The Consumer Price Index (CPI) numbers came in at 8:30 AM on Tuesday morning, September 13, 2022.  The CPI for August came in at 0.1%.  It was expected to be negative 0.1%, largely due to the decrease in gas prices.

The year-over-year price inflation stands at 8.3%.  The less volatile median CPI was up 0.7% for the month, and it hit an annual rate of 6.7%.  This is the highest the median CPI has been this year and for a long time.

The slightly higher than expected number instantly drove markets down.  It is now almost a sure thing that the FOMC will hike its target rate by another 75 basis points at the next meeting, which is in just over a week.

Unless you were short the markets or in cash, investors took a major loss today.  Stocks were down big, as the Dow lost more than 1,200 points.  Gold was down.  Cryptocurrencies were down.  Yields went higher, pushing bond prices down.

So even if you follow my recommendation of a permanent portfolio, you took a loss today.

The Fed is now in a bigger pickle than it was before.  They are almost forced to continue to raise the target rate.  This is in the face of a yield curve that is already inverted in some spots.

The 2-year yield, which has been higher than the 10-year yield for a while now, went up even higher.  Most yields went higher, but this should ensure a full inversion.  The 3-month yield will soon invert against the 10-year yield.

Mortgage rates have hit new highs for the year, which should help deflate the massive housing bubble.  Since houses are far less liquid than stocks, it might take a few months before we really start seeing the air come out of the bubble.

If gas prices hadn’t come down in August, the inflation numbers would have been much worse.  Americans are paying more and more for groceries, as food prices continue to rise at a double-digit annual pace.

This is what middle class America faces in 2022.  Prices for most necessities continue to rise, while asset prices deflate. It is a tough combination for anyone, especially with wages lagging far behind price inflation.  It will be especially bad for those who are in substantial debt.

And I know that the situation is far worse in much of Europe, where people are wondering if they will be able to afford to heat their homes this winter.

Everything points to a massive recession ahead.  It will likely be in 2023.

We have falling gold prices despite price inflation above 8%.  We have housing prices that have peaked.  We have a somewhat inverted yield curve.  And on top of all of this, we have a Federal Reserve that is forced to drain its balance sheet and raise its target interest rate.

You don’t have to be an expert in Austrian school economics to understand that the economy is in major trouble.