Tuesday, March 26, 2024

Only The Dead Have Seen The End Of Inflation

The headline is our repurposing of Santayana's "Only the dead have seen the end of war."*

Back in the bad old days of the U.S. economy making stuff** and energy intensity be damned, the rule of thumb was "a 10% rise in oil prices flowed through to a 1% rise in CPI." 

Now it is around half that but still important as it touches on just about every facet of economic life. And if we look at the action in oil (WTI) and gasoline we can see where goods inflation is likely to get a boost over the coming months. Three month charts, daily prints via FinViz (also on blogroll at right):

Crude Oil Chart DailyGasoline RBOB Chart Daily

*"Only the dead have seen the end of war".

attributed to Plato from the 1930s on, especially following a speech by General Douglas MacArthur at West Point, 12 May 1962 crediting him, but not found in Plato's works; Santayana is the earliest known source
Soliloquies in England and Later Soliloquies (1922) ‘Tipperary’
**The U.S. manufacturing sector has pretty much flatlined since the 1980's but because the rest of the economy has grown so much, the relative contribution of manufacturing to GDP and employment has fallen dramatically.