The official inflation numbers, which are skewed to make the situation appear better than it actually is, have reached the highest levels in 40 years.
At 8.6 percent officially – the real figure using old calculation methods is easily in the double digits – inflation is killing what remains of America’s middle class. And the sad reality is that it is likely to get far worse in the coming weeks and months.
Bureau of Labor Statistics (BLS) data shows that the consumer price index (CPI) rose by 1 percent month-over-month with key drivers being necessities such as food, fuel, consumer goods, and housing.
Rather than cool off as some had hoped would happen, inflation is picking up speed as we enter what appears to be hyperinflationary economic conditions.
The core inflation rate, which excludes the highly volatile energy and food sectors, climbed by 6 percent year-over-year, according to the data. This is higher than economists’ expectations of a slightly less 5.9 percent increase. Month-over-month, core inflation is leaping by 0.6 percent.
What will be the straw the finally breaks the camel’s back?
Energy inflation is currently leading the pack at 34.6 percent overall, while food is not that far behind it at 10.1 percent, officially. In the energy sector, electricity costs are rising by 12 percent year-over-year while gasoline prices are up 48.7 percent. The most dramatic increases are being seen with fuel oil, which surged 106.7 percent.
Meat prices are also continuing to skyrocket with chicken now costing 17.4 percent more in May compared to last year. Pork is up 13.3 percent with ham specifically at 11.1 percent, followed by beef at 10.2 percent.
“Eggs spiked by 32.2 percent, while milk advanced by 15.9 percent,” reports The Epoch Times. “Fruits and vegetables increased by 8.2 percent, and coffee rose at a remarkable pace of 15.3 percent.”
“Shelter costs swelled by 5.5 percent. Airline fares increased by 37.8 percent as a result of increasing fuel prices and high travel demand.”
Vehicles are also more expensive than ever, especially used vehicles which have increased in price by 16.1 percent. New cars are now 12.6 percent more expensive, and clothing is up 5 percent.
The stock market, meanwhile, is finally seeing the dramatic drops that were long predicted. Things are clearly entering recession territory, which will more than likely decline further into depression and total collapse territory as time goes on.
According to Ed Yardeni, president of Yardeni Research, what is happening in the financial markets, particularly with U.S. Treasury notes, is “signaling that investors now expect that the Fed will have to raise the federal funds rate by another 200bps over the next 12 months.”
“The 10-year yield remained around 3.10 percent, suggesting that the yield curve is anticipating a significant economic slowdown, which will lower inflation,” Yardeni added in an email to clients.
Some want to believe that inflation has reached its peak and will soon decline, but many others disagree, including Mohamed El-Erian, a top economist and chief economic adviser at Allianz.
On June 10, he reiterated his stance that June’s month-on-month headlines will be even worse than May’s, and that people need to brace themselves for what is soon to come.
“Amplifying the economic / social / political discomfort, headline is a new high for this inflation cycle,” El-Erian tweeted. “Also, if the first 10 days of June are anything to go by, the next monthly measure would be higher.”
The bond market’s reaction to U.S. inflation data, he added, points to a more aggressive Fed response, as well as a much larger economic downturn soon to come.
“Our gas has doubled, our food is up over 20%, and many other things we use are up 30-40%,” wrote a commenter at the Times.
As inflation becomes hyperinflation, we will keep you informed about the latest at Bubble.news.
Consumer demand is drying up, leaving shelves at big-box retailers overstocked with things nobody wants
Inventory is piling up at many of the nation’s largest big-box retailers as overinflated consumer markets take a major tumble.
Target, Walmart, Amazon and others are now sitting on way too many things that nobody wants, reports indicate, which is sending “bad vibes,” to quote Vox‘s Emily Stewart, into the economy.
“More and more spooky recession signs are cropping up seemingly every day, ranging from cooling housing starts to meek GDP growth, all amid the Fed tightening rates,” writes Rachel Premack for FreightWaves.
“It’s an about-face from the beginning of 2022, when things were economically pretty peachy. Too peachy, one could argue: People were buying so much stuff that our ports and terminals could barely handle the massive import volume.”
In the transportation world, a full-on recession is already being felt as the costs associated with moving a container from Asia to a major North American or European port have plummeted by 23 percent since the beginning of the year.
“Spot rates have plummeted even faster; marketplace Freightos said rates from China to the West Coast are down 38% month-over-month,” Premack adds.
“FreightWaves forecast this week that ocean shipping volumes will ‘drop off a cliff’ by this summer, based on slumping bookings out of China.”
Spot van rates in trucking are down 31 percent since the beginning of the year, which combined with skyrocketing diesel and regular fuel prices is pinching out truckers from continuing to participate in the economy.
“Even our mighty railroads are reporting a 3% year-to-date decline in volumes across the board, with only carloads of coal, chemicals and “stone, sand and gravel” (aka, frac sand) increasing,” Premack says.
Amazon overextended its warehouse footprint, now having to majorly scale back
As for the big-box retail industry, many of the big guys now have egg on their faces as they struggle to figure out what to do with all that inventory they stockpiled over the past year.
In addition to the aforementioned companies, Best Buy and Home Depot are facing what is known as “inventory bloat,” meaning people are not buying what these companies are selling, at least not to the degree that they once were.
“The retailers weren’t aware that we were all going to stop ravenously buying this quarter, apparently,” Premack speculates.
“They quietly kept amassing their own inventories, many of which were still depleted from 2020 and 2021. And concern over another black swan after years of oddities – trade wars, the pandemic and so on – probably drove many transportation managers to keep ordering stuff. Just in case.
During its April call to investors, Amazon announced that it greatly overextended itself by doubling its warehouse footprint and is now having to scale back dramatically. Just a few weeks later, the company quietly tried to end leases on or sublease at least 10 million square feet of that warehouse space.
The news so shocked investors that many of them pulled out, realizing that the retail behemoth is not going to continue the trend of endless growth. Amazon also has way too much stuff in its warehouses with nowhere for it to go as nobody wants to buy it.
“According to federal filings concerning the first three months of 2022, the value of Amazon’s total inventories increased 47% compared to the same period last year. But its North America net sales only popped 8%,” Premack reveals.
Walmart is in a similar predicament as its inventory jumped 32 percent from the previous year compared to a meager 4 percent increase in sales. Best Buy was more conservative, expanding its inventories by only 9 percent, though its sales have actually declined by 8 percent.
More related news about the falling house of cards can be found at Collapse.news.