Inflation will 0% in 2023, here's why:
The biggest buzzword of 2022 is inflation.
But, in November CPI was 0.1%, this would be 1.2% inflation annually.
Compared to June, this numbers have gone down dramatically (which had a 1.3% month over month gain)
But, in November CPI was 0.1%, this would be 1.2% inflation annually.
Compared to June, this numbers have gone down dramatically (which had a 1.3% month over month gain)
In other words: Based on the data from November 2022, the annualized rate has dropped to the what the monthly rate was 5 months ago. (roughly 92% decrease)
So what will December CPI show? We can look at the data.
Retail gas prices are down ~14% since November.
So what will December CPI show? We can look at the data.
Retail gas prices are down ~14% since November.
Natural gas, crude oil, heating oil, and retail gas futures are all also down from November, variably so, but DOWN.
An approximate 10-20% decrease across the board.
An approximate 10-20% decrease across the board.
What else is dropping? Most Food commodities like corn, wheat, etc. (except cattle and sugar)
From the CPI inputs we have a lot of data that signals a few things:
1. Most inputs are down significantly since November
2. Groceries and eating out are stickier than the raw commodity prices so they will not match the futures exactly, but the trend is still down
1. Most inputs are down significantly since November
2. Groceries and eating out are stickier than the raw commodity prices so they will not match the futures exactly, but the trend is still down
The car market is still currently f'd, but as @GuyDealership pointed out in his thread, this likely to change in the coming months.
We should see a steep decline in car prices soon.
We should see a steep decline in car prices soon.
Housing market is stalling, and rent is also stable at this point.
So, with all that said, what does it mean?
So, with all that said, what does it mean?
Currently analysists are forecasting December CPI to be 0.2%, but I don't think that'll be the case.
Energy prices have been falling significantly since mid November, as have most commodity prices across the board.
Energy prices have been falling significantly since mid November, as have most commodity prices across the board.
The rise in interest rates has already put us into recession IMO, even if the numbers don't confirm it yet.
The fed's policy is misguided - because a lot of the issues was due to supply chain issues created by COVID & the Invasion of Ukraine (unpredictable black swan events)
The fed's policy is misguided - because a lot of the issues was due to supply chain issues created by COVID & the Invasion of Ukraine (unpredictable black swan events)
I know a lot of people feel that loose monetary policy (i.e money printer go brr) caused the crazy inflation, but I think it was necessary to keep the economy from imploding during both of these crises.
The current data we have for December basically confirms that the next CPI will show DEFLATION.
Unless something catastrophic happens again (lol)
Unless something catastrophic happens again (lol)
I would not be surprised if it was even -.5%.
December 2021 CPI was +0.6% (annualized +7.2%).
If we are at 0% this month, inflation will have fallen by 100% year over year, and annualized CPI will drop to 6.5%.
December 2021 CPI was +0.6% (annualized +7.2%).
If we are at 0% this month, inflation will have fallen by 100% year over year, and annualized CPI will drop to 6.5%.
If we are -0.5%, it would be down to 6%, a drop of 15.5% in one month!
The future (for YOY CPI) is bleak: Looking from Dec 21 onwards we get:
Jan 22 (+0.6%)
Feb 22 ( +0.8%)
Mar 22 (+1.2%)
April (+0.3%)
May (+1%)
June (the peak at +1.3)
The future (for YOY CPI) is bleak: Looking from Dec 21 onwards we get:
Jan 22 (+0.6%)
Feb 22 ( +0.8%)
Mar 22 (+1.2%)
April (+0.3%)
May (+1%)
June (the peak at +1.3)
Essentially, it'll be harder and harder to get inflation ( I know it sounds confusing) due to how bad inflation was during the majority of 2022.
Say we have 0% inflation through June 2023, (which is generous given the data we have now + rising rates + potential resolution of Ukraine crisis + fixed supply chain).
Of an annualized baseline of 6.5% we would get:
5.9% in Jan
5.1% in Feb
3.9% in Mar
2.6% in May
1.3% in June
Of an annualized baseline of 6.5% we would get:
5.9% in Jan
5.1% in Feb
3.9% in Mar
2.6% in May
1.3% in June
In other words, with CPI values at 0% and not negative, we're going to see today's annualized number become the actual annualized number as of 6/2023.
If December of 2022 comes in below 0 - i.e., -.5% as I think is quite possible given the energy plunge - things accelerate faster.
Assuming we are at 6% annualized in Dec 2022 and the monthlies are -.3% through June 2023.
We would be at 5.1% as of 1/22,
4% as of 2/22
2.5% as of 3/22
1.9% as of 4/22
+0.6% as of 5/22
-1% by June of 2022
We would be at 5.1% as of 1/22,
4% as of 2/22
2.5% as of 3/22
1.9% as of 4/22
+0.6% as of 5/22
-1% by June of 2022
Barring another black swan event - which is possible, but could also result in even more deflation!
The trajectory since June of 2022 would put us at annualized inflation of under 2% between March and June of 2023, with a risk of actual annualized DEFLATION also appearing sometime after April 2022 if the December trends continue.
What does this mean?
What does this mean?
I think the Fed pivot will accelerate, I think we have one or, at most, two small hikes before the pause, and I also think that we will see rate CUTS by June of 2023.
This likely means that the stock market bottom that has already occurred or will occur in Q1 of 2023, and if we see several consecutive negative CPI print outs.
QE is likely back on the table by Q2-Q3 of 2023 (brrrrrrrrrrrrr)
QE is likely back on the table by Q2-Q3 of 2023 (brrrrrrrrrrrrr)
And that's all folks! A bit of a lengthy one, but if you liked this thread be sure to follow me @SullyOmarr for more
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