CPI Report Is A Disaster: Here Is What Happens Next

[00:00:00] Speaker 1: We just got the most recent inflation report and let me give you the quick summary. It's not looking good. In fact, the CPI just went up 3.7% in September and that's up from the 3.4% reading we had in August and economists were even expecting a 3.6% reading. So it was even worse than what economists were expecting. But the inflation number is not even the worst part of this news. Despite the fact that we're almost back up to 4% year-over-year inflation once again, to make matters much, much worse is that incomes have only gone up 3% over that same amount of time. So let's do some quick math. If you have inflation, which is the cost of living, going up 3.7% year-over-year and incomes only going up 3%, now I'm no data or math scientist, but by my math, it looks like people are falling behind. And that's if you even trust these CPI inflation numbers at 3.7%, which I have long said on this channel that I believe those numbers are completely bogus and they're probably always at least double what we're being told. So it could easily be about 7.2, 7.4% right now. And for just give you a quick, simple illustration here, somebody who's making 50 grand a year gets a 3% raise. Now you're making 51,500. Okay. But 3.7% inflation would require you to be making 51,850. Well, now all of a sudden you are $350 short of maintaining the same purchasing power from a year ago. And also it's important to know that everyone's personal level of inflation can vary pretty substantially depending on which part of the country you live in, your lifestyle, how long you have to commute to work, or how much it costs to heat or cool down your home, how many people live in your household. There's so many different factors that contribute to everyone's individual level of inflation. Now, according to these figures, gasoline prices increased 9.1% in September following a 3.9% increase in August. And over the past year, gas prices rose 34.2%. And they're saying gas and heating costs are driving these big increases in inflation. But the reality is what's really driving it is the increase in the money supply. And this is a big deal, guys. Like somebody who was spending $300 a month one year ago on gasoline would now be spending over $400 a month. That's an extra $1,200 annually on just one expense. Not even including everything else that has gone up in price during the same timeframe. Also, homes that use heating oil have really been hit by this because that has gone up 74% compared to one year ago. Electric prices have gone up 4.4% compared to one year ago. Food prices over the past year have gone up 2.5%. Groceries went up 1.8% and restaurant meals went up 3.5%. Coffee went up 7.1%. Fish and seafood went up 6.9%. Ground beef went up 5.4%. So it's like, oh, when they tell us grocery inflation is only up 1.8% year over year, clearly that doesn't reflect some of these items that people buy guys. And that's not even including anything else like cereal or milk or chicken, eggs, whatever. We also saw a shelter inflation go up 3.2% year over year. College tuition went up 4% year over year. Airfare increased a whopping 22.4%. Public transportation went up 15.6%. Postage went up almost 13%. So another big one, which is shelter. Everybody needs a place to live unless you want to be homeless. And that went up at a higher and faster rate than wages. Guys, this is the problem. This is the big thing I'm trying to highlight in this video because for a long time, they kept telling us, oh, don't worry about inflation because the wages have been outpacing inflation, which I always said was a lie because the CPI is a lie. And that was all based on the CPI figures. But now that we have the CPI figures actually exceeding the wage figures, they can no longer hide and lie anymore because the proof is out there. The proof is there showing us that, yeah, the wages no longer are keeping up with inflation even by official measures. And yeah, some things did go down like eggs went down 20%. Butter went down 10%. Prescription drugs went down 4.5%. Furniture went down 2.4%. But those decreases don't erase the earlier increases that came before them. Kind of like with real estate. You know, a lot of people are still unhappy with the price of homes because it just went up far more than it's been coming down. This is the same thing. One of the other major problems with having inflation running hot right now is it's likely going to keep borrowing costs much higher than most people are comfortable with. As more treasury investors are unconvinced that the federal reserve has inflation under control. They are going to continue demanding higher and higher interest rates from the federal government on these treasuries, which means that borrowing rates for all other types of loans will go up because if the 10-year treasury goes up, that affects things like car loans, mortgage rates, credit card interest rates, anything that requires you to borrow money as a consumer. We really haven't seen anything yet guys like this grocery price inflation at 1.8% right now is an absolute joke because that's likely going to go way up as these diesel prices continue to surge. And there's basically a diesel shortage right now and everything is shipped via diesel, especially groceries. And that means you're going to be paying more for them very, very soon. And really we're