Today the top trends forecaster in the world, Gerald Celente, warned the situation is about to get much worse in the US.

October 6 (King World News) – Gerald Celente:  The Core Personal Consumption Expenditures Index, the U.S. Federal Reserve’s preferred measure of inflation, rose to 3.6 percent in August from a year earlier, the U.S. Bureau of Economic Analysis reported, the number’s biggest jump since May 1991.

The index excludes the costs of energy and food.

The increase edged past Dow Jones’ 3.5-percent forecast and rose 0.3 percent from July.

The more-publicized Consumer Price Index climbed to 4.3 percent year on year, a rate unmatched since January 1991.

The 12-month spike reflected a 2.8-percent increase in food prices and a 24.9-percent leap in energy costs.

The numbers reflect the price of used cars rising once again, oil and natural gas costing more, and supply chain chaos continuing, leaving many staples in short supply, The New York Times noted.

Inflation’s climb is likely to last longer than policymakers had expected (see related story), stoking fears in Washington and on Wall Street that more workers could press demands for higher pay, setting off an inflationary spiral that would be hard to rein in…

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Most price increases have been caused by supply chain disruptions, officials say, meaning that upward price pressures will ease as logistics snarls untangle.

However, shipping companies expect the backlog of container ships stuck waiting for port space will continue into next year, as we reported in “Shipper Books Tenfold Increase in Net Profits” (17 Aug 2021).

In addition, rents are climbing relentlessly, the semiconductor shortage shows no signs of abating, and Chinese factories are cutting production in the face of persistent electricity outages (see related story).

Those inflationary factors are unrelated to problems in the transport industry.

While consumer prices increased, so did consumers’ positive outlook: the University of Michigan’s index of consumer sentiment edged up to 72.8 in September, compared to 70.8 the month before.

Real income in August increased just 0.2 percent, signaling that consumers’ cost of living is rising way faster than their earnings.

Partly as a result, the personal savings rate slipped from 10.1 percent in July to 9.4 percent in August.

Savings peaked in April 2020 at 33.8 percent of income, just after the economy shut down.

Manufacturers also produced more again last month.

September’s ISM Manufacturing Index registered 61.1, the percentage of companies expanding production. Ratings above 50 represent growth; the larger the number, the more robust the activity.

Manufacturers’ costs are still rising, the survey found, with 81.2 percent of those responding reporting increases, compared to 79.4 percent in August.

“Supply chain concerns are growing beyond electronics and chips into most other commodities,” an electronics industry executive said to the NYT.

“Lead times are extending, shipping lanes are slowing, and we will not see an end to this in 2021,” the executive predicted…

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Consumer spending rose 0.8 percent in August against a downwardly revised -0.1 percent in July, highlighting “only a scant gain” in individual spending during the third quarter, compared to more than a 10-percent gain during the first six months of this year.

Economists polled by Bloomberg predicted overall consumer spending would progress by 2.2 percent last month.

Spending on services rose 0.3 percent in August after slipping 0.7 percent in July; spending on goods rose 0.6 percent after stumbling by 2.6 percent last month.

The Fed foresees the Core Personal Consumption Expenditures Index averaging 4.2 percent during this year’s final quarter, no longer the 3.4 percent it had predicted in June, and settling at 2.2 percent at the end of 2022.

The greater the supply chain jams which are not expected to ease, the higher inflation will rise. Also pushing up supply chain worries are the lack of truckers and concerns that overworked laborers at snarled ports may start to rebel, thus causing the jams to last longer.

And as we noted, today, the Federal Reserve Bank of Atlanta reported that “The GDPNow model estimate for real GDP growth in the third quarter of 2021 is 2.3 percent on October 1,” which is a steep drop from 2 August when the forecast was for 6.3 percent growth. Thus, considering the overall stressful economic conditions, the “Biden Bounce” that we had forecast back in January would happen—but be temporary—is coming to an end.  (See, “THE BIDEN BOUNCE, THE WORST IS YET TO COME” )

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***To listen to exactly what levels to watch in the gold and silver markets and much more in this important audio interview CLICK HERE OR ON THE IMAGE BELOW.

***To listen to this powerful audio interview with Alasdair Macleod CLICK HERE OR ON THE IMAGE BELOW.

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