Notwithstanding slow Joe’s attempts to play political games with the Strategic Petroleum Reserve, the inflation report today was much hotter than people expected and gives the lie to the notion that it is going away any time soon. Particularly important, as I have mentioned before, is to look at the rent and health care items. Rents continued to rise at an unhealthy clip. Rents don’t go down, not like gas or even food prices, which can be volatile. And health care prices, which I am very attuned to, are beginning their acceleration, while health insurance has completely blown up by 24% year-over-year. That is health plans anticipating the coming massive price increases providers are insisting on in negotiations for the coming year. Health care is 20% of the economy. And then there is another little nugget.
New car prices rose rapidly, at least in part because the laughably named recent inflation reduction act provided expanded subsidies, which just gave manufacturers of electric and non-electric cars cover to raise prices without consumers feeling it. And while gas prices, which are highly visible to consumers, have declined in recent months, food prices, which are more important and also quite visible, for food from grocery stores have increased over 13% in the last year. Finally, interest rates are rising, meaning the price of money has skyrocketed. The cost of borrowing money for ten years has more than doubled. The cost of a 30 year fixed mortgage has almost tripled. Yep, Joe, your economic policies are working like a charm–to make things worse for the average American. But don’t worry, those 87,000 new IRS agents are just being hired to help people get bigger refunds.
Update–here is good place to see what has happened to various categories. (ZH Post)
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And let’s point out that of 3:30 pm today the DJIA is down over 1100 points. A strong reaction to todays report you are commenting.
I will say that mortgage rates going up drastically is a good thing in the long run and long overdue. Home prices have gotten insanely high, well over half of which is due to crazy low mortgage rates when they never should have been so low. Will a lot of people get hurt by the rise in rates? Sure. But prices need to at least stop rising if the next generation is going to ever be able to afford a house. If we want the price of building new homes to level off or go down, we need to greatly increase the quantity of wood being cut, concrete being produced, etc and cut regulations that stand in the way of increased production.
And while gas prices would have gone up a little bit even if Trump had been reelected, Biden and his handlers have gone scorched earth to cut oil production wherever possible. I wish I knew their true motivation for this is. None of them are stupid enough at this point to believe that “global warming” (or whatever fashionable term is being used) is actually a threat to the world or that banning oil production would do anything to stop it. I have trouble believing theories that elites are evil enough to want things that have been talked about in the Great Reset, but that makes as much sense as anything at this point.
As for rent prices going up, the dirty little secret that nobody wants to talk about being a major factor in this. Immigration. Very few first generation immigrants can afford to immediately buy a home and will need to rent. Increased immigration leads to more renters and more renters competing for the same dwellings leads to increased rents.