You heard it here first
The official US Consumer Price Index for March yesterday showed a year over year increase of 2.4%, a decline of -0.4% from 2.8% the previous month. The Producer Price Index for March, released this morning, showed an outright decline of -0.4% from the previous month.
In a word, the CPI is registering disinflation.
The PPI is printing deflation.
Technically, we could say the CPI registered deflation too, with a month-over-month decline of -0.1%, but the annual figures are more substantial. Of course Financology takes all such government statistics with an outsized grain of salt. We prefer unfiltered, unprocessed market data. Not only are they not subject to political and bureaucratic manipulation, but they respond in real time.
Neither official series measures actual inflation, but only its exhaust fumes … its effects on select subsets of prices.
As I’ve been saying since the days of yore, consumer prices respond with long and variable legs, because changes in the value of the currency have a long trek through various and sundry pricing chains to reach final goods and services. Producer prices have a shorter trip, so it’s not surprising that they were the first official macroeconometrica to sniff out the deflation Financology had already deduced from real time market data.
The gist of it is this. If asset prices are going in different directions, without much of an overall thrust, it’s just the assets. If the prices of disparate assets are overwhelmingly going in the same direction, check your units … that’s where most of the action is.
Let’s not be hasty though to extrapolate the past into the future. Should asset markets soon reverse and currency resume its decline, that impulse goes into the pricing chain along with others already en route, so that the effect on consumer prices may be blunted before it’s fully manifest. But unless and until that happens, media hysteria about rising inflation is no more than a cry of anguish as the ruling class that once celebrated disruption itself gets disrupted.
Meanwhile, it bears repeating, in light of the blitz of misinformation to the contrary, that while tariffs may give a one time boost to consumer prices, they have nothing to do with inflation. No … I’ll go one step further. To the extent the revenue they produce displaces revenue conjured via money printing, they are anti-inflationary. As Milton Friedman taught us, inflation is always and everywhere a monetary phenomenon.
Should the underlying deflationary process continue, its downward pressure on consumer prices could even overwhelm the direct bump from tariffs, so that the net effect is a reduction.
The environment can turn from inflationary to deflationary on a dime, but central planners can be glacial, especially when infatuated with lagging data. Worse, our “apolitical” Fed couldn’t wait to cut rates last fall before the election, even though earlier progress on consumer price growth had stalled well above its own inflated target and markets floated on a sea of liquidity. Now, it sits on its hands talking about cuts that might come later this year, as it summons theoretical inflationary threats from thin air, while liquidity dries up, recessionary omens loom, and markets crash.
It would do well to just act on the data. If it can’t, or won’t, end it. Let Treasury issue the currency and free markets determine interest rates.
JPMorgan Responds To The Fed: There Is A Liquidity Crisis Right Now
https://x.com/Megatron_ron/status/1911061292091056620?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
Trump looks silly now
Mega’s dispatch from England:- The Government Steel’s from Mega
Breaking News-
Government officials now at British Steel Scunthorpe site
The emergency bill giving the government powers to take control of British Steel in Scunthorpe is continuing its passage through parliament.
But even before it has passed, officials from the Department for Business and Trade have arrived at the British Steel sit in Scunthorpe, Sky News understands.
So, there you have it…….the return to the 1970s.
As for all this high talk about bringing “Green” steel production to this site i think you can forget that. If they intended to do that they would just have built a new site. They intend to produce Virgin steel with coke etc…not electric arc using recycle steel.
So, the 1st of many a company to find its way into government ownership.
Cant wait for the work force to thank them by going on strike to demand BIG pay rises!
Don’t blame you a bit for not wanting to take on unprofitable businesses as dependents. Here in the US the last regime of grifters tried to make us take on people who borrowed too much to make losing investments in higher indoctrination.
Mr Trump thanks them very much.
Thin end of the wedge……..in the 1970’s the government took over EVERTHING. With the expectation of Rolls Royce aero engines everything else turned to crap. The IMF came in & ever with oncoming Northsea Oil/Gas the forced massive cuts.
