US: A Goldilocks Inflation Moment, Tariffs and All | Metals Mine

  • US: A Goldilocks Inflation Moment, Tariffs and All

    From etftrends.com

    The tariff saga is front and center in the public’s future inflation perceptions, but should it hold such importance? When Donald Trump was elected in November, respondents to the University of Michigan’s Consumer Sentiment Survey anticipated 2.6% consumer price inflation over the proximate year, roughly in line with that month’s Consumer Price Index (CPI) inflation rate of 2.7%. Expectations have leapt higher. Last month’s Michigan survey had a new estimate: 6.6%, akin to responses last seen in 1978, when inflation was ripping through Jimmy Carter’s presidency. It’s a bold estimate when considering the ... (full story)

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Eurorally
Jun 22, 2025 9:02am — Edited
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Unfortunately, the author is chasing ghosts. The fact is that the prices have not increased due to president Trump's tariffs as "predicted" by pundits, "experts" and TV talking heads. This has been amply documented by CPI and PPI over the last five months and the year to year inflation stays at 2.4%, significantly below the 50-year average of 3.28%.

In particular, the discussion of the University of Michigan Inflation Expectations gyrating widely is the least reliable factor in all this. This is because the 420 consumers that the UoM surveys and asks them about what the inflation is expected to be 12 months from now have no basis for telling us this with any degree of reliability. The consumers just repeat what they hear from pundits. Namely, "Trump's tariffs MUST be added to the price and you will pay for it." Such dilettante economic opinion flies in the face of the readily available economic data as it disregards "the price elasticity" and the play of other important economic factors.
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Trader#8EEF
Jun 22, 2025 6:07pm
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Unfortunately, many people see the US economy as a speedboat, when it is more like an aircraft carrier. It takes a long time to move. A very long time. Also, Mr. Trump did not start to move on tariffs until April, and even some have been delayed further. Further, companies have been scrambling to front run the tariffs, so they can still sell merchandise at prices that predate the tariffs. It will take a little while to work off that inventory. Lastly, don't forget the immigration crackdown which is removing labor from the workforce at the rate of several hundred to several thousand per week. We are only in the top of the first inning on this story. It is, after all, an aircraft carrier that takes a long, long time to move.
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ww3361
Jun 22, 2025 11:57am
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Quoting Eurorally
Unfortunately, the author is chasing ghosts. The fact is that the prices have not increased due to president Trump's tariffs as "predicted" by pundits, "experts" and TV talking heads. This has been amply documented by CPI and PPI over the last five months and the year to year inflation stays at 2.4%, significantly below the 50-year average of 3.28%. In particular, the discussion of the University of Michigan Inflation Expectations gyrating widely is the least reliable factor in all this. This is because the 420 consumers that...
Overleveraged on your property?
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Trader#68C7
Jun 22, 2025 10:18am
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Quoting Eurorally
Unfortunately, the author is chasing ghosts. The fact is that the prices have not increased due to president Trump's tariffs as "predicted" by pundits, "experts" and TV talking heads...
The huge majority of those tarrifs are not currently being implemented, sunshine.
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Eurorally
Jun 22, 2025 9:15pm
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Quoting Trader#8EEF
Unfortunately, many people see the US economy as a speedboat, when it is more like an aircraft carrier. It takes a long time to move. A very long time. Also, Mr. Trump did not start to move on tariffs until April, and even some have been delayed further. Further, companies have been scrambling to front run the tariffs, so they can still sell merchandise at prices that predate the tariffs. It will take a little while to work off that inventory. Lastly, don't forget the immigration crackdown which is removing labor from the workforce at the rate of...
What are you telling us? Just wait another week, another year, five or twenty years? As a broken clock is correct twice a day, this will also be correct one day but not because of the tariffs.
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Eurorally
Jun 22, 2025 9:33pm
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Quoting Trader#68C7
{quote} The huge majority of those tarrifs are not currently being implemented, sunshine.
Yes, but the base tariff of 10% across the board remains in place as well as some higher tariffs on steel, etc.

