Published 12 Oct, 2022
What a difference a month makes! The US continues to battle against rising prices, but cooling inflation remains a much-debated topic in the news. After a summer of jumbo rate rises, market volatility is back, and cracks are beginning to show in the economy, with the cost of living impacting businesses, the housing market and consumers. Let’s dive into the numbers and see what the data tells us.
The US Truflation CPI has dropped from 8.8% at the end of August to 8.5% at the end of September and today is at 8.1% on 12th October. It continues the downward trend we have seen in our numbers since June. The decline was driven by the following:
The macro data releases and bond market turbulence demonstrate that markets see further risks ahead. For example, in September:
Currency strength should help US inflation drop further in the coming months and make imports cheaper. However, inflation has proved to be much more persistent, even with the Fed's three jumbo rate rises this summer, than most economists thought it would be. Supply and inventory levels are reducing in the US, and consumer demand is also softening as the cost of living and economic worries weigh on consumer confidence and spending. Demand and growth now seem to be slowing in the US economy, especially in the housing market, but the real question is whether or not we will start seeing the effects of the rate rises in terms of unemployment.
The tight labor market continues to be the thorn in the Fed’s side, with demand drivers not mitigating in the way the Fed would like. Unemployment doesn’t look to be rising as the US economy continued to add more jobs in September, however, hidden in the BLS employment data are several things that point to weakening labour demand:
The employment data has made the market take the Fed’s ‘no-pivot’ message seriously, and further rate rises are on the cards. Whether it is 0.75 or 0.5 remains to be seen. Many economic indicators suggest that demand is softening, which will bring down prices. This is what we are seeing in October at Truflation. We believe in having better real-time data to help consumers and businesses make better-informed decisions.
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Written by CeAnn Simpson
Truflation is an economic data aggregator serving independent, unbiased, real-time data on-chain and off-chain. Truflation’s mission is to help individuals, investors, companies, and institutions make more informed decisions by accessing independent and unbiased economic information.