It's 1937 All Over Again: Weak GDP, Soaring Inflation, and the Fed Hiking

Phoenix Capital Research's picture

The US economy continues to implode as inflation ignites.

GDP Now has collapsed from 3.4% in early February to 1.3% today. It will be revised even lower based on the awful deficit numbers (the US trade deficit hit a five year high in January).

Meanwhile, inflation is soaring.

The Fed tracks FOUR inflation metrics. They are Core CPI, Core PCE, Trimmed Mean CPI and Cleveland Median CPI.

Roughly all four are now at or above the Fed’s so-called “target” of 2%.

·      Core CPI is growing at an annualized rate of 2.1%.

·      Cleveland Median CPI is growing at an annualized rate of 2.2%.

·      Trimmed Mean CPI is growing at an annualized rate of 2.1%

·      Only Core PCE is just below the Fed’s target rate at 1.9%.

Weak economic growth and soaring inflation… there’s a word for that… it’s called STAG-flation.

The Fed is going to repeat its 1937 mistake of hiking rates into a weak economy. Now, like then. CPI is soaring while GDP growth flatlined.

Inflation soaring.

Year

% Change in Avg CPI Year over Year

1929

0.00%

1930

-2.30%

1931

-9.00%

1932

-9.90%

1933

-5.10%

1934

3.10%

1935

2.20%

1936

1.50%

1937

3.60%

1938

-2.10%

GDP flatlining.

The Fed aggressively hiked into this mess. The outcome?

The US plunged into recession and stocks nearly halved.

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Best Regards

Graham Summers

Chief Market Strategist

Phoenix Capital Research

 

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Buck Johnson's picture

What they never figure out and always fall into is that it's different this time, it's never different.  The insidiousness of printing money/debasing your currency is quite simple.  You can't do it even for the first time, never.  It draws you in and eventually your in to deep and are afraid to take the consequences of your financial actions.

 

We are going to have to accept the consequences and they are going to be painful.

 

PurpleNIRPle's picture

WIKILEAKS VAULT 7 IS THE PROOF DONALD TRUMP HAS THAT HE WAS WIRETAPPED:

 

https://www.youtube.com/watch?v=RVp1xT78PUY&index=16&list=PLz5bXc3GZwmzP...

Silver Savior's picture

Yep I see it all the time. My daily coffee just went up. I been thinking about just buying a medium instead of a large just because I am pissed off at it. For all I know the sizes are an illusion the medium probably has just as much in it. 

The grocery store is a fright. I hate going shopping it all just makes me so mad. My yearly raises get eaten by inflation and it's like I make less every year in terms of spending power. It's a big shit show and I am tired of it and want a reset.

Buck Johnson's picture

You always see it in the grocery store.  And I can't imagine what the family of a bread winner or winners are feeling.  I hear that Aldi is a main thing now for alot of families.  Hell my boss in my dept. goes to Aldi and alot of my other work mates also.

 

 

Osmium's picture

Not to worry, I'm sure it will be different this time with the non-stop money printing.  My yearly raise always seems to be offset by insurance premiums.