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Although inflation came down in 2023 to 4% from the 2022 level of 8.3%, it did in fact creep up a bit in March to 3.5%. As a reminder, even though this is much better than 8.3% or even 4%, keep in mind that inflation is cumulative, so whatever the 12 month average ends up being for 2024, it just stacks on top of last year’s 4% which is stacked onto 2022’s 9%.

A decrease in inflation simply means the growth rate has slowed. That said, the much anticipated rate cuts that we all thought were coming (and I even wrote about in a previous post) have not yet materialized.

The Federal Reserve (i.e. Jerome Powell) is desperately trying to keep the inflation genie in the bottle and the March number didn’t help any. Powell is concerned about his legacy and seeing “re-inflation” will sideline his chances of being the Fed Chairman who tamed inflation in the post pandemic world. With that, there is still talk about a few rate cuts this year but I’m not sure those will materialize if inflation doesn’t come down.

But what else has not materialized? The much anticipated recession of course. I’m not complaining certainly but haven’t we all been waiting for the recession for the last two years? Technically, we really did enter inflation in Q3 2022 when it was announced that Q1 and Q2 both had negative growth thus meeting the definition.

For some odd reason, however, the powers that be were able to wave the magic wand and declare that it was not a recession. I’m not sure how that works but the country bought it and with the new definition of a recession, we seemed to have avoided an actual one.

What we are seeing is a rise in unemployment claims. An uptick in these claims has been long anticipated by those of us who can’t figure out how the economy is staying afloat. Employment is considered a “lagging indicator” because it is usually one of the last economic indicators that signals recession. Companies will hang onto employees until they absolutely have to lay people off.

This has been been the case over the decades but more so now as companies learned during the pandemic how hard it is to hire employees and are still having problems today with finding qualified candidates who want to work.

The point of this post is that even though macroeconomics tends to follow a template, nothing is guaranteed. The irony is that in macroeconomics patterns are supposed to be somewhat predictable and to an extent they are but this time around thing just seem different. This is why I will continue to stress the need to continue learning more about macroeconomics, banking, finance and the geopolitical situation in general.

Stay vigilant and keep an eye on all aspects of the economy. Don’t take anything for granted and take what you hear on legacy media or even independent media with a grain of salt.

You might want to read or re-read some of my earlier posts about the basics of macroeconomics. I’m not trying to be a fear monger — I’m just trying to win over converts to macroeconomics. The more you know and understand, the better prepared you will be to make knowledgeable decisions to potentially avoid catastrophe and capitalize on opportunities.

Until Next Time,

Macro Ark

Note that I am not a certified financial planner and am in no way qualified to provide financial advice. This article is for information and entertainment purposes only.