21 April 2011

Stagflation Watch: Philly Fed Misses By a Mile

I try not to react to a single month's number, and instead keep an eye on the trend.

Still, the Philly Fed came in at 18.5 versus a consensus expectation 33, and that is enough of a miss to make me spill my coffee. 

The taxes on the real economy from the unreformed financial sector and the gasoline spike are taking their toll.  There were also supply chain disruptions associated with the Japan earthquake that may have played a part.  The price paid section of the report showed rising prices.

The data are looking and quacking like stagflation to me.  And I think stagflation is the result of an exogenous shock or egregious policy error.  I'll take that second door, Alex, for a lower 90 percent of the public strangled by corrupt fiscal and monetary policy, and unfortunately, their own gullibility.

Let's see how the trends continue to develop.