It's VERY DYNAMIC.
When people go to buy groceries and items like fast food that they
repeatedly buy, they see that prices have never leveled off and continue to go up even though the CPI only shows 2.4% YoY growth in January.
This is what sours consumer sentiment.
Grocery prices are insane!
This is as opposed to durable goods orders (like a washing machine, water heater, etc.) or automobile that gets purchased once every 10 years.
It will be interesting to see if the new Fed Chairman Kevin Warsh throws the Fed's economic forecasting and "dot" plots out the window as Larry Summers has advised. Warsh has been highly critical of Jerome Powell's reliance on the "dot" plots and other forecasting models. Warsh is more of a hard-money guy and will focus more on the money supply.
One thing I know for certain, Warsh will be shrinking the Fed's balance sheet.
That means more supply hits the market and puts pressure on rates to increase.
That having been said, he may use issuance of shorter term instruments like T-Bills to do it.
The latter was proposed by Janet Yellen during the Biden Administration.
It was criticized by Trump cheerleaders like Treasury Secretary Bessent, but that's exactly what Bessent has been doing now.
"Cults don't end well. They really don't."
