Disinflation Underway – Even with Robust Jobs Report

The big economic news on Feb. 3 was the strong January jobs report: 517,000 jobs were added during the first month of 2023.

Economists who say that this, along with wage gains, are signs that inflation is set to roar back are off the mark, says a long-time financial journalist.

Here’s the title of the article he pens (CNBC, Feb. 3):

Ron Insana says even with the big jobs report, there are signs of disinflation

Insana says the reason for the robust jobs report is a demographic issue, not an economic one, and goes on to say that the main trend is disinflation, not inflation. This is evidenced by falling prices for goods and energy, as well as a global deceleration in economic growth.

As Elliott Wave International sees it, outright deflation may be in the cards.

This is from the December 2022 Elliott Wave Theorist:

[A]bsolute M2 has been declining on a month-by-month basis for the first time in many decades, probably since the 1930s or 1940s. This trend is deflationary.

In the same issue of the Theorist, Robert Prechter also points to the property market:

Do you know what the underlying problem in the property market is? It is that people have been investing in property. … Houses are ultimately consumption items, like food, although they perish at a slower rate. “Investing” in houses causes their prices to rise beyond normal consumption value. When the investing stops, the trend reverses. That’s what happened this year. It is early in the downtrend, but if you can’t get out, it may as well be later.