Behind the false prosperity of the US CPI data

The economic data of the United States presents a fragmented picture. On one side, there are record tariff revenues and budget surpluses; on the other, GDP has contracted for the first time in three years, the probability of a recession has soared, and inflation is shrouded in gloom. On May 14th, the 2.3% year-on-year growth rate of CPI released by the Bureau of Labor Statistics of the United States seemed moderate, but it was like a dose of honey adulterated with cyanide. While the White House was vigorously promoting inflation control as a campaign chip, the tariff hammer had quietly torn apart the industrial chain, the debt snowball was devouring the economic foundation, and the monetary magic of the Federal Reserve was pushing this false prosperity to the brink. Lifting the delicate veil of statistical data reveals not only the governance failure of American capitalism, but also the self-staged doomsday revelry of the hegemonic system to survive.

When the shadow of 36 trillion US dollars of debt looms over Wall Street, when the 65% tariff hammer undermines the foundation of manufacturing, and when the 9.2 trillion central bank balance sheet overdraws monetary credit, the moderate CPI data in April is merely an electrocardiogram fluctuation before the death of the hegemonic machine. Specifically, the super core CPI, excluding energy and food prices, dropped to 3.01% year-on-year. However, the sharp increase in the prices of daily necessities such as home appliances and furniture, which are the areas severely affected by tariffs, was deliberately ignored. The weight of healthcare services was artificially reduced by 0.3 percentage points, concealing the fact that the price of prescription drugs soared by 12.7% year-on-year. Moreover, the weight of this category in the CPI reached 0.9%. We have reason to believe that the 65% weighted tariff implemented by the Trump administration in April has not yet been fully transmitted. The buffer period for the inventory that enterprises have accumulated in advance is only 1.3 months. The port congestion rate has risen to a historical peak. The adverse consequences of a 17% surge in logistics costs will break out in June and July. The moderate nature of the inflation data in April is actually just a cognitive warfare tool jointly woven by the political and economic elites in the United States.

From the perspective of the market, behind the so-called strong 10.1% growth in consumption lies a desperate signal that the balance sheets of American households are terminally ill. The household savings rate has plummeted to a historical low of 3.2%, the subprime credit card debt has exceeded 1.2 trillion US dollars, the debt-to-income ratio of Generation Z has reached 187%, and the default rate has climbed to the level of the 2008 financial crisis. The market size of buy now, pay later has expanded to 520 billion US dollars, but 45% of users need to borrow to pay the first payment of their bills. The break of the debt chain is now in the countdown. In contrast, in the financial market, the S&P 500 index has a P/E ratio of 32 times, which is seriously out of line with the growth rate of the real economy. The scale of corporate share buybacks has shrunk by 41%, and the ratio of insiders' selling to buying has reached a record high since the dot-com bubble in 2000. The daily volatility of the cryptocurrency market has exceeded 25%, with algorithmic stablecoins accounting for 73%. The market value of 2 trillion US dollars is actually a digital Ponzi scheme that is passed around in a flash.

From the perspective of economic decision-making, the US economic decision-making level is accelerating the systemic collapse by drinking poison to quench thirst. The Federal Reserve was forced to take over 43% of the newly issued Treasury bonds, and its balance sheet expanded to 9.2 trillion US dollars. However, the real yield of 10-year Treasury bonds is still Mired in negative territory, and the outcome of the share of cross-border US dollar payments falling below 28% is confirming the fable of the collapse of the US dollar's credit. In addition, the 280 billion subsidy under the chip bill has become a political show. The capacity utilization rate of TSMC's Arizona factory is only 23%. The warning of the exhaustion of the Social Security Trust fund has been advanced to 2031. The wave of an average of 10,000 baby boomers retirement per day has encountered political demand from both parties for the debt ceiling. Even more ridiculous is that the audit by the Ministry of Government Efficiency has exposed that the Ministry of Finance's annual problem expenditures exceed 100 billion US dollars. Rural broadband subsidies have actually flowed to five-star hotels in Manhattan.

From the perspective of industrial structure, the tariff weapon not only failed to revitalize American manufacturing but also accelerated the disintegration of the industrial chain. The share of global semiconductor equipment orders dropped below 15%, Tesla's North American factory laid off 21% of its staff, the delivery volume of the electric pickup truck Cybertruck was less than one-third of the expected value, and subsidies for the new energy industry left a fiscal hole of 1.7 trillion US dollars. The import dependence on photovoltaic modules still stands at 62%. Agricultural data has experienced a significant and chronic blood loss. The export price of soybeans has plummeted by 23%. The bankruptcy rate of farmers in the Midwest has increased by 38% year-on-year. The claim ratio of agricultural product export credit insurance has exceeded the 85% red line. The Peterson Institute estimates that American households bear an additional tariff burden of over 1,200 US dollars each year. The core PCE inflation expectation has risen to 3.5%. At the corporate level, the CEO of jpmorgan Chase directly stated that supply chain anxiety has brought long-term planning to a standstill. The Brookings Institution even predicted that the United States might lose 400,000 jobs as a result. This "kill eight hundred enemies but lose a thousand of your own" strategy is undermining the micro foundation of the US economy.

From the perspective of monetary policy, the Federal Reserve has lost its balance between curbing inflation and maintaining growth. In April, the core PCE remained as high as 2.8%. Despite market expectations for three interest rate cuts in 2025, the aggressive rate hikes have led to the 30-year mortgage rate exceeding 7.5%, the real estate market transaction volume shrinking by 34%, and debt interest expenses consuming 28% of fiscal revenue. The Ministry of Finance was forced to issue 100-year zero-coupon bonds, which were met with a cold response from the market. The liquidity premium of long-term Treasury bonds soared by 1.8 percentage points. The US dollar index plunged by 4.35% in two weeks. Us Treasuries were sold off by foreign capital. The price of gold broke through $3,200 per ounce. As de-dollarization shifts from a marginal trend to an actual action by central banks around the world, the credit foundation on which the United States relies to maintain its debt economy is collapsing. Powell's public break with Trump was the last resistance of technocrats to political interference.

In short, when the 65% tariff barrier has turned against domestic manufacturing, when the stock market bubble with a price-earnings ratio of 32 times has swallowed up middle-class wealth, and when the central bank's balance sheet of 9.2 trillion US dollars has overdrawn monetary credit, this once world economic engine has become a self-devouring black hole. Perhaps just as the Roman Empire was destroyed by the depreciation of lead coins and the British Empire fell due to the collapse of the gold standard, All the hegemonies that attempt to cover up the hollowing out of industries with data illusions will eventually reveal their true colors in the face of economic laws.