Americans’ inflation expectations have surged to 4.3%, marking one of the sharpest three-month increases since 1979, according to new data that has economists concerned about price stability.The University of Michigan’s consumer survey for January shows median one-year inflation expectations have climbed 170 basis points since November’s election, The Economist reported on Tuesday. It represents a joint-largest quarterly increase in over four decades, rivaling periods when inflation hit double digits.
Market indicators reflect similar concerns. One- and two-year breakeven inflation rates, calculated from Treasury yield differences, have risen 1.7% and 0.8% respectively since November.
The jump exceeds historical patterns. According to The Economist’s model, approximately 80% of variation in quarterly inflation expectations typically correlates with current inflation rates and fuel prices. If the traditional relationships held, expectations would be nearly a full percentage point lower.
Analysts attribute the disconnect primarily to President Donald Trump‘s tariff rhetoric. Consumer uncertainty about inflation has reached its highest level since 1980, with those opposed to tariffs expecting inflation near 5%.
“This is the riskiest period for inflation policy since the early Biden administration,” former Treasury Secretary Larry Summers told The Economist, referencing the period preceding four-decade inflation highs.
Signs suggest the expectations may become self-fulfilling. American wages grew at an annualized 5.9% in January, while over 20% of Michigan survey respondents—the highest proportion in three decades—report accelerating major purchases to beat anticipated price increases.
Federal Reserve officials have expressed concern. “When inflation expectations become unanchored, central banks often can restore price stability only at a great economic cost,” Dallas Fed President Lorie Logan recently warned. The uncertainty, she added, serves as “a reminder that expectations won’t stay anchored forever on their own.”
Longer-term inflation expectations show mixed signals. While the “five-year, five-year forward” measure favored by central bankers remains stable, five-year consumer expectations have climbed to 3.3%, exceeding recent peaks.
A partisan divide has emerged in longer-term outlooks, with Democrats now expecting 4.2% average price increases over the next five years. Research suggests similar Republican concerns during the pandemic contributed to subsequent inflation.
Some analysts believe Trump’s criticism of Federal Reserve Chairman Jerome Powell, including demands for interest rate cuts, has heightened Democrats’ inflation concerns.
Stone, what is your opinion of the Mar A Largo accord? It seems to be a clever new scheme to deal with debt!
Milking the Ukrainel/Russia hoax for all it’s worth. Grade school kids can perform better than this…keywords, “Deal, Don’t have the cards, Respect, he can come back when he’s ready for peace” Kinda neat how Trump nudge Zelensky at the 45:10 timemark in the video, like he was going to punch him. Another example that exposes this entire event as a hoax…Guess they want it to continue a little longer.
https://www.pbs.org/newshour/world/watch-zelenskyy-departs-white-house-after-trump-and-vance-chastise-him-in-tense-meeting
Pope Francis doesn’t look good. The prophecy of the popes is in peril. It doesn’t seem the Pope will survive until 2027.
I never thought Francis was the Pope, what with all the nonsense he was involved in, and his constant blasphemies and theological errors he espoused.
Would it still be valid if the Pope goes into a coma for example, and they keep him alive artificially? Then is it plausible that no new Pope would be selected?
As long as he has a pulse.
It is very possible that the Catholic Church will collapse after Pope Francis and he will still be the last Pope.
Despite a horrible GDP revision downwards this morning, bond yields have a long way to go before they match economic conditions….
The Atlanta Fed GDP estimates are now showing for a contraction for this quarter. The massive upticks in imports have mathematically reset any GDP growth.
Trump reveals whom Biden blamed for Dems’ 2024 election defeat — and it’s not Kamala Harris
Former President Joe Biden told President Trump that he blamed fellow former President Barack Obama for the Democrats’ knockout loss in the 2024 election, the commander-in-chief revealed in a new interview.
Trump told the Spectator World he had visited the White House to meet with an “angry” Biden shortly after he defeated Vice President Kamala Harris — who took Biden’s place on the Democratic ticket after he was forced out of the race due to concerns over his age and abilities.
“I asked him, I said, ‘so who do you blame?’ Because he was very angry, you know, he was a very angry guy, actually. And he said, ‘I blame Barack,’” Trump said.
“And he said, ‘and I also blame Nancy Pelosi.’ I said, ‘what about the vice president?’ He said, ‘no, I don’t blame her,’ which was interesting.”
Biden aide admits administration was ‘gaslighting’ Americans by covering up alarm at his age and health
“He didn’t blame [Harris]. He blamed … he told me he blamed those two people,” the president said.
Obama had initially encouraged Democratic allies to stick with Biden in the wake of his disastrous debate performance on June 27. But by mid-July, Biden’s old pal had reportedly turned on him in the face of mounting concerns about his mental and physical fitness.
“He said, ‘I blame Barack,’” Trump said about Biden’s thoughts on the Democrats’ loss in the election.
The 44th president had met with former House Speaker Nancy Pelosi (D-Calif.) to discuss their growing concerns.
Biden, 82, dropped out of the race on July 21 and promptly endorsed Harris — who was ultimately unable to overcome Trump in just a few frantic months on the campaign trail.
Biden has previously admitted that he was nudged out of running for a second term by Pelosi and other party elites, but has avoided pointing a finger at Obama.
If Biden wants to know who’s at fault, he should look in the mirror! That’s the last place most of want to look.
Holy moly! Look at that goods trade deficit. The economic pencil pushers will be revising GDP estimates downward… Revised PCE data look okay and are inline with estimates.
PCE Price index (YoY) (Jan)
Act: 2.5% Cons: 2.5% Prev: 2.6%
PCE price index (MoM) (Jan)
Act: 0.3% Cons: 0.3% Prev: 0.3%
Core PCE Price Index (MoM) (Jan)
Act: 0.3% Cons: 0.3% Prev: 0.2%
Core PCE Price Index (YoY) (Jan)
Act: 2.6% Cons: 2.6% Prev: 2.9%
Goods Trade Balance (Jan)
Act: -153.26B Cons: -116.90B Prev: -122.01B
Personal Income (MoM) (Jan)
Act: 0.9% Cons: 0.4% Prev: 0.4%
Personal Spending (MoM) (Jan)
Act: -0.2% Cons: 0.2% Prev: 0.8%
Real Personal Consumption (MoM) (Jan)
Act: -0.5% Cons: Prev: 0.5%
Retail Inventories Ex Auto (Jan)
Act: 0.4% Cons: Prev: -0.1%