Here are some numbers out today that tell the story.
PCE (Month) up .4%
Personal Income up .3%
Personal Spending -.6%
Not a hard concept to figure out. As price increase faster than incomes, something have to give. When people spend less, that causes inventories to rise (record pace in Dec).
This means that economic activity slows down, eventually pulling prices back down. It all starts in the areas of discretionary spending.
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