503-785-3485
bill@conerlyconsulting.com
  • Facebook
  • Twitter
  • Linkedin
Conerly Consulting Conerly Consulting
  • Consulting
    • Approach/Philosophy
    • Sounding Board
    • Economics and Business Strategy
    • Assessment
    • Case Studies
    • Testimonials
  • Speaking
    • The Package
    • Topics
    • Testimonials
  • Writing
    • Businomics Newsletter
    • Businomics
    • The Flexible Stance
    • Blog
  • Industries
    • Banking/Finance
    • Manufacturing
    • Other Industries
  • Video
    • Speaking
    • Event Promotion
    • Business Planning
  • About
    • News Coverage
  • Contact
  • Consulting
    • Approach/Philosophy
    • Sounding Board
    • Economics and Business Strategy
    • Assessment
    • Case Studies
    • Testimonials
  • Speaking
    • The Package
    • Topics
    • Testimonials
  • Writing
    • Businomics Newsletter
    • Businomics
    • The Flexible Stance
    • Blog
  • Industries
    • Banking/Finance
    • Manufacturing
    • Other Industries
  • Video
    • Speaking
    • Event Promotion
    • Business Planning
  • About
    • News Coverage
  • Contact
  • Home
  • Economy
  • CPI Rises, Ensures Rate Hike

Economy

14 Jun 2006

CPI Rises, Ensures Rate Hike

  • By Bill Conerly
  • In Economy

OK, today’s CPI report pretty much guarantees the Fed will hike rates the end of this month.  The rise in the "core rate" (the CPI excluding food and energy) is most worrisome to the Fed.  That’s the red line on our chart.
Cpi1_2

My fellow data hounds are pointing out that housing costs are giving a big and misleading push to the CPI.  "Owner’s equivalent rent" is how the statisticians gauge inflation in the cost of housing.  If you own a home, they assume that you as a landlord rent the house to yourself as a tenant.  They estimate rents, based on comparable rental homes, and that’s for the housing component of the CPI.  Rents are now rising sharply, because they had been artificially depressed when every credit-worthy family in America bought a house or a condo.  There’s really no good way to handle housing costs in the CPI; looking at the price of houses confuses investment prices with living costs.  In any event, the Fed may be over-reacting if it bases rate hikes on the owner’s equivalent rent increases.

Further problem for the Fed: time lags.  We all know that inflation takes a while to bring down.  It’s possible that the past two year’s interest rate hikes are doing the job, but we have to wait a bit longer to see their effect.  If that’s the case, then further rate hikes are a mistake.

WWBD?  What would Bill do?  I think I’d pause this meeting, but it’s not a clear issue.  I’d been leaning 60/40 to pause; not utterly stupid to hike rates.  How’s that for a clear answer?

Business Strategy Implications:  I’m raising my own estimate of the chances of a recession in the coming two years.  The possibility of a Fed policy mistake is rising, simply because the data signals are getting harder to interpret, due to both housing and oil costs.  So if you have not done your contingency planning for an economic slowdown, start today.  Call me if you want some help on it.  That’s one of my favorite consulting topics.

  • Share:
Bill Conerly

Search

Sign Up For Our Newsletter!

View Latest Issue

RSS Bill’s Forbes Articles

  • Useful Economics—The Business Insights Not Being Taught In Colleges April 9, 2021
    College economics courses usually teach theory as a springboard to talk about policy: fiscal policy, monetary policy and regulatory policy. Yet few students end up in the Federal Reserve or Congress. Instead of policy, college grads should know a few key economics concepts.

Testimonials

Bill assisted O.B. Williams Company with developing a strong business plan that we implemented 18 months ago. As a result and together with Bill, we are improving our position within our highly competitive market segment.
David Wick, CEO, O.B. Williams Company (wood products)
As you know, it can be difficult to find economists who provide good substantive information who are so entertaining and engaging. I received many enthusiastic comments from members and others in attendance. I was very pleased with Dr. Conerly and have recommended him to NCSTAE, our national organization.
Molly Steckel, Idaho Telecom Alliance
Your talk and its message stuck with people.
David Crowell, after presentation to National Rural Electrical Cooperative Association
Your presentation was right on the mark. I received more positive comments about you than any other presenter. We would not hesitate to recommend you to others or have you back for an encore performance.
Bob Russell, Oregon Trucking Association
Every time you spoke, we got business.
Chris Rasmussen, Washington Trust Bank, Bank of the Northwest
Thank you for a wonderful presentation. Everyone who heard your presentation was impressed with your analysis, and strong command of facts and theory. More importantly, your ability to weave together substance with humor, in a very dynamic way, meant our attendees learned and retained more information than we would have typically expected. You made economics fun and you left our members with powerful insights on trends and issues to consider as they prepare for the future.
John Aguirre, Oregon Association of Nurseries
It can be difficult to find economists who provide good substantive information who are also entertaining and engaging. I received many enthusiastic comments about Dr. Conerly from members and others in the audience.
Molly Steckel, Idaho Telecom Alliance
Bill is a delight and easy to work with. The client thought he was great and delivered value to their group. I would definitely recommend Bill.
Andrea Gold, Gold Stars Speakers Bureau
You made a complicated global picture understandable. I have received many favorable comments from those in attendance. I frequently heard comments like ‘Now I understand’ or ‘Wow, now I get it’ and ‘He was great to listen to. Thanks for bringing Bill to our meeting.’
Pete Van Sickle, Idaho Department of Lands
We asked Bill Conerly to look at one of the major factors limiting the growth of our business. He pulled together data from a wide range of sources, as well as his own extensive business knowledge, to give us an insight into when conditions would improve and how we could be ready to capitalize on better times. He did so in a straight forward, easy to understand manner. A year later it was clear that things had evolved just as he had forecast. Ever since then he’s been my go-to guy on how the e…
Len Ludwig, former CEO, Vencore Capital LLC

Get in touch

(503) 785-3485

bill@conerlyconsulting.com

PO Box 2188
Lake Oswego, OR 97035

Useful Links

  • Consulting
  • Speaking
  • Videos
  • Blog
  • Press
  • Contact

Social Links

  • Facebook
  • Twitter
  • Linkedin

Newsletters

Copyright 2020 Conerly Consulting LLC