Keller @ Large: Inflation's down - what does this mean for the economy?
BOSTON - The cost of gas...airline fares...used car prices...all down.
New figures show inflation dropped to three percent last month. That's the lowest point since early 2021.
What does it mean for the overall economy and the presidential election ahead?
"Our plan is working," said President Biden last week and if these new numbers are a sign of things to come, you can expect to see more victory laps from him.
"The manufacturing sector has contracted, and that, simply stated, means we are buying more services than goods right now so goods pricing has collapsed," said Art Hogan, chief market strategist for B. Riley Wealth.
Not so much at the supermarket, where prices held steady at elevated levels. But cars and trucks are down a half a percent, airfares are down 8.1 percent, and the cost of rental housing - elsewhere in the country at least - is dropping sharply. "Prices are coming down, there's jobs aplenty and the recession that everyone predicted seems to be around the corner again or maybe pushed out forever," said Hogan. "And I think that's very, very good news."
Also, a tentative triumph for Jerome Powell and the Federal Reserve, which raised interest rates aggressively despite recession warnings. "They will likely raise rates one more time in July and that'll be the end of the rate-hike cycle," predicted Hogan. "I also think it's vindication for the administration, which has done a very good job of staying on top of these things."
Things like fixing supply chains disrupted by the pandemic and making long-term investments in infrastructure repair.
Will it all help clear Biden's path to a second term? That remains to be seen. But for now, it's celebration time, said Hogan: "This is a very good time to be in America."
Of course, it's wise not to forget Murphy's Law: anything that can go wrong will go wrong. But the trendline for inflation does suggest that the economic disruption of the pandemic is mostly in the rear-view mirror. And that would be the best news the Biden re-election campaign could possible receive.