just getting started because when we look at wholesale inflation, that is the number that all of the suppliers have to pay right before the actual item hits store shelves and you actually buy it at retail. Wholesalers pay wholesale prices. They buy things in bulk and that number just skyrocketed. Over the past 12 months, wholesale price inflation went up 6.3%, guys. The CPI is at 3.7%. And they say this is the fastest wholesale inflation rate seen since December of 2022. And that was just a few months after the Fed started hiking rates because back then we had a CPI that was about 9%. So if the CPI was close to 9% back then, and this is the highest we've seen this since then, well, what do you think that's going to say about where the CPI is headed next? Does it mean for sure it's going to go up to 9%? No. But does it mean it's probably going to go much higher than 3.7% where it's at now? Yeah, most likely. I can't guarantee that. But based on these statistics, it looks like that's where things are going. And so this makes the case that the Fed should definitely raise rates again in October. They have another meeting coming up at the end of this month and most likely they're going to have to raise interest rates again because it's the only way to make it look like at least pretend on paper that they're serious about fighting inflation. Even though I would say they probably never have been and probably never will be under this current system because if they were, they would be raising these rates much, much higher. And this was another surprise as well. Nobody was expecting the wholesale inflation to go up as much as it did. And if we get the PPI numbers, the producer price index also coming in hot, it's basically a guarantee the Fed's going to raise rates again. Once again, I don't think that really means much. You know, this is not having huge impacts because the treasury market is well ahead of the Fed at this point. You know, they are charging rates which they think kind of protect them from where things are going right now, which has been disconnected from the Federal Reserve rates for a while. The only benefit to this that I've seen as a consumer is I actually just got an email yesterday saying that one of my savings accounts was being bumped back up to 4% APY, you know, for the interest rate, which is great. But still, if the inflation is at 3.7% and you're making 4% on your high yield savings account, what are you really coming out with in the end? Especially after tax, you've got to pay taxes on that interest payment, right? You don't get to keep all of that. Uncle Sam takes their cut. So really, you're lucky if you're breaking even according to the official numbers with these increases. But I will say at least it's about time because these rates for everything else have been exploding recently when it comes to car loans and when it comes to mortgage rates. And only just now we're starting to see a small bump in high yield savings account interest rates. And amid all this news, they just announced the social security cost of living adjustment that's going to hit people who get social security checks in 2027. And they said it's going to be 3.6%. We had a 2.8% increase for 2026. And now you're going to get 3.6% in 2027, which once again, is below the CPI. So it's not just people who are working, getting hit with wages that aren't keeping up with inflation. But if you're on a fixed income, or your main source of income is social security, that's not keeping up with it either. But you're still doing better than somebody who's actually working, which kind of blows my mind, right? Like you are collecting social security and getting a bigger raise than somebody who's actually working is just insane. That's how upside down this economy is right now. This 3.6% cost of living adjustment equals about $75 a month for the average retiree, which brings you to a little over $900 a year. This will bring the average monthly benefit to approximately $2,163 per month. But it's like using this as an example, somebody gets that 3.6% cost of living adjustment, right? In 2027. But that doesn't account for all of the inflation that's going to happen moving forward in 2027. Somebody has to use that money to pay for all of the future expenses and paying that forward, right? Because you don't get cost of living adjustments every single month. When the CPI reports come out, you get it once a year and that's it. But the problem with this, guys, is so many people rely on social security as either their main source of income or a large chunk of their retirement income, which was never intended to be, by the way, but people do. And because of that, it is going to put the squeeze on more elderly Americans than we have seen in a long time. Because about 40% of Americans 65 and older rely on social security for half of their income. So for those people, a big change in the cost of living is going to hit them where it hurts. And everybody who's collecting social security has been dying for them to raise the cap on how much is collected from people who are working today, which it is going to happen. Social security payroll taxes will increase 4.2% to $192,300 in 2027. And so for the highest paid workers who are affected by this, that means an extra $484 per year in social security taxes. But nobody is hurting worse than people who are still working guys because of the wages are seeing