(THREAD UPDATE: U.S.
CONSUMER PRICE INDEX -- CPI --
THROUGH JUNE 2021)
Yesterday, 13 July 2021, the United States Bureau of Labor Statistics and the U.S. Federal Reserve Bank (St Louis) released their monthly report on the state of the US economy in the form of the monthly Consumer Price Index survey of private household and business sector entities. The report confirms what many herein have been expressing anecdotally: The USA is undergoing a loss of purchasing power which, now sustained for the eleventh consecutive year, has been deemed -- by the BLS & St Louis Fed -- as having entered a state of
permanency.
I'll drop a few highlights (toplines) as well as a couple of graphic diagrams culled from the BLS / Federal Reserve report.
First, here's a link to the Bureau's report for any who care to review the BLS/FED data:
https://www.bls.gov/news.release/cpi.nr0.htm
Toplines re: the BLS / St Louis Fed Report on the CPI through 30 June 2021:
Overall Consumer Price Index (CPI)
1. The Consumer Price Index (CPI) increased 0.9% in June from May 2021, after having jumped 0.6% in May, and 0.8% in April – all of them the steepest month-to-month jumps since 2009.
2. Exclusing the "volatile" food and energy sectors, the so-called “core CPI” increased by 0.8% from May to June 2021 and, more importantly, increased by 9.5% over the past three months (i.e., March through June 2021) annualized, which BLS/The Fed calls hottest "core CPI” increase since June 1982.
3. By its own calculation, the BLS & Fed estimate that purchasing power of a US Dollar has decreased by 10.7% from March through June 2021 annualized -- the steepest decrease in (US) dollar purchasing power since June 1982.
GRAPH 1: PURCHASING POWER OF U.S.
CONSUMER DOLLAR THROUGH JUNE 30 2021
(Source: U.S. Bureau of Labor Statistics & U.S. Federal Reserve Bank St Louis, July 2021)
In the opinion (in the report) of BLS and the St Louis Fed, the data depicted in Graph 1 are neither
temporary nor
transitory and can only be remedied (i.e., "reversed") after a
sustained period of deflation. Deflation is, historically, a very rare event in the U.S. economy; it has occurred in only five quarters over the previous 70 years, most recently during a 6-month period in 2008 (note the "little notch" in Graph 1 above).
As it stands, in the opinion of the BLS / Federal Reserve, the only aspect of inflation and the loss of consumer purchasing power of the U.S. dollar that is temporary is the speed with which it progresses, faster or slower, over the next several months.
Durable Goods
The cost of
durable goods, which include cars and trucks, appliances, consumer electronics, furniture, etc., increased by 3.5% in June from May and by 14.6% year-over-year, the the
largest (measured)
increase in this sector since 1957.
The biggest driver of the increased cost of durable goods through June 2021 was the cost of used vehicles:
GRAPH 2: CPI - USED VEHICLES THROUGH 30 JUNE 2021
(Source: U.S. Bureau of Labor Statistics & U.S. Federal Reserve Bank St Louis, July 2021)
Summary for CPI through June 2021
In the existing inflation data such elements as the cost of housing are understated despite the housing market also being very "hot", and while the influence (on CPI) of such factors as the cost of used vehicles is expected to be temporary, price increases are already spreading to previously unaffected categories of consumer expenditure, most significantly continued rise in the cost of housing, increasing cost of groceries and the likely continuing increase in the cost of energy.
