Breakdown of CPI DATA and Real Earnings, May 2022

Last month, I shot my mouth off and predicted the CPI for May would come in between 7.9%~8.2%. That was optimistic, as it came up as 8.58%, rounded to 8.6%.

The BLS report for May... (historical archives)

The Consumer Price Index for All Urban Consumers (CPI-U) increased 1.0 percent in May on a seasonally adjusted basis after rising 0.3 percent in April, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 8.6 percent before seasonal adjustment.

The increase was broad-based, with the indexes for shelter, gasoline, and food being the largest contributors. After declining in April, the energy index rose 3.9 percent over the month with the gasoline index rising 4.1 percent and the other major component indexes also increasing. The food index rose 1.2 percent in May as the food at home index increased 1.4 percent.

My own inflation report continues to see the onslaught of higher prices, and I am not happy😠...

Here is a compilation of various inflation reports for May to date. Note my price index jumped to 7.6%. This is not one of those happy increases. Food continues to bite, as those hoarding supplies are beginning to dwindle.

The BLS also released the May Real Earnings Report.

Real average hourly earnings for all employees decreased 0.6 percent from April to May, seasonally adjusted, the U.S. Bureau of Labor Statistics reported today. This result stems from an increase of 0.3 percent in average hourly earnings combined with an increase of 1.0 percent in the Consumer Price Index for All Urban Consumers (CPI-U).

Real average weekly earnings decreased 0.7 percent over the month due to the change in real average hourly earnings combined with no change in the average workweek.  

Real average hourly earnings decreased 3.0 percent, seasonally adjusted, from May 2021 to May 2022. The change in real average hourly earnings combined with a decrease of 0.9 percent in the average workweek resulted in a 3.9-percent decrease in real average weekly earnings over this period.

Since February 2020...

Based on real earnings, the workforce is back to February 2020 level. It is hard to imagine any improvement, with current inflation eroding earnings. 

The inflation report was a surprise, as it was above forecasts. However, the forecast was revised upward throughout the month. Obviously the forecasts were not raised fast enough. Don't worry (or maybe worry), the forecasts for June report, due out in July... calls for a range 8.64%~8.91%, at this time. With this past month at 8.58% and it already being near mid June, there is a near 100% chance that June's inflation rate will outpace May. The likely headline in July, will once again harken back to the December 1981 rate of 8.92%. Not much further back, as the November 1981 rate was 9.59%.

The PPI comes out Tuesday and we can see the future of inflation, in my opinion. I will be looking at the various groupings as well. We have the essentials, which fall into the food and shelter category; the things we complain about, but could possibly cut back on; the stuff we would like to have; and the stuff that dreams are made of.

The retail trade report is due out on Wednesday and will indicate something, although not sure of what. Several companies are stating they have an abundance of stuff, that we are no longer purchasing as if the world ends tomorrow. Which seems to indicate something related to the previous paragraph.

Still looking for that glimmer of hope, which might be in the CPI-W. As this is based on 3rd quarter, year over year average, the forecasts are indicating a possible 8.7%~9.0% increase. UNFORTUNATELY, that also indicates some serious inflation yet to come. It should be remembered that C.O.L.A. is based on 3rd quarter average, versus same period of a year earlier. While the CPI-U is the headline, the CPI-W was up 9.3% YoY. Which is odd, as years past had the CPI-U accelerating faster than the CPI-W. 

Hope you have a good weekend!!

Review of EIA Weekly Report for 6-8-2022

 Gasoline, Diesel and Crude Oil stocks are still well below seasonal average.

Much is being made about those inventories climbing since last week, except gasoline. It should be noted that imports remain similar to previous weeks, but exports fell 1.5 ~2.0 million barrels per day, compared to past week's numbers.

Not sure this portends to a capping of crude and petroleum products pricing. Consider the imports of gasoline actually exceeded the exports of gasoline for the first time in a few weeks. Consumption of gasoline is still slightly below last year's pace... yet inventory fell by about 600K barrels.

The AAA has the national average of regular gasoline at $4.955 per gallon. It should break that $5 level over the next few days, according to the futures market.

Here's a look at where we (EU, UK, US) were, where we are, and what the futures market indicates for natural gas. At some point that high price of natural gas will make its way to the consumer, via electrical generation, manufacturing with high NatGas inputs as well as those using natural gas in their homes.

I keep hearing that inflation might be at peak, but that doesn't necessarily mean it is subsiding. 

Oh, aren't I a bundle of optimism!

Update: This afternoon, an explosion at a Freeport LNG has halted the terminal for 3 weeks, according to reports. NatGas prices plunged on Henry Hub, as this will slowdown NatGas exports. EU and UK markets were closed, so should watch direction tomorrow.

The Fine Art of Rubber Necking

Clearly, my user name is not my real name, so I am guilty as sin, for whatever follows. However, in my defense, it is not difficult to uncover my real identity. It is sad that anyone would bother, but some people do lead sad lives.

What I am about to write... is about rubber necking. Traditionally rubbernecking is considered as staring at objects or accidents, etc. However, there is also the art of quickly turning our heads or ignoring things we could and or should do something about. 

For purposes of this diatribe, it is the action or rather non action of someone that sees something wrong or incorrect... then quickly turns their head to ignore. Invariably this person will then post on social media that experience and lament the failings of our society. 

As we ignore the world around us and fail to invest ourselves in that world, the world becomes more uncivilized. If I can repeatedly get away with some uncivilized act, it becomes part of my style and begins to seep into the actions of others. 

