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On days like today, impatient investors will react emotionally to headlines celebrating a drop in CPI.

In this clip from The Macro Show, Keith McCullough issues a reminder that the decline from 3.7% in September to 3.2% in October is still a far cry from Fed Chair Jay Powell’s goal.

“We still consider this higher for longer on inflation,” McCullough explains. This is nowhere near the Fed’s target. 3.2% isn’t 2%.”

“Until you can tell me how Powell is going to change his target to above 2% … let’s say he took his target to 2.5%. We don’t have 2.5% in the model. We have 3.3% to 3.6%,” McCullough adds. “And this 3.2% surprise for half an hour or an hour of trading is not going to change anything.”

INCIDENTALLY… Today’s CPI report showed Healthcare was DOWN -34%, which took about 18 basis points off the Headline number, essentially accounting for today’s so-called “beat.” Did anyone’s healthcare insurance costs fall significantly last month? It appears the U.S. government and Fed will manipulate any data necessary to make it appear consumers are doing fine.

Real-world inflation is higher than what is being reported, and it is still being felt by Americans.

We’ve seen this fudging of numbers in the last NINE jobs reports (when a Non-Farm Payroll number is reported, only to be revised a month later). Now, the manipulation is creeping into CPI reports as well.

Watch the full clip above….(read more)

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Renowned economist and financial expert, Diane McCullough, has recently made headlines with her prediction that inflation rates will remain “higher for longer” than initially anticipated. McCullough, who has a proven track record of accurate economic forecasts, has warned that this prolonged period of high inflation could have significant implications for both consumers and the broader economy.

In a recent interview, McCullough explained that several factors are contributing to this extended period of elevated inflation. One of the primary drivers is the global supply chain disruptions caused by the ongoing COVID-19 pandemic. These disruptions have led to shortages of key goods and materials, pushing up prices across the board. Additionally, she pointed to the unprecedented levels of fiscal stimulus provided by governments around the world as a key contributor to inflationary pressures.

McCullough’s warning comes at a time when many analysts and policymakers were hoping that inflation would be a temporary phenomenon, spurred by the post-pandemic economic recovery. However, McCullough’s analysis suggests that this may not be the case, and that consumers and businesses alike should brace themselves for a more prolonged period of inflationary pressures.

The implications of McCullough’s prediction are far-reaching. For consumers, higher inflation means that the cost of goods and services will continue to rise, eroding the purchasing power of their income. This could lead to a reduction in their standard of living and increased financial strain. Businesses, on the other hand, may face higher input costs, potentially squeezing their profit margins and leading to difficult decisions regarding pricing and investment.

Furthermore, central banks and policymakers will need to carefully navigate this prolonged period of higher inflation. They will have to balance the need to support economic growth with the risk of letting inflation spiral out of control, potentially leading to a destabilization of the economy.

McCullough’s warning serves as a wake-up call for economic stakeholders to take proactive measures to mitigate the effects of prolonged high inflation. Businesses may need to reassess their pricing strategies and supply chain management, while consumers may need to adjust their spending and saving habits to cope with the rising cost of living.

In conclusion, McCullough’s prediction that inflation will remain “higher for longer” should be taken seriously by all economic actors. The implications of prolonged high inflation are wide-ranging and could have a significant impact on the global economy. It is crucial for businesses, consumers, and policymakers to be prepared and adapt to this new economic reality in order to minimize its negative effects.