HERE IS "KUDLOW."
LARRY: ♪.
LARRY: HELLO, FOLKS, WELCOME TO
"KUDLOW."
I’M LARRY KUDLOW.
SO MANY PEOPLE I SUSPECT AGREE
WITH BIDEN PRESS SECRETARY
KARINE JEAN-PIERRE WHO SEEMS TO
EXPECT IF INFLATION PEAKED, ON
ITS WAY DOWN, OUR TROUBLES ARE
VIRTUALLY OVER.
PLEASE TAKE A LISTEN.
>> WE EXPECT THE HEADLINE NUMBER
WHICH INCLUDES GAS AND FOOD TO
BE HIGHLY ELEVATED MAINLY
BECAUSE GAS PRICES WERE SO
ELEVATED IN JUNE.
JUNE CPI DATA IS ALREADY OUT OF
DATE BECAUSE ENERGY PRICES HAVE
COME DOWN SUBSTANTIALLY THIS
MONTH AND ARE EXPECTED TO FALL.
LARRY: WELL NOW, IF YOU THINK
THAT WAY, I BEG TO DIFFER.
WHILE IT IS QUITE TRUE OIL AND
GAS LINE AND FOOD PRICES FOR
THAT MATTER ARE THE MOST VISIBLE
PRICE SPIKES, THE FACT REMAINS
THAT PRICES ARE RISING ACROSS
THE BOARD, NOT JUST FOOD AND
ENERGY AND THIS ACROSS THE BOARD
PRICE HIKE MAY WELL BE GETTING
WORSE NOT EASIER.
NOW WE PUT UP ON THE FULL SCREEN
A USEFUL CHART FROM MY OL’
FRIEND AND COLLEAGUE ROBERT
CINCH MUCH BROAD INFLATION
MEASURE, TRIMMED MEAN CPIs
FROM THE CLEVELAND FED AND THE
DALLAS FED ARE ACTUALLY
INCREASING, NOT DECREASING.
NOW THESE TRIM MEAN MEASURES
EXCLUDE THE LARGEST AND THE
SMALLEST PRICE CHANGES.
IN EFFECT THEY MEASURE THE
MIDDLE 80% OF PRICE CHANGE
MOVEMENT.
LOOK AT THE CHART.
YOU WILL SEE, THEY’RE 12 --
ACTUALLY BROADER THAN FOOD AND
ENERGY.
THEY ARE RISING STEEPLY.
THAT IS THE INTERESTING POINT.
DALLAS GOING FROM 2% TO LESS
THAN 4%.
CLEVELAND SHOOTING ALL THE WAY
UP TO 7%.
WE SHOW ON THE CHART, CURRENT
CPI.
BE A WARNING, CURRENT INFLATION
CYCLE IS BROAD AND WIDESPREAD
AND LIKELY ACCELERATING,
REGARDLESS OF ONE MONTH CHANGE
OF IMPROVEMENT IN GASOLINE
PRICES WHICH WE WELCOME.
I DON’T KNOW WHETHER THAT IS
SUSTAINABLE FOR THE WHOLE
INFLATION PROBLEM.
NOW ALSO MANY PEOPLE ARE TALKING
ABOUT THE RECENT SLUMP IN
COMMODITY PRICES WHICH DO FILTER
INTO THE WHOLESALE PRICE INDEX,
THE PPI, AND ALSO SIGNAL
INFLATION EXPECTATIONS AND REAL
VALUE OF THE DOLLAR.
NOW TRUE ENOUGH THE DOLLAR HAS
GONE UP AND COMMODITIES HAVE
SLOWED BUT THE COMMODITY INDEX
SLOWDOWN IS MORE LIKE A DIP, NOT
A MAJOR DROP.
LOOK IT, OVER THE PAST MONTH OR
SO THE CRB FUTURES IS DOWN 12%.
YEAR TO YEAR IT IS STILL UP 36%.
BY THE WAY, IF YOU WENT ALL THE
WAY BACK TO MID OR LATE 2020
THAT CRB FUTURES INDEX IS UP
ALMOST THREEFOLD.
THE GOLDMAN SACHS INDEX, VERY
SIMILAR.
IT IS OFF 11% OVER THE PAST
MONTH OR SO BUT IT IS UP 44%
YEAR ON YEAR.
THESE ARE BROAD INDEXES.
PRECIOUS METALS, ENERGY,
INDUSTRIALS, AGRICULTURE AND SO
FORTH.
SO BEWARE.
THE M2 MONEY SUPPLY AS
UNEQUIVOCALLY FALLEN QUITE A BIT
FROM ROUGHLY 27% YEAR ON YEAR
GAIN.
I THINK THAT WAS BACK IN LATE
20, EARLY 21, ALL THE WAY DOWN
TO ONLY A 6% GROWTH RATE.