the lowest increase compared to inflation. When you look at the job market right now, it is not looking too good. There have been more than 800,000 jobs that have been revised away from January, 2025 through August of 2026. That is 800,000 jobs that they said we got and we actually didn't. And over this time period now, we actually lost jobs. We didn't gain any jobs in this economy between January of last year and August of this year. And this we've been seeing this happen now for the past few years in the job market. And yet all we've been hearing since then is just how strong the economy is and how great things are going and blah, blah, blah, blah, blah, blah. These numbers are so bad that going back to January, 2025, the average downward monthly revision is about 39 and a half thousand jobs lost. So they're saying basically if you average it out, we lost 39 and a half thousand jobs over those past 16 months. And they're saying, well, this is a problem because the Federal Reserve has been raising interest rates now into a softer than believed job market. And that's the problem with these terrible jobs numbers that are completely altered and manipulated and overstated is important economic decisions are made based on those fake numbers like the Federal Reserve raising interest rates. You know, at the most recent meeting in September, they were working off an August estimate of 162,000 jobs gained. And now that's being revised into a loss. They're kind of second guessing whether raising rates was the proper decision. Although I would say, who cares about that? Because the most important thing when it comes to raising rates is inflation. The issue is, is the Federal Reserve has what's called a dual mandate and their dual mandate states that they're supposed to create an environment where there's maximum employment and minimum inflation. And as we've seen in the recent market, those two things have become disconnected. You can't exactly do that anymore because the fundamentals don't work the way that they used to. And they're still trying to say that this labor market is one of few layoffs and few openings, meaning that there's not a lot of people getting fired. There's also not a lot of people getting hired. And they say that because of how low the unemployment rate still is. Unemployment rate is still sitting at 4.2%, which is still historically low. But I'd like to push back on that as well, guys, because all year, I mean, I have covered many different stories about all the different layoffs that we've seen happen. You know, earlier this year, we saw layoffs from Meta and Microsoft and Amazon and some of these big companies that are laying off, you know, 10, 15, 20,000 workers at a time. And just in this past week, Kroger announced they're laying off 3000 people over the next three years. Netflix announced they're laying off a thousand people. HubSpot said they're going to be laying off a thousand people. Those layoffs are smaller than some of the ones we saw earlier in the year, but still a lot of people who are high income earners who are going to be losing their jobs. And then, of course, if you do lose a job in this environment, it is extremely difficult to get another one right now. But, you know, they look at unemployment and say, oh, it's still low and don't factor in while this doesn't account for people who actually never file for unemployment, who just go straight into gig work, for example, because that is an available option and you never need to apply for unemployment. You can still keep some money coming in while looking for a new job. That's one thing people do. Also, what about these high paying tech layoffs? A lot of them come with generous severance packages and people have plenty of time and money to find a new job if they're in that position. So there are a lot of different reasons why unemployment doesn't spike even though we're seeing all these layoffs left and right. Literally every week there's new layoff announcements. So I would say if you have a job right now, you are one of the lucky ones and you should do what you can to keep it and find ways to have multiple streams of income, guys, because there's really no such thing as job security anymore. And you really need that extra income, the extra sources of income, not only for financial stability, but to have a better shot at having your income outpace this really high inflation right now. Because even people are doing well, are being squeezed by this higher inflation, especially when some of these things have gone up 20% on the year, gas prices up 34%. Everybody has to pay for that. Even if you own an electric car, you're paying for it because you probably buy groceries, right? You buy electricity, you buy other items from Amazon, you get things shipped to your doorstep that all require shipping expenses paid for by diesel fuel. So we are all in this together. And I just hope that these updates that I keep giving people are helping you in some way to try and stay at least one or two steps ahead of the curve and try to put yourself in a better financial situation tomorrow than you were in yesterday. And if that's the case, well, then my goal has been achieved. So if you guys enjoyed this video, make sure you subscribe to the channel. And if you don't want to wait for my next video to come out, check out this one on the screen right over here, and I'll see you in the next one.