As the FT reported last night:
US wholesale prices jumped in July, rising 3.3 per cent from a year earlier, in the latest signal that President Donald Trump's tariffs are seeping through to the American economy.
The rise in the Producer Price Index, which tracks what domestic US producers charge for their goods and services, was the biggest jump since February.
The reading from the Bureau of Labor Statistics was well above June's 2.4 per cent annual gain and the 2.5 per cent rise expected by economists polled by Bloomberg.
What astonishes me is that there were economists in the USA who did not expect this.
On what planet have they been living?
How could they not have expected significant increases in US underlying inflation, given the tariffs that Trump has been promoting so hard?
What else did they think the consequences might have been?
And why did they think they would not have already hit, given that some of them have been operational for some months now?
I have been suggesting, since before Trump actually became president, that this was the inevitable consequence of his proposals on tariffs. I will, only very slightly, resist the temptation at this moment to say "told you so", but the reality is that making this forecast of increased inflation was probably the easiest economic prediction that I could have ever made.
So, the question is, why is it taking the US by surprise? That question is very much harder to answer. Are they all living in Cloudcuckooland?
Finally, one crucial point. Note who produces this data. It is the Bureau of Labor Statistics. This, of course, is now being moved under the control of a Heritage Foundation economist who has, no doubt, been chosen to deliver the figures that Trump would like in the future. Whether we get objective inflation data for the US from now on will be very hard to tell.
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Not only is it an entirely unsurprising uptick, but given recent inceeases and the expectation that some companies will have absorbed some of the costs while working out where tariffs were going to end up, it’s likely less than half of the effect has shown up in the data so far.
It’s hard to expect the US can avoid inflation continuing to overshoot expectations for months yet.
Equally, would it be particularly surprising if Trump made some ‘tweaks’ a while ahead of the midterms to drop the monthly inflation stats and declare victory on inflation just as US citizens next vote?
You are right about the rate being understated, so far.
Thank you, Richard.
A friend, former colleague and former Labour Party official returned to Chicago last year and reports increasing pressure on people, use of food banks and economic slow down, including white collar redundancies.
BLS data is used to calculate benefit payments, so one can deduce what will happen.
Please note that the Heritage Foundation hosted some of the shadow cabinet in NYC and Washington just before the general election and has maintained ties with the government.
All noted
It’s obvious from J D Vance’s visit, and recent comments by the US government that Britain is becoming less free, but only in relation to the Southport riots and potential restrictions on social media, that the Heritage Foundation and associated interests are turning the Eye of Sauron on us. Unless the American people shake off fascism, we are next, and Labour will just take the money and run.
With control of the statistics King Donald controls the message.
Anyone who questions is the enemy, running the risk of being “prosecuted” for Trump related thought crimes.
Look at the claims (as reported in the NYT ) Trump lawyers are making to the court hearing one tariff case ” that unless the court supports the sweeping tariffs, the US risks slipping into a depression if the court rules that the Federal government must repay the $bns already collected”.
King Donald claims that he has collected $150bn so far this year and tariffs will replace federal taxes?
No wonder King Donald’s Federal lawyers are facing action from US legal groups reporting them to the relevant state Bar Association for breach of ethics etc regulations.
As you suggest, it’s an interesting peep into the American psyche – if you’re made to pledge allegiance to the flag each morning at school and told that you live in the best country in the world, when things don’t go your way, fault must lie outside America, ‘evil doers’ (how quaint) are out to get you!
Result: victimhood.
An accelerant towards fascism.
Given that the real America is found in the ‘fly-over’ states – the rust belt, not sun licked Californian beaches or handsome Bostonian coastal areas, all one can say is that American politics has been – what – ‘hill-billied’?
Can you hear the new U.S. national anthem?
‘Da da ding ding ding ding ding ding dinnnng’ (duelling banjo theme from the film Deliverance (1972)).
Apologies to any Americans on the blog, but how else can show my contempt for this state of affairs?
I listened, painfully, to Trump answer reporters questions a day or two ago and was amazed to hear him speaking in the words of a student who has just graduated from junior school to secondary school.
He was unable to analyse the questions put to him and replied in extremely childish terms.
Afterwards I looked up the average reading age of Americans (54%) and was astonished the it was equivalent to first year of secondary school pupils.
So we have a poorly educated felon and liar at the head of the most powerful country on earth whilst the rest of the free world just bow to his demands.
As you know, California is the fourth largest economy in the world, so what Trump does has an impact there. It’s the reason it was no accident that Trump and his cronies chose to send the US military into LA, and that ICE agents are crawling all over the city on a daily basis (note: Trump’s DA has asked the Supreme Court to rule on their application to be able to stop and search anyone who speaks Spanish – I kid you not.).
Well, here’s an excellent segment from Lawrence O’Donnell on how California, through it Governor, Gavin Newsom (an obvious candidate in the next Presidential elections – if they ever happen) are fighting back against Trump. I strongly recommend watching as it’s something positive – at last – in the fight against Trumpism.
https://www.msnbc.com/the-last-word/watch/lawrence-gov-newsom-is-showing-americans-how-to-fight-donald-trump-245039173517
Also worth noting that the Governor of New York state has already said she will join in using state power to fight Trump.
Very good
Watched it
Governor Gavin Newsom has fired on Fort Sumter.
In re the Bureau of Labor Statistics, they collect their data by phoning/emailing households and businesses, with questionnaires. Some querents answer, others don’t some; some are timely, some are not. It really is a goofy way to get solid data. https://www.bls.gov/k12/teachers/posters/pdf/how-bls-collects-data.pdf
So, while Trump’s fascist Fire Murphy response to disagreeable data is asinine, the BLS does need to improve its data gathering protocols.
Ours are as bad.
It’s crazy we do this in the UK when we have real time employment data from PAYE.
Question: how many economists can a billionaire afford to keep on his payroll? And how many more economists will parrot a billionaire’s talking points to advance their standing or at least avoid getting the wrong kind of attention?
This is part of the danger of wealth being concentrated in very few hands.
Still, not everyone is cooperating. (See the kerfuffle involving Jan Hatzius and David Solomon.) At this point, I wouldn’t be surprised if most Americans are fully aware of where the hammer is falling. You can’t trust the interviews to inform you about the reality of what Americans are thinking.
As for Newsom, well. It’s something. But if the Republicans have been outright traitorous, then at minimum, the Democrats have been a disappointment for decades, if not outright complicit. The most egregious of their betrayals, aside from the obvious economic ones, was letting our courts slide. Anyone possessing even a passing familiarity with con law saw we were headed nowhere good.