Supply chain stress collapses

The COVID inflation shock is over. In fact, we’re entering the post-COVID deflation shock. Shipping:

And everything else:

Supply chain stress essentially back to pre-pandemic level (black line is average) ; commodities & used car prices helping lead on way down
⁦@DataArbor⁩ ⁦@Conferenceboard⁩ ⁦@federalreserve⁩ @ISM ⁦@NFIB⁩ ⁦@UMich⁩ pic.twitter.com/5UZsrvuDwt

— Liz Ann Sonders (@LizAnnSonders) October 19, 2022

Goods inflation is about to turn deep deflation as huge inventories are run down:

The problem for the Fed is now sticky inflation in services:

INFLATION, MONTH-OVER-MONTH PERCENT CHANGE
Month	CPI	Core CPI	PCE	Core PCE	Updated
October 2022	0.81	0.54	0.59	0.42	10/19
September 2022			0.33	0.44	10/19

INFLATION, YEAR-OVER-YEAR PERCENT CHANGE
Month	CPI	Core CPI	PCE	Core PCE	Updated
October 2022	8.14	6.58	6.29	5.17	10/19
September 2022			6.27	5.16	10/19
Note: If the cell is blank, it implies that the actual data corresponding to the month for that inflation measure have already been released.

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About the author

David Llewellyn-Smith is Chief Strategist at the MB Fund and MB Super. David is the founding publisher and editor of MacroBusiness and was the founding publisher and global economy editor of The Diplomat, the Asia Pacific's leading geo-politics and economics portal. He is also a former gold trader and economic commentator at The Sydney Morning Herald, The Age, the ABC and Business Spectator. He is the co-author of The Great Crash of 2008 with Ross Garnaut and was the editor of the second Garnaut Climate Change Review.