Taps Coogan – June 14th, 2023
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We made this point a few months ago and now, with a few more months of data, we’re making it again. The decline in headline CPI since its peak last June has been one of the fastest on record.
CPI peaked at just under 9% last June (11 months ago) and has fallen to 4.1% as of the May data released yesterday. That ~4.8% decline has only been eclipsed twice since the early 1950s: briefly during the Global Financial Crisis and for one month during the severe 1980/81 recession. Those two recessions are widely considered the worst two recession since the Great Depression.
As we pointed out last time, this is as close to a ‘goldilocks’ pace of decline in CPI as the Fed is going to get. The risk/reward of further rate hikes is highly dubious.