Daily update
Daily update
- US March consumer price inflation data is due. Inflation is a complex subject (reasonably priced, widely available books could be written about it). Sadly, the world of hashtag economics reduces everything to a single data point (or at best, two). However, the details today really do matter.
- Middle-income consumers are what drives US economic growth. Their spending power is not affected by headline consumer price inflation, but by data excluding the absurdity of owners’ equivalent rent (OER), which no one pays. OER inflation may be slowing today, but that does not imply greater spending power. Likewise, slowing car price inflation is also less relevant to spending power—most US consumers will likely not be buying a car this year.
- Regional differences in inflation matter, because this is an election year. They also show that significant areas of the US are already in a low inflation environment. Market-based prices matter because inflation has been propped up by administered and calculated prices, and lower market-based inflation signals few future inflation pressures (especially in areas subject to the Federal Reserve’s policy influence).
- A credit rating agency (it does not matter which) has done something (it does not matter what) to China’s rating outlook. Investors will already be aware of the underlying economics behind this move.