As we continue this tradition of ignoring wrongs, ills, misbehavior, etc., we can continue to see incivility increase. But hey... it does give us something to post on social media. I would simply ask the poster to stop lamenting about the decline of our society after observing some indiscretion with out actually commenting at that time and place of occurrence. 

Beware, mentioning this on social media might bring scorn down around you, by people that rubber neck in their actual lives and hide behind their screennames. 

Do you see the problem? 

Are Things That Bad, Or Is It an Election Year?

Famines, war, poverty, inflation... everywhere we turn the news is terrible and we are all going to die, or so it seems.

Is it really that bad, or is it an election year? Over 100 years ago, a guy named Mencken stated...

I remember as a child, being told to finish my meal... as there were children starving in Asia. As a child, I had no idea where Asia was, or even cared. I mean I had trouble distinguishing which Washington had the U.S. Capitol. The little town a few miles away from me, or the state. That whole D.C. thing, simply escaped me. 

Frankly, even today... that whole D.C. thing escapes me. I have learned where it is and have even been there, but is there anyone that can really make sense of that place? It seems rare, that anything happens... which makes sense. 

What was the last thing you can point to?

As for famines, wars, poverty, inflation... has anything meaningful been done to seriously address any of those things?

Which is probably why I focus on things directly and/or indirectly impacting me and trying to plan for that proverbial worst case scenario, while hoping for the best. That's about all, any of us can do, in my humble opinion. 

Review of EIA Weekly Report for 6-2-2022

Yes, gasoline prices continue to rise, as inventories are below seasonal 5 year averages... as are distillates and crude.

Refineries are working at normal or above, with gasoline and distillate consumption down and crude consumption up. Yet the prices for gasoline and diesel are going up... oh yes exports.

There is really no global slowdown in demand, although U.S. usage indicates some demand destruction. Those that import a lot of energy are trying to build up inventories, unless you know what were to happen. On the other hand, the U.S. can absorb some of that excess demand, depending on how much the consumer can handle in price increases. Yes, I do believe $5 national average on gasoline is just around the corner... as in just days.

Beginning in March, the U.S. began exporting more than importing and the exports have been large enough to state the U.S. is a net exporter since Mid October of 2021. Wrap your head around that fact.

Now for LNG... We are exporting at capacity and adding processing capacity. This is impacting Natural Gas prices in the U.S., as well as prices in Europe.

As can be seen, the UK v Dutch pricing has diverged, due to UK capacity for processing LNG back to gas. UK appears to be capping off inventories and shipping excess to mainland Europe.

In the U.S., we can expect natural gas prices to rise, as further processing capacity for LNG is brought on line. None of this bodes well for U.S. inflation, but everything else is going up, so why not. 

As for good news, the anticipated soon to be named T.S. Alex, appears to be barely a T.S. and will impact southern Florida. Maybe not good news for southern Florida, but stays away from the very sensitive gulf coast refineries. I hope that lasts, as it would be a game changer, in my opinion... and not a good one.

I really do wish there was some good news for the consumer. Just remember, this is all transitory [sarc].

CPAP and BiPAP

Courtesy of CPAP.com

So, I have been using a BiPAP for over 14 years and while not an expert, I have a basic understanding of why I am using one. 

It's about the oxygen and lack thereof, which was diagnosed as possible cause of Mitral Valve deterioration. Taking the sleep test indicated my oxygen levels were dangerously low during sleep. No amount of checking with a pulse oximeter would reveal this, unless it was recording while sleeping. Because it would give good readings while awake.

However, I did experience grogginess, fell asleep quite easily, and had difficulty keeping my mind focused. I even had the swimmy headed thing going on. 

It was quite a chore to adapt to wearing a mask and I tried several. I would lie awake for hours and worried about loss of sleep. Granted I would eventually grow too tired to stay awake and drift off. 

The changes were gradual, and it took me a few months to grasp what was taking place. My need to frequently get up in the middle of the night to urinate... subsided. My daytime grogginess cleared up rather quickly. That swimmy headed thing was gone, and I became more focused. Oh yes, I stopped those middle of the night trips. That was explained to me in a way I will not repeat here. 

Apparently even my tiny brain requires oxygen, and it wasn't getting it. Before being diagnosed, I thought I was experiencing the early signs of dementia. Turns out I was wrong, although I may be in that stage now. Not an expert in that area, but I do wonder if this may be an undiagnosed leading cause of Dementia or Alzheimer's.

In any case, don't be too quick to downplay the idea of sleep apnea. Don't be too quick to trash the mask after only a half-hearted try. The heart also needs oxygen, as well as various other organs. Your brain knows I am right... if it is properly oxygenated.

I can only state my journey with Apnea. 

A Cautionary Tale About Believing Everything You Read!

Very recently, I ran across an article posted to one of those social media sites I frequent.

I will not link to the article, but the gist was the average retirement income for those over 65 had fallen from $56,632 in 2019, to  $46,360 in 2020. The source for that data was the Census Bureau.

As the drop was so large, I decided to investigate further, rather than accept the analysis of a financial planner. 

It was a case of mixing apples and oranges, as the 2019 number was for the age group 65~74, while the 2020 number included everyone over 65.

I visited the Census Bureau website and downloaded the 2019 and 2020 data. Here is a snapshot of each...

2019...

2020...

Of course all this is 2019 with pre-Covid and 2020 with Covid. There is a drop in each category.

Overall, the picture looked like this for 2019...

And here is 2020...

I could go on about how the economy was still struggling to fully recover in 2020, as it had not met GDP output for end of 2019... in either real terms or nominal.

Not real sure why the apples to oranges comparison came about, but it serves to point out the need to carefully parse the underlying data... prior to jumping to conclusions and certainly before publishing as fact.