Still no inflation on the horizon
The Federal Reserve has one big problem.
The Fed mandate on employment has largely been fulfilled. Financial markets are swimming along just fine.
Yet inflation is stubbornly low.
There is a large camp at the Fed that thinks it's only a matter of time but consumers are proving more price-savvy than ever.
Business Insider today writes about falling sales growth in fast food restaurants. The reason: it's getting cheaper to eat at home. The July CPI showed the prices of eating at home fell 1.55% year-over-year compared to +2.79% for eating out.
That's not a huge change but it illustrates how sensitive consumers are. Price in fast food restaurants is maxed out and there will be downward pressure. It's the same in so many other industries and in the work force, where anyone thinking of asking for a raise might be reminded that Ford just announced it will outsource all small-car manufacturing to Mexico.
