The Fed meets next week and they certainly aren't going to LOWER rates, are they? According to Powell and others, they are in no hurry to raise them but, as you can see from this chart, inflation is rising about twice as fast as wages so our workers are falling further and further behind in buying power. This effect is, however, masked by stimulus checks that boost spending power – that's the key to our "great" economy this year.
Labor supply shortages are still evident across all sorts of industries. The latest survey of manufacturers from the Institute for Supply Management cites complaints from makers of furniture, chemical products, machinery and electrical products about the difficulties of fulfilling demand and that hurts growth and growth is what the economy is all about, right?
Rents are starting to rise sharply, according to a range of data sources. And businesses facing higher prices for Supplies and Labor may be in the early stages yet of passing on those higher costs to consumers. The Producer Price Index, which tracks the costs of the supplies and services that companies buy, rose 1% in June, an acceleration from April and May. This is a signal that inflationary forces may still be working their way through the economy.
It is supposed to be the Fed's job to prevent prices from going up more than 2% by raising rates but, with inflation up 4% in the first 6 months of the year, the Fed is too busy lying to us about how strong (but weak) the economy is, which gives them the excuse to keep printing up $120Bn per month and distributing it to their Bankster Buddies (keep in mind the Fed is not a Government body but a banking cartel that is blessed by the Government – after many contributions from Banksters).
Meanwhile, all this free money is keeping earnings afloat for most companies (so far) but next week will be telling as the bulk of the S&P 500 will be reporting. So far, earnings have generally beaten fairly low expectations as few companies are matching their 2019 performance but that doesn't matter as they only compare…