I pencilled in 2027 for the IMF return visit.
Quite Sunday, thus i been reading up on China/EV stuff. I don’t focus on the software side of things because that’s not my field. I at one time ran my own engineering company & i had worked a lots of state of the art CNC machine tools working before that.
I am simply blown away by what China is about to do.
Most Western EV producers are talking about Solid state battery production hitting the market in volume in the 2030’s……..China will be in production this year!
SSB are the biggest game changer there is.
Right now we have a max of about 275 wh/kg……most are lower grade Lithium Iron sulphate mix that make around 160 wh/kg. This is likey to get uped to 200 wh/kg this year, but SSB are in a different planet!
The 1st production version will be 400-450 Wh/kg, later versions will be over 600!
Its not just battery tec either, EV electric motors are developing fast. New very light, very compact motors. China has been investing HARD & its beginning to pay off.
Even the production methods on the line will allow them to leap frog Tesla & GOD help the western dead beats.
No wonder why the CEO of FORD wants Chinas IPR
2026 could be a Mega year……….
Mike
Gold Baby!
https://www.youtube.com/watch?v=Q6NDthBhdAI
Hope silver gets a break
Mike
Like the 1980’s USA wants to sell EU COAL baby!
https://x.com/Megatron_ron/status/1911452037125923023?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Etweet
SSB from China will KILL that move
Solid state batteries will give electric cars a new lease on life. But EVs won’t replace fossil fuels. Batteries are energy storage devices; you still need to produce the energy to charge them with.
So electric generation still boils down to coal, oil, gas, wind, solar, nuclear … and of these nuclear is really the only source with the capacity to replace fossil fuels. Solar is second but not available everywhere and anytime; wind is even more fickle. Even nuclear has yet unsolved problems with radioactive waste disposal. If EU doesn’t want US coal, oil or gas, best thing it can do is make peace with Russia.
Long term maybe fusion steps up, or the ultimate … matter-antimatter annihilation.
Meanwhile dirty fossil fuels and dirty nuclear fission are essential bridges to get there.
Gold … taking a breather as stocks regain some traction. Even treasuries are getting a bid today. Gold has a bright future, but given how overbought it is the potential for a sharp selloff near term is considerable.
Trade. There have been accusations that the EU’s restrictions on imports of GMO products are an unfair trade barrier. That would only be true if the EU didn’t put similar restrictions on its own domestic products. If EU doesn’t want US GMOs, that trade barrier is Made in the USA.
If you want people to buy your products, you have to make what they want. Econ 101.
WE dont know what is happening “under the RADAR” but Trump now looks a bit lost. Red Sea remains closed, Iran is NOT going down the same route as Libya, they go out fighting 1st.
China called Trumps bluff, then rased the stakes…………Ukraine is dragging on
Mike
For sure we don’t know what’s going on under the radar. The media filter isn’t designed for transparency. I may not like it, but think Trump knows exactly what he’s doing on trade. Opening with a blowout bid and then reducing it to look generous is classic Art of the Deal.
Not at all clear this is the place for it though. This isn’t a private business deal; it’s on the world stage and the helter-skelter optics not only make business planning difficult but hand unfriendly media lots of space to spin to suit.
Far as the Red Sea goes though, he’s definitely at sea. He campaigned on less foreign adventurism but lately has been adrift on the Neocon Cruise.
Elon update
https://www.carscoops.com/2025/04/furious-protesters-smash-a-tesla-to-pieces-in-everyone-hates-elon-event/
They got an 11 year old Tesla with a crapped out battery & smashed it……
Mike
If we had still had any real journalism left, reports on demonstrations would also report on who is funding them.
So it’s not just China’s central bank buying gold…
https://www.gold-eagle.com/chinese-gold-etfs-see-record-inflows
$4,000 gold price is coming as risk assets crack, says Bloomberg’s Mike McGlone
And I predict that when gold hits $4000, predictions of $5000 will emerge.
………………..& £5000 Gold will follow
Mega won!
Mike
China to refuse delivery of Boeing planes