The state of regional inflation statistics
Update since Tuesday: Unemployment insurance claims for the week ending June 3, 2022, came in slightly higher, pushing up the 4-week average over the previous week’s – but no sign of an upward trend at this point.
On Wednesday June 8, Kevin Smith wrote about AB 257, which is a new bill in the California Assembly to regulate working conditions in the fast food industry. The article has a great breakdown of industry statistics too. Restaurant workers have been some of the hardest hit and are feeling emboldened in a strong labor market. In addition to workplace safety, a big part of their demands is related to the cost of living.
On the national scene, Jeffrey Frankel wrote on “No, the US is not in Recession”. The author puts monetary policy in context, suggesting that even with rising interest rates, the credit market is very healthy and money is still “easy” in historical context.
While we don’t see headlines like “IE Inflation highest among major metro areas” as often anymore, regional inflation does continue to hit new records. For March, the latest month for which we have data, overall inflation, year-over-year, was 10%! That’s higher than national numbers. We’ll have the latest numbers for May later this morning, but most analysts are not expecting much change – perhaps a slight cooling, but nothing major. I’ll be sure to give you an update of any big news on Tuesday.
The high inflation statistic continues to be driven by price growth in durable goods (11.2% year-over-year) and transportation (25.4%, mainly gasoline and used cars and trucks – which is actually part of the “durable goods” category). There is also some pressure recently from food, both food for home consumption (5.2%) and restaurant prices (6.1%). All sorts of categories of food have seen major inflation, from meats/poultry/eggs (16.4%) to fruits and vegetables (10.1%). Housing is another hotspot (8.0%, mainly an indicator of rising rental prices). These sub-components of inflation are not usually reported directly by the BLS, but I have written programs and scripts to pull this data for easy analysis.
Non-durable goods inflation has seen significant jumps over the last few months (16.5%), as well as services inflation (7.3%), which is why I’m more concerned about the inflation situation than I was a few months ago. For example, 6 months ago non-durables inflation was 9% and services inflation just 5.3%. This means that higher labor costs are starting to feed prices.
In general, I am more worried about inflation now than I was a few months ago. It sounds silly, but higher gas prices can, on their own, cause all sorts of economic turmoil: gas/diesel is an important component of many companies’ costs, and it can even put a dent into consumption and consumer expectations. Higher interest rates can do that too. It’s a question of how much inflation consumer demand can withstand.