It's

 

not even started yet.

Inflation is cooling thanks to gas prices, but many things still cost a lot more

"The Labor Department reported Wednesday that annual inflation dipped to 8.5% in July, from 9.1% the month before, thanks in part to a steep drop in gasoline prices."

(It's important to keep in mind that gas prices only fell because of the drawdown of the Strategic Petroleum Reserve. In September of next year we and some of our allies will start to replenish the SPR all at the same time with no increase in refining capacity. What do you think is going to happen then? When you artificially lower the cost of something, weather it's credit through prolonged low interest rates, or gas prices through a drawdown on the SPR, you can not do it forever and when those policies end you'll end up in a worse situation than you were in before they started.)

Meanwhile, falling prices at the pump left the consumer price index unchanged between June and July. The average price of gasoline reached $4.01 a gallon on Wednesday, according to AAA, down sharply from the record high of $5.01 a gallon on June 14.

(I was telling pastor Bridgette yesterday who ever decided how much oil to take out of the SPR did a great job because $4 a gallonis the breaking point foe consumers, get much above atht $ and they cut back in  other areas.)

"Sure, that's better than $5," says Spencer Sutton of Newport, Pa. of today's lower gas price. "But compared to what we were paying before everything started with the war in Ukraine, it's still a high cost."

"Rising rents and home prices are reflected only gradually in the Labor Department data, and those costs tend to be more persistent than volatile food and energy prices."

"That's moving in the wrong direction for the Federal Reserve," says Diane Swonk, chief economist for KPMG.

"Annual core inflation, which excludes volatile food and energy prices, held steady in July at 5.9%"

(So what's Wall Street exuberant about again exactly?)

."But core prices rose just 0.3% between June and July — the smallest increase in four months. Investors welcomed the sign that inflation may be cooling."

(Is that something to be happy about really? That it only went up.3%?)

"Penelope Valdespino switched this year from a retail job to a higher-paying post with the school district in San Antonio, Texas. Her larger paycheck is rapidly gobbled up, though, by rising prices.

"I finally moved over to a different job where yes, I'm going to be getting paid $3 or $4 more an hour," she says. "That's awesome, but to catch up and keep everything in order is still a challenge in this climate right now."

(Most of the country is right there with ya my sister)

"Sutton, who works for a dental insurance company, also got a raise this year, but says the money doesn't stretch as far as it used to.

"It wasn't enough to combat inflation and the rising cost of food," he says. "It's tough to get to the end of the week before you get paid and you're out of food and you're digging out of the freezer to try to find something."

Average wages in July were up 5.2% from a year ago — well short of the inflation rate."

(But the people who wish to preserve the status quo will try and tell you that it's rising wages that are driving inflation.)

"But the Fed's task grew more challenging after last week's better-than-expected report on the labor market, which showed employers added 528,000 jobs last month."

"If those numbers are to be believed, we generated over a half-million new paychecks in the month of July, which is a lot of extra income," Swonk at KPMG says. "Even if individuals feel like they're losing ground relative to inflation, that extra income is supporting demand," keeping upward pressure on prices.

Few points:

Its not extra income if its just keeping your head above water and individulas dont "feel like their losing ground relative to inflation" they are losing ground relative to inflation. But I understand his point, that is $ that is being spent that would have been otherwise and thats helping keeping prices up. Hello stagflation we werent gonna be having.

Swonk says gas prices have an outsize impact on people's attitudes about the economy, even though other expenses like food and rent make up a bigger part of the typical household budget."

and the band played on...

I love you baby.