The Dow Jones tumbles in major sell off after bad inflation report.

 

Federal Reserve chairman Jerome Powell. 

All three major stock averages tumbled today in a major sell off due to a bad inflation report. Yahoo Finance. The Dow Jones fell 1275 point, roughly 4%. Inflation caused prices to be 8.3% higher over last year and increased .1% over the last month. The markets were expecting inflation to ease by the same rate. Much of the inflation outside of the volatile food and energy markets is from the price of shelter and homes. The news resulted in spikes in interest rates.  

My Comment:

I am far from an expert in the economy, but even I can see that things are not going well. Inflation is a problem that is not going away and nobody seems to be doing anything about it or even agreeing what the problem actually is. Instead we get news like this where the Army is telling soldiers to get onto SNAP to deal with high grocery prices. 

Supposedly our joke of a President had an event today celebrating "victory" over inflation, which, in a sane world, would be a "mission accomplished" moment for Biden. This is far from a victory, Biden sounds totally tone deaf when the economic news is so bad that it triggers a stock sell off. 

Indeed, I think there is a strong case to be made that much of this inflation is a direct result of Biden and his policies. I can give him a pass for some of it, after all, he wasn't in power when the stimulus payments went out. But the energy prices skyrocketing? That's because of his role in pushing Russia into the war with Ukraine. And high housing costs? That's directly downstream of the massive invasion of our porous borders, a problem that had greatly improved under President Trump. 

And Biden himself is out to lunch. He's not at all focused on the problems Americans are facing, he's just on a crusade against President Trump and his supporters. The economy doesn't seem to matter to him at all, he just wants to throw half the country in jail because they support Trump instead of him. 

But that's enough Biden bashing for now, this is a real problem and I don't think it is going away anytime soon. Energy prices will continue to rise and so will food. I have been sounding the alarm on food prices for awhile now and though you don't hear about it that much anymore I think it will get worse as the harvest come in, or don't considering the situation this year. 

I think we are already in stagflation, where prices continue to rise even though there is an economic contraction. I know this isn't really strong evidence, but I do know at work we are getting a lot more applicants than we had in the past. People want steady work when the economy is tanking and I have heard that businesses are starting to slow down. 

But the biggest threat might be what is happening in Europe right now. Their economy faces ruin this winter as they are now largely cut off from Russian energy. Given how interconnected things are between Europe and the United States that could be a real problem for us as well. It might finally fix our inflation problem though, as depressions usually take care of that.