CBO: Inflation to slow down in 2023.

[MickinMD ★]

As someone whose pension COLA is capped at 3% max. per year and who saw relatives' pensions' buying powers get cut in half in the 70's and 80's for similar reasons, I look at high inflation with great fear and hope it soon slows down considerably.

No one can know for sure, but one reputable agency thinks inflation with drop to 3.1% in 2023.

The Congressional Budget Office released an economic outlook Wednesday saying that high inflation will persist into next year, likely causing the federal government to pay higher interest rates on its debt.

The nonpartisan agency expects that the consumer price index will rise 6.1% this year and 3.1% in 2023. This forecast suggests that inflation will slow from current annual levels of 8.3%, yet it would still be dramatically above a long-term baseline of 2.3%.

Note that the Consumer Price Index is rigged with "seasonal adjustments" that do NOT add up to zero over the course of a year as they are supposed to.  Ever since the CPI formulas were changed in the 1990's because they were said to be overstating inflation, they've been understating it.  Of course, this means Social Security recipients and Pensioners get cheated each year.

For example, in October, 2008 the CPI announced that for the past 12 months ending with September, 2008, the price of food had risen 5.8%.  That same month, the countywide school system from which I had retired announced it would cost 20% more for raw foods for its cafeterias compared to the previous school year.

Another example: From Mar. 2009 to Mar. 2010, the CPI said gasoline went down 7%. Gasbuddy.com's graphs shows it went up nationally from $1.62 to $2.61!

The cost of health insurance and copays is not figured into CPI numbers: it uses other medical data that understates increases.  There have been years between 2013-20 where there was a zero or close to zero COLA, but the Medicare Premiums went up enough to wipe out any increase in checks for the next two years!

[Prophet Zacharia]

I believe the Fed is expected to have small interest rate hikes in both June and July to help bring inflation down without stalling the economy too much.

[maddmaxx ★]

4 minutes ago, Prophet Zacharia said:

I believe the Fed is expected to have small interest rate hikes in both June and July to help bring inflation down without stalling the economy too much.

As long as covid and the war in Ukraine rage on inflation will get worse with energy and shipping delays.  That's a far better guess than the optimism the Fed is making up.  Stock up on canned goods.

[Dottleshead ★]

2 hours ago, maddmaxx said:

As long as covid and the war in Ukraine rage on inflation will get worse with energy and shipping delays.  That's a far better guess than the optimism the Fed is making up.  Stock up on canned goods.

I agree with this.  This is a great article on the future of the economy and I tend to believe it.  https://www.forbes.com/sites/billconerly/2022/03/07/economic-forecast-2022-and-beyond-good-now-scary-later/?sh=346a0b935353

[ChrisL]

We are really feeling the pinch with food & fuel costs.  We used to average $200 for food a week.  Now we are spending $225-$250 a week.  

I like to get breakfast at a local Mexican fast food place once a week.  2 egg & cheese burritos used to cost me a little over $6.  I now spend $8.50 for the same meal.  The employees also used to earn $12 an hour, now they are earning $15.  I’m guessing inflation drastically cut any recent wage increases they received.

[Razors Edge ★]

12 minutes ago, Dottles said:

I agree with this.  This is a great article on the future of the economy and I tend to believe it.  https://www.forbes.com/sites/billconerly/2022/03/07/economic-forecast-2022-and-beyond-good-now-scary-later/?sh=346a0b935353

I stopped falling for "Forbes" years ago.  Awful in general.

[Dottleshead ★]

Yeah, I could save a LOT of money not going out to eat.  I mean a lot.  Problem is I'm cooped up here w/ this work from home stuff and I like to get out.  I used to go to work and come home to eat.  Now I stay home to work and go out to eat.

[Dottleshead ★]

2 minutes ago, Razors Edge said:

I stopped falling for "Forbes" years ago.  Awful in general.

Read this article and tell me where you think it's wrong.

[12string]

Great.  NOW you tell us, after you convinced me to buy those Series I bonds!

Only makes sense, there are a LOT of abnormal and temporary reasons that inflation is this high.  Though it's partly the FED's fault, so I can't say I trust them to not throw us into recession

[Bikeguy]

23 minutes ago, 12string said:

Though it's partly the FED's fault, so I can't say I trust them to not throw us into recession

I expect there will be a recession AND inflation for a while.

[Parsnip Totin Jack ★]

@MickinMDand great fear of inflation are polar opposites. @MickinMDcan adjust his spending and shopping habits in less than five minutes. Prices too high at Weis Market, I can buy the same for less at Aldi / Lidl. Sounds like a trip to Costco is in order. Mick will be fine except for blue crabs. The Chesapeake population is down to 225 million crabs. I have to admit that I’m sad from the 2022 dredging reports. 

[Prophet Zacharia]

2 hours ago, Old No. 7 said:

The Chesapeake population is down to 225 million crabs.

Maybe high diesel prices added to less supply will bring prices high enough to drop demand for a season. Maybe the crab population will rebound as a result. Two years of tourist restrictions in Hawaii have resulting in a much more healthy reef system there. So some good can come from this.

[MickinMD ★]

On 5/26/2022 at 11:29 AM, Prophet Zacharia said:

I believe the Fed is expected to have small interest rate hikes in both June and July to help bring inflation down without stalling the economy too much.

Some of the top experts say they should be doing 1% hikes at a time.

I've been worried ever since English major Jerome Powell was made Fed Chairman. His main financially-related skills were in being a spokesperson for financial companies, not handling money or setting up investment, etc. programs.  I think Trump, Biden, and Congress have been more concerned with how the Fed makes them look than in what's best for America, so they got a smooth talker for Chairman.

Former Fed Chair Ben Bernanke, a great, trained economist and THE expert on the financial systems surrounding The Great Depression, is saying that the Fed made a great mistake by not raising rates much sooner.  But how would Powell know that?

Thank God Powell wasn't Fed Chairman in the 2008 crash.  When Bush and both parties in Congress did virtually NOTHING except save the banks, it was economist and Fed Chairman Ben Bernanke who saved us from Great Depression II.  For example, AIG was insuring 50% of ALL of American companies' endeavors and the White House and Congress were content to let it collapse!

Bernanke found an old law that let him save AIG and his reward was to be grilled by Dem. and GOP Senators demanding to know how he was allowed to do that!  Dem. Senator Harry Reid said to Bernanke that if things go downhill, he'd be blaming him.  Meanwhile G W Bush only said, "I'll run interference for you."

Bernanke did much more: he wrote a great tell-all book I read called, The Courage to Act which is a great title since Bush and Congress did NOT have the courage to do anything but save their banking pals - and it was basically Cheney who did that, calling the major bank CEO's into his office, literally locking the door, and not letting them leave until they signed papers requiring them to save the banks regardless of cost.  Bank of America had to save it's subsidiary, Merrill Lynch - which had risky, bad investments - and that eventually cost CEO Ken Lewis his job.