We should not fall into the dilettante economics believing that tariffs MUST be added to the price for the follwing reasons:

1. There is something called "price elasticity" in economics
2. The foreign producers have a number of ways to avoid tariffs by increasing production from the production facilities in the US thereby fulfulling two objectives of Trump's policy:

a. Lowering imports there by lowering the US negative balance of trade and
b. Increasing the utilization of the American labor - witness BMW and Mercedes

c. Withdrawing from the US market, which would fulfill one of the objectives of Trump's policy, namely lowering the negative balance of trade. Yet, this is not the preferred policy as the markets do not grow on trees, the foreign companies that announced the withdrawal from the American market early this year just in spite on the basis of a political bias notwithstanding.

d. Keep the prices constant to keep the market share plus offering various bonuses and price benefits to do the same - witness the Chinese mailorder company TEMU

So much for the dilettante economic theory "idiot Trump wants to destroy the US economy with his tariffs and the American consumer will pay for them" to which so many so readily subscribe with their lack of knowledge of economics. As one PhD wrote to me: "It is just the common sense, is it not?"
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Eurorally
Jun 23, 2025 9:03am
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Respectfully, how did you come to the conclusion that I was talking about Trump when I said "dilettante economics." That must have been the political correctness of the know-nothing left, pundits, TV talking heads and the like who, totally devoid of any knowledge of economics say that "idiot Trump wants to destroy the American economy by tariffs and the American consumers will pay for it." As one PhD wrote to me: "It is just common sense."

Not only that these assorted characters already put their foot in their mouth concerning the five months history of CPI, PPI and the current year to year rate of inflation of 2.4%.

But Trump has a degree in economics from an Ivy League school unlike Biden, Harris, Obama and the pleyade of Democratic presidents who have been lawyers with no knowledge of economics whatsoever.
Both Bushes had also degrees in economics and management and like Trump, they had experience in running large business enterprises.

Kamala Harris especially graced us with the proposal to control the prices of groceries. This is a basic tenet of socialism. But politicians have short memories.

When Nixon (a Republican! devoid of any knowledge of economics) instituted a three-months moratorium on wage and price increases in Aug 1971, meat started disappearing from supermakets and farmers were drowning their chicken instead of selling them later at a loss.

But we had decades of socialist price controls in communist Czechoslovakia that resulted in severe, repeated and long-lasting shortages of the most basic products such as meat, matches or toilet paper.

(A question on the communist Radio Yerevan: "How is it in Armenia with meat?"
Radio answers: "With meat in Armenia it is good. But without meat it is bad.")

The interested parties can read all about these subjects and why inequality is the sine qua non of the well functioning economic scoiety in the works of the liberal (the meaning of this word was entirely different before it was highjacked by the left) classical economist and the 1974 Nobel Laureate in Economic Sciences Friedrich von Hayek.
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Eurorally
Jun 23, 2025 11:25am
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Quoting ww3361
Yay Austrian school, fun! But you always have to agree on how level the playing field is to begin with, otherwise what's the point: It'd be carnage. At the moment we seem to be addicted to a playing field carpeted in cash. Oooops.
Whatchu talking about? Please explain. But I can say this: The Austrian School of Economics is not characterized by "fun."

Second, "playing field carpeted in cash?" What playing field, what cash and carpeted by whom? Respectfully, I am afraid that there may be a serious lack of understanding of economics.

But if you are talking about the astronomical 40% increase in the money supply from $15 trillion to $21 trillion in only twenty three months, highly inflationary according to monetarists led by Milton Friedman, caused by profligate spending financed by borrowing and printing the money, the astronomical increase of both in the national debt to $37 trillion and the FED's "assets" from $800 billion in 2008 to $6.75 trillion today where we put governtment's IOUs in lieu of printed money, I am with you.

But I respectfully decline to be with you if we dismiss all this by a sleigh of hand without any understanding of the above and above all, without understanding how to change and therefore resolve all this.
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DwnUndrTrdr
Jun 22, 2025 11:56pm
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Quoting Eurorally
{quote} Yes, but the base tariff of 10% across the board remains in place as well as some higher tariffs on steel, etc. We should not fall into the dilettante economics believing that tariffs MUST be added to the price for the follwing reasons: 1. There is something called "price elasticity" in economics 2. The foreign producers have a number of ways to avoid tariffs by increasing production from the production facilities in the US thereby fulfulling two objectives of Trump's policy: a. Lowering imports there by lowering the US negative...
I thought you were referring to Trump when you mentioned “dilettante economics” but as I read on discovered that was not the case.
Interesting points you put forward. Time shall tell…
ww3361
Jun 23, 2025 9:39am
Permalink
Yay Austrian school, fun!

But you always have to agree on how level the playing field is to begin with, otherwise what's the point: It'd be carnage. At the moment we seem to be addicted to a playing field carpeted in cash. Oooops.
Reply
Eurorally
Jun 22, 2025 9:12pm
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Quoting ww3361
{quote} Overleveraged on your property?
If you must know - no. But I am curious what motivated this question.
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