Elliot Eisenberg Economic & Policy Blog

Infinitesimal Inflation Inflationary pressures continued ebbing in May with the CPI unchanged ( 0.0 %) M-o-M and up 3.3 % Y-o-Y , down from 3.4 % Y-o-Y in April . More importantly , core-CPI rose 0.2 % M-o-M compared to 0.3 % in April and 3.4 % Y-o-Y , both the mildest gains since 2021 . Critically , the May slowdown was broad-based and keeps the Fed on track for at least one 25bps cut in 2024 if inflation stays at this level through summer .

Procedure Pricing Somewhat counterintuitively , medical procedure price transparency appears to slightly raise prices . Transparency does not impact the quality of service , and most critically and quite troublingly , does not increase consumer price shopping . This result of higher prices is strongest for low-cost

providers with low out-of-network spending . This suggests that transparency provides more pricing information to providers , which allows for tacit medical procedure provider collusion .

Naturally Nvidia In a move both totally expected and utterly shocking , Nvidia ’ s shares gained 3.2 % in mid-day trading , boosting its market capitalization to $ 3.33 trillion , edging ahead of Microsoft at $ 3.32 trillion , and Apple at $ 3.28 trillion . To put this into perspective , these three firms would comfortably be the world ’ s third largest stock exchange , behind the NYSE at $ 28.5 trillion and the NASDAQ at $ 25.4 trillion but ahead of Euronext at $ 7.2 .

Tariff Totals There is some talk of replacing 100 % of income tax revenue with tariffs on foreign goods entering the US . This will be hard to do . In FY2023 corporate and individual income taxes totaled $ 2.6 trillion , excluding payroll taxes . Total imports in FY2023 were $ 3.8 trillion . To raise enough money the average tariff on imports would have to be 68 %, assuming , quite

unrealistically , no behavioral changes on the part of buyers .

Percentage Performance At the most recent Fed meeting , eight members expect there to be two 25bps cuts by 12 / 24 , seven expect one , and four expect none . The median is one cut , the mode is two , and fifteen of nineteen , only 12 of which vote , expect one or two . It ’ s very fuzzy . Moreover , put almost no weight in these forecasts . Back on 12 / 13 / 23 and 3 / 20 / 24 , the expectation was a total of three cuts .

Gauging Growth Estimates of 24Q2 GDP growth are quickly sinking as more data becomes available . The Atlanta Fed is now expecting quarterly seasonally adjusted annualized growth of 1.8 %, down from 4.2 % in mid-May . Similarly , the NY Fed now also sees growth at 1.8 %, down from 2.75 % in late April , and the St . Louis Fed sees just 1.2 % growth , down from 1.4 % last week . Averaging all three gets to 1.6 %, economic stall speed . Withering Withdrawals During the run up to the Housing Bust , home prices surged and the

value of revolving home equity loans rose dramatically from $ 185 billion in 2002 to $ 603 billion in 2009 as households tapped into their home equity and supercharged the economy . Now , despite large home price increases , the value of revolving home equity loans has been stagnant at $ 250 billion / year since 2021Q3 , and thus no assist to household spending .

Exuberant Equities During the Tech craze peak , the equity share of household assets was almost 32 %. Today it ’ s 34 %. Similarly , the equity share of household financial assets has risen from a peak of 45 % during the dotcom boom to 50 % today . Moreover , the median household now has a staggering $ 140,000 of equity holdings . When the next bear market comes , and they always do , the pain will be widespread and deep .

Elliot Eisenberg , Ph . D . is an internationally acclaimed economist and public speaker specializing in making economics fun , relevant and educational . Dr . Eisenberg earned a B . A . in economics with first class honors from McGill University in Montreal , as well as a Master and Ph . D . in public administration from Syracuse University . Eisenberg is the Chief Economist for GraphsandLaughs , LLC , a Miamibased economic consultancy that serves a variety of clients across the United States . He writes a syndicated column and authors a daily 70-word commentary on the economy that is available at www . econ70 . com .

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