The Fed is becoming increasingly trapped: despite the FOMC’s “best intentions” to telegraph that the economy is improving with the unemployment rate at a paltry 4.3% – because otherwise it clearly wouldn’t be hiking, right – CPI has now missed consensus estimates for 5 consecutive months, and what worse, the biggest historical driver of inflation in recent years, shelter and rent inflation, appears to have peaked and is now declining. Worse, wage inflation is nowhere to be found, much as one would expect from a bartender and waiter-led “recovery.”
Of course, never one to miss a scapegoat, earlier today Dallas Fed president Robert Kaplan blamed the lack of inflation on technology, saying at an event in Texas that technological disruption is “a new and powerful structural factor that is influencing inflation” and finally noticing that “technology is increasingly replacing people in the jobs market” while “allowing consumers to change shopping habits, and is limiting the pricing power of businesses. That – in addition to global factors – has an impact on inflation.”
This post was published at Zero Hedge on Aug 11, 2017.
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