I THINK THE LATEST MONTH IS MAY
BUT MONETARY LAGS ARE LONG AND
VARIABLE AND THE FILTERING
THROUGH THE COMMODITY DIP AND
THE M2 DROP MAY NOT APPEAR
REALLY FULLY UNTIL 2023 AND EVEN
2024.
SO CAVEAT EMPTOR.
I STILL SEE A LOT OF PEOPLE IN
THE SOFT LANDING CAMP ESPECIALLY
AFTER FRIDAY’S 3,000 JOB JUMP IN
NON-FARM PAYROLLS.
YES IT WAS A SOLID NUMBER BUT
HOUSEHOLD EMPLOYMENT DROPPED
315,000 AND HOUSEHOLDS ARE OFF
TWO OF THE PAST THREE MONTHS.
THAT’S WHY PARTICIPATION RATES
HAVE SLIPPED.
I DON’T WANT TO BE THE KILLJOY
BUT I’M JUST SAYING THE FACTS
ARE A LITTLE LESS EXUBERANT THAN
SOME WOULD HAVE US BELIEVE.
REAL INCOME HAS FALLEN 3.3% OVER
THE PAST YEAR AS BIG INFLATION
HAS KNOCKED DOWN HIGHER WAGES
AND REAL RETAIL SALES HAVE
FALLEN HALF A PERCENT OVER THE
PAST YEAR AS HIGHER WAGES ARE
BUYING FEWER GOODS.
GDP DID DROP 1.6% OFFICIALLY IN
Q1.
MY PERSONAL VIEW IS WE’RE ON THE
FRONT END OF A RECESSION.
THE ATLANTA FED BY THE WAY, ITS
GDP TRACKER IS DOWN 1.2% SO FAR
IN Q2 BUT THE QUARTER IS NOT
OVER YET.
NOW ANOTHER DASHBOARD INDICATOR,
THE NEW YORK FED SURVEY OF
CONSUMER SPENDING,.
THAT SHOWS INFLATION
EXPECTATIONS HAVE BECOME
EMBEDDED IN THE ECONOMY.
ONE YEAR AHEAD THE INFLATION OUT
LOOK IS 6.8%.
THAT’S A NEW HIGH.
THREE YEARS AHEAD, 3.6%.
EVEN FIVE YEARS AHEAD, 2.8%.
AND REMEMBER, EVERYONE OF THOSE
READS ALONG WITH THE ACTUAL CPI
AND PPI, AND THE DALLAS AND
CLEVELAND TREND MEAN PRICE
INDEXES EVERYONE OF THESE IS
WELL ABOVE THE FED’S 2%
INFLATION TARGET.
SO LYME I’M GOING TO ARGUE THIS
WILL BE A LONG AND DIFFICULT
STRUGGLE TO BRING DOWN
INFLATION.
THERE IS NO QUICK FIX HERE.
WE DON’T KNOW IF GASOLINE PRICES
WILL KEEP FALLING BECAUSE THERE
IS A SHORTAGE.
DITTO FOR OIL PRICES.
WE JUST DON’T KNOW.
FINALLY THE DEMOCRATS ARE TRYING
TO PUT TOGETHER A TRILLION
DOLLAR RECONCILIATION BILL THAT
COULD SPEND A TRILLION, MIGHT
WELL RAISE TAXES MORE THAN A
TRILLION.
WE DON’T KNOW ALL THE DETAILS
BUT WE KNOW THEY’RE COOKING UP
BUILD BACK SMALLER.
WE ALSO KNOW MORE SPENDING WILL
STEEPEN INFLATION AND OUR TAXES
WILL DEEPEN RECESSION.
THE JOINT TAX COMMITTEE JUST
SCORED THE SENATE DEMOCRATS TAX
HIKE AND IT SHOWS THAT BASICALLY
EVERYBODY ACROSS THE BOARD WILL
GET HIT WITH HIGHER TAXES.
MOST ESPECIALLY THE MIDDLE CLASS
AND THERE IS HIGHER TAXES ON
SMALL BUSINESS PASS-THROUGHS,
LARGE CORPORATIONS, FOREIGN
CORPORATIONS AND THE WEALTHY.
ALL OF THAT IS GOING TO DAMAGE
INCENTIVES ON THE SUPPLY SIDE OF
THE ECONOMY.
IT IS EXACTLY THE WRONG POLICY.
NO WONDER A RECENT POLL SHOWS
THAT 93% OF WORKING AGE
AMERICANS SAY THE ECONOMY IS
EITHER POOR OR FAIR.
THAT IS THE MOST AGREEMENT BY
THE MOST AMERICANS I HAVE EVER
SEEN IN MY LIFETIME SINCE
RONALD REAGAN WAS ELECTED
PRESIDENT IN 1984.
SO I WOULD SAY TO MY DEMOCRATIC
FRIENDS, WHY DON’T YOU LISTEN TO
AMERICA?
NO TAXES, NO SPEND, NO REGULATE
ANYMORE?
STOP!