Consumer prices came in as expected today, as inflation continues to soften from a 9% peak last year. Actually, topline inflation came in at 3.2% versus July a year ago, a slight increase from the 3% registered in June.
The so-called core rate, excluding food and energy, is still running 4.7% ahead of last year. Food and beverage prices are up 4.8% versus a year ago and groceries are up 3.6%. So, inflation is still sticky and stubborn, but a lot lower.
The level of consumer prices still up roughly 16% over the course of Joe Biden’s administration. That’s the level of prices, which seldom comes down. It’s led by energy and food. In recent months, we’ve had a rest from energy prices, but those may be turning back up, with AAA nationwide gasoline heading toward $4 a gallon.
Joe Biden is out there on the campaign trail telling us he created 13 million new jobs, but no humanoid can substantiate that number since it has to be adjusted for returning COVID jobs. Once you add that to the mix, he really hasn’t created hardly any new jobs at all, but I don’t want to upset him.
Manufacturing and housing are in a big slump right now, and I know Wall Street says this time it’s going to be different, but once again I will point to the deeply inverted yield curve, which is upside down, with short rates much higher than long rates in the Treasury market. That indicates credit crunch potential and the New York Fed yield curve model is showing a 65% probability of a recession in the next twelve months.
Also, bank stocks – a leading indicator of the economy – are down 23% over the past six months, another warning sign and, I will just say, over the past six quarters or 18 months, real GDP has grown at a paltry 1.3% average pace, including two negative quarters in the first half of last year, which was Joe Biden’s first full year in office.
The only supply-side source of growth comes from the lingering Trump tax cuts. Though Biden is doing his best to repeal them. Other than that, the Biden regulatory assault on business, along with continued overspending and of course the war against fossil fuels, have all set the stage for a continuation of what Democrat economist Larry Summers years ago called “secular stagnation,” which I don’t like one bit and I don’t think America’s buying it.
That’s why Biden’s economic polls are so incredibly low. A recession next year will sink Mr. Biden and his Democratic Party. That is, if they haven’t already dug their own deep grave of corruption and that’s my riff.
This article is adapted from Larry Kudlow’s opening commentary on the August 10, 2023, edition of “Kudlow.”