NEWS ROUNDUP: COOLING INFLATION INDICATES THAT FEAR-MONGERS WERE WRONG

In CPI Report, Economists & Experts Find Evidence That Inflation Is Headed in Right Direction

Kathy Bostjancic, Oxford Economics: “Overall, we’re getting further moderation in the monthly advance in consumer prices, especially at the core level”

Reuters: “Underlying U.S. consumer prices increased at their slowest pace in six months in August as used motor vehicle prices tumbled, suggesting that inflation had probably peaked”

Today, the Labor Department released data showing that inflation cooled in August, as core consumer inflation rose by only 0.3%, lower than increases from the previous two monthly reports. The data is part of a downward trend in month-over-month increases, yielding more evidence that inflation likely peaked and further supporting economists’ belief that such inflation is transitory.

The mounting evidence that inflation is cooling disproves GOP fear-mongers, who opposed the Build Back Better agenda with the false talking point that President Biden’s agenda was causing inflation. In fact, economists like Moody’s Mark Zandi believe the Build Back Better agenda will “likely ease inflation pressures” and deliver important growth in the American economy.

WHAT ECONOMISTS & EXPERTS ARE SAYING:

Joe Brusuelas, Chief Economist at RSM“[Today’s CPI report is a] real victory for team transitory… If we are going to observe a broadening of inflation that puts at risk Fed policy and price stability, it’s going to be via the housing market, and that’s just not happening right now.’”

Guy Lebas, Chief Fixed Income Strategist at Janney Capital Management“We’re seeing the unwinding of a lot of factors that pushed inflation prints higher early in the summer. We’ll see these rolling supply and demand imbalances gradually diminish into 2022.”

Kathy Bostjancic, Chief US Financial Economist at Oxford Economics“Overall, we’re getting further moderation in the monthly advance in consumer prices, especially at the core level. The core level was little bit softer than we thought, so that’s good news.”

Rubeela Farooqi, Chief U.S. Economist at High Frequency Economics“Pandemic-related effects will diminish further over coming months. And it appears the impact of supply chain disruptions and shortages is also fading, a positive development.”

Larry Adam, Chief Investment Officer at Raymond James“It’s a fairly positive report in the sense that the Fed’s wish that inflation is transitory is coming true. If you look at a lot of the areas that were leading the surge in inflation, now they are all starting to come back down to earth. If you look at some of the components – used cars and trucks (prices), car and truck rentals, airline fares, lodging were all down.”

WHAT PEOPLE ARE SAYING:

Reuters: U.S. consumer prices slow further in August; inflation likely peaked

Underlying U.S. consumer prices increased at their slowest pace in six months in August as used motor vehicle prices tumbled, suggesting that inflation had probably peaked, though it could remain high for a while amid persistent supply constraints.

The broad slowdown in price pressures reported by the Labor Department on Tuesday aligns with Federal Reserve Chair Jerome Powell’s long-held belief that high inflation is transitory. Still, economists cautioned it was too early to celebrate and expected the U.S. central bank to lay out plans in November to start scaling back its massive monthly bond-buying program.

CNBC: Consumer prices post smaller-than-expected increase in August

Prices for an array of consumer goods rose less than expected in August in a sign that inflation may be starting to cool, the Labor Department reported Tuesday.

[…] Investor fears about inflation have calmed as well. The Bank of America Fund Manager Survey for September indicated that a net level of respondents now expect inflation to fall over the next 12 months. As recently as April, a net 93% were expecting it to increase.

The New York Times: Prices climbed more slowly in August, welcome news for the Fed

Policymakers have consistently argued that a surprisingly strong burst of inflation this year has been tied to pandemic-related quirks and should prove temporary, and most economists agree that prices will climb more slowly as businesses adjust and supply chains return to normal.

[…] White House economists greeted the report as confirmation of their view that prices should stop climbing so quickly headed into 2022.

“We view the report as consistent with the story we, the Federal Reserve and the vast majority of forecasters have been talking about,” Jared Bernstein, a member of the White House Council of Economic Advisers, said after the report was released. “It’s one month, and we’re going to continue to vigilantly watch the data.”

The Hill: Inflation cools in August as price growth misses expectations

Monthly growth in the consumer price index (CPI), a closely watched gauge of inflation, fell for the second consecutive month, dropping from a July increase of 0.5 percent. Economists expected the CPI to grow by 0.4 percent last month.

[…] Economists expected inflation to cool slightly after a summer rush of travel and leisure spending drove price growth to remarkably high levels following steep declines in 2020.

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