Inflation Could Look Even Worse This Week

THE U.S. ECONOMY — and the jobs market — are red hot, but that doesn’t generate headlines. The only economic story that seems to matter is inflation, which may look even worse after new reports this week.

TUESDAY’S CPI REPORT COULD SHOW a huge March increase — consensus is for an 8.4% rise, year-over-year, up from a 7.9% rate the previous month. Wednesday’s PPI report may also show a rise of about 8%. This almost certainly will prompt the Federal Reserve to hike rates by 50 basis points at its May 3-4 FOMC meeting.

THIS WILL HAVE AN IMPACT ON FISCAL POLICY AS WELL: The idea of a big new spending package is becoming less and less likely; doing anything that would exacerbate inflation has little political support. Democrats are scathing, in private, toward inflation hawk Larry Summers, but he’s been largely correct, and his views are dominant now.

THE UNEMPLOYMENT RATE, now at 3.6% — with record low weekly unemployment claims — has generated virtually no attention. Unless inflation and yields suddenly decrease this summer, Democrats face a Nov. 8 smackdown, losing the House and possibly the Senate as well.

ONE GLIMMER OF HOPE FOR BIDEN: A new ABC News poll shows that Vladimir Putin gets most of the blame for high gasoline prices, followed closely by oil companies. The Biden Administration gets some blame for high gas prices.

BUT SURGING FOOD PRICES AND INFLATION IN GENERAL are blamed on Biden — who faces a rough week on inflation, the illegal immigration mess, surging gun violence, and a sense that the U.S. hasn’t done enough for Ukraine.

A NEW GENERAL has been appointed to head the Russian war in Ukraine — Alexander Dvornikov, who ran the brutal Syrian campaign that killed thousands of civilians. But a new commander may not necessarily make a major difference; analysts reported this weekend that Russian progress has been slow in the Donetsk and Luhansk regions.

AS WE PREDICTED ON FRIDAY, long supply lines now entering eastern Ukraine seem to be sitting ducks, continuing a pattern of extremely inept Russian logistics. The poorly prepared Russian troops will now encounter the highly motivated Ukrainians.

UKRAINE HAS SUPRISINGLY STRONG AIR SUPPORT and enough NATO and U.S. supplies to hold off the Russians for months to come. The likelihood of continued fighting will have a ripple effect on global food and fuel supplies — and prices — well into the summer.

A WILD CARD, OF COURSE, WOULD BE A VICTORY by Marine Le Pen in two weeks, which would be a crushing blow to NATO. We think Emmanuel Macron will prevail by a narrow margin — and then he will focus almost exclusively on winning a truce between Ukraine and Russia later this spring.

Related: White House to Extend Student Loan Moratorium

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