode with many industries and companies having already crashed... The days of companies being able to eat the real effect of inflation are quickly coming to an end. Right, so here we are. All of that happened. So now inflation is at 9.1% and the average household is 4% worse off than a year ago – with Friday’s jobs report showing incomes only growing at 5.1% over the past year. As per usual, unlike the economists, I’ve not made a career out of being wrong.