Watching the parade of Fed presidents deliver their rimshot-worthy proclamations that there is no inflation problem reminds me of a scene in Mel Brooks’ History of the World.
Brooks’ character, applying for unemployment in ancient Rome, describes himself as a “standup philosopher” who “coalesces the vapors of human experience into a viable and meaningful comprehension,” to which Bea Arthur responds, “Oh, a bullshit artist!”
In this morning’s housing data we see more evidence that even though prices are rising at a problematic rate – courtesy of the Fed, which insists there is no inflation problem – at least some areas of the economy are stagnating. Single-family housing starts plunged 9.5% (versus -2.0% expected) and permits increased only 0.3%. It seems builders know something the rest of us don’t.
According to the NAHB, “75.1 million households, or roughly 60% of all U.S households, are currently unable to afford a new median priced home.” This is a situation unlikely to resolve itself any time soon given the soaring price of lumber – again, courtesy of the Fed, which insists there is no inflation problem.
It’s no better in the rental market. The average price of a 2-bedroom apartment is up 5.3% YoY (over 30% in cities such as Las Vegas or Detroit.) Though multifamily starts are struggling to keep pace (up 4.0% YoY in April) the supply-demand picture is under mounting pressure from increasingly unaffordable single-family housing.
The futures, fresh off another overnight ramp job, haven’t yet reacted to the latest indication of stagflation. 
I supposed you can’t have stagflation without inflation – which the Fed’s philosophers will go on insisting doesn’t exist, like a Kanizsa triangle that isn’t really there.
To everyone else – especially those the Fed claims to be trying to help – it’s easily visible. It’s the Fed’s economic projections that seem to be without form or substance.
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