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The BLS says the CPI is up only 1.4% from a year ago.  However, the CS-CPI has been running between 2% and 3% for the past three years and most of the past seven years. By this measure, the Fed has already achieved its goal.  Yet, the Fed is holding rates near zero and has pledged to remain that way. We can calculate " Real Interest Rates Thanks to the Fed slashing interest rates to near-zero, real interest rates are -3.45% as measured by CS-CPI but "only" -1.31% as measured by the CPI. Third Great Fed Mistake With the real interest rate at -3.45% is it any wonder speculation in stocks, ju...

Personal Income Jumps 10% In January The Bea’s Personal Income and Outlays Report for January 2021 notes that personal income increased $1,954.7 billion (10.0 percent) in January. Disposable personal income (DPI) increased $1,963.2 billion (11.4 percent) and personal consumption expenditures (PCE) increased $340.9 billion (2.4 percent). Rise Due to Transfer Payments The 10% jump in January is due to a jump in transfer payments, notably covid stimulus payments. Transfer payments are free money or money equivalents from the Federal government. The category includes food stamps, a relatively...

Initial Unemployment Claims Unexpectedly Dive, What Does That Mean? Mish What Does That Mean? The answer depends on future revisions and trends which we do not know yet.  Two weeks ago initial jobless claims dipped to a reported 793,000 for the weekending February 6.  Last week, the BLS revised February 6 to 848,000 claims with the February 13 at 861,000. Today the BLS says February 13 is 841,000 with the week ending February 20 down to 730,000. It's anyone's guess what the BLS will say a week from now about today's big dip. More on that below but first let's discuss continued claims. Co...