That repeatedly asked question makes me want to poke my own eyes out. Seriously.
It's like asking when the median CPI will normalize.
The following chart shows the 36-month moving average of the annualized median CPI.
Click to enlarge.
We're in the declining blue trend channel and we're currently riding the red parabola. As a follower of declining economies and unstable parabolas, it all looks pretty frickin' normal to me.
Let's zoom in for a closer look.
Click to enlarge.
We peaked and we're now heading down the other side of the red parabola. I'm going to go way out on the limb here and suggest with 80% confidence that we won't be returning to the top of the blue channel any time soon, especially now that the price of oil has crashed.
Think about that for a moment. We peaked and the Fed hasn't even raised interest rates yet. So why should they need to raise them other than to inspire confidence when little is warranted?
It would take a lot of wage pressure to reverse our course at this point. At the very least, I would expect wage pressure to push many of this country's many "new and improved" discretionary small businesses (think restaurants and nail salons) right over the side of the cliff at some point.
I see a hard landing no matter what the Fed does or doesn't do. When a plane is low on fuel, the terrain is rocky, we're hurtling towards the ground, and the landing gear can only be lowered zero percent, why should we expect much different? In the meantime, this economy sure has some momentum built up. I'll give it that.
This is not investment advice.
St. Louis Fed: Median Consumer Price Index
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