- Personal income increased $60.3 billion (0.3 percent) in August.
- Disposable personal income (DPI) increased $51.4 billion (0.3 percent)
- Personal consumption expenditures (PCE) increased $46.4 billion (0.3 percent).
- Real DPI increased 0.2 percent in August and Real PCE increased 0.2 percent.
- The PCE price index increased 0.1 percent. Excluding food and energy, the PCE price index increased less than 0.1 percent.
The BLS says core inflation is zero and year-over-year core inflation is 2.0%.
Your results may differ substantially especially if you buy your own health insurance, don’t have health insurance, are in school, are looking to buy a house, or live in a high rent area.
Curiously, a debate over where inflation should be is underway at the Fed and at central banks in general. For discussion, please see Rethinking the Fed’s 2% Inflation Target: Spotlight On an Absurd Debate.
So, what gives?
We have to keep in mind two important data points here.
First, inflation is a lagging indicator. Just as unemployment and GDP numbers are. When everyone is screaming inflation, even at 2%, chances are, we are already at peak inflation at that particular moment.
Most importantly, most of this so called inflation since 2009 bottom went straight into speculative assets. The stock market, bonds, real estate, art, collectible cars, etc…. We are seeing a little bit of a spill over into the real economy (food, energy, etc…) but the spill over is not significant by any measure. We are certainly not seeing it in wages despite the tax cuts and Mr. Trump’s “Best Economy” in American history.
In other words, when the Everything Bubble pops, as it surely will, you will see any residual inflation disappear overnight, only to be replaced by a massive deflationary spiral.
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