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Non-Tech : Kirk's Market Thoughts
COHR 143.02+3.5%3:59 PM EST
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To: Jerome who wrote (1427)6/17/2014 9:58:39 AM
From: Kirk ©  Read Replies (1) of 26545
 
Bob P on CNBC just said he isn't seeing wage pressure on CPI. Obviously he doesn't live on the West Coast where cities from Portland to San Jose (and possibly San Diego... I don't get their local news) are talking about raising the min wage to between $15 and $18 per hr.

Today's data only reflects the current min wage.

I wrote this on June 6: ECRI's US FIG Indicates Building Inflation Pressure

Today we learned
The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in May on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 2.1 percent before seasonal adjustment.

The index for all items less food and energy rose 0.3 percent in May, its largest increase since August 2011. The all items index increased 2.1 percent over the last 12 months; this compares to a 2.0 percent increase for the 12 months ending April, and is the largest 12-month increase since October 2012.

www.bls.gov/news.release/cpi.nr0.htm?
This is annualized CPI for just the last month of data:
  • 0.4% x 12 = 4.2%
  • 0.3% x 12 = 3.6%
BOTH well above 2.0% target for PCE inflation rate. PCE is different than CPI-U, but they are close enough and consumers care about CPI-U.

BTW, it takes about $80K to hire someone good from a top school to work at a tech company here. I've heard one reason we have soaring rent here is it goes up to whatever they can pay, which is quite a bit as they get busses from SF to work so they don't need cars AND they get their food, laundry, massages, etc. done for them at work so they don't really need to have extra funds to spend. The gal who cuts my hair says many of her customers are these Googlers and they don't have a lot of extra cash (hence go to low cost hair cut salons) since they spend it all on taxes and rent.

It is interesting the unintended consequences work here and how inflation spirals get started.
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