Egg prices returning to normal and lower energy prices will get inflation back below 2.0%. The last 2.8 CPI reading is with data that is 2-4 weeks old. Actual inflation is already far closer to 2.0. Dropping egg prices from 200% of normal to normal and lower energy prices already working through the economy should get inflation down. Inflation being down will enable interest to be cut by about 1-2%.
Eggprices.org report egg prices nationwide are already down to $5.51 a dozen from a peak of $8.17. Egg prices returning to $3.00-$3.50 will take 0.2 to 0.3 off of CPI (2.8).
There were a series of cullings of chickens for bird flu (total of 150 million killed with about 44 million in the last batch). In another two months the chickens will mature to replace the bird lost in December. If there were not another bird flu mass culling then full recovery of chicken populations should happen by May.
At $5.51 per dozen in March 2025, that’s roughly a 53% YoY increase from January 2024’s $3.60/dozen. If prices return to normal by May-June, assume they drop to a pre-shock level of ~$3.00-$3.50/dozen. This 35-45% decline over 2-3 months would significantly reduce the food-at-home CPI sub-index, which weighs ~8% of the total CPI. A rough calculation suggests a 0.2-0.3 percentage point (ppt) drop in headline CPI from this alone, given eggs’ outsized role in recent food inflation.
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Tariffs both by the U.S. and its (former) allies, under-investment in infrastructure and massive arbitrary government layoffs causing chaos, and deportation of illegal migrants – most of whom are working at low wage jobs that can’t be replaced by Americans at those levels, since Americans working at that wage level have other problems illegal migrants don’t have, not the least of which is a poorer work ethic; all of these will be inflationary. Just as egg prices moderate (assuming best case scenario that bird flu goes away on its own, since a gutted and mismanaged USDA etc. can’t contain it), these other factors will keep inflation high. The stock market is crashing and major banks like TD Bank are already starting to shut branches; more will follow and lending will dry up. Then we are in a recession + inflation = stagflation, which is very hard to control. It took most of the 1970s into the early 80s to control it the last time, with massive interest rate increases to “break the back of inflation” thanks to Paul Volker, who wasn’t thanked at first at all.
how do you know inflation is actually 2.0%?
Egg prices are responsible for less than 0.2% of CPI.
Eggs could be given amd you won’t get a reduction of 0.5 in CPI.
I walk you through the inflation components and the calculation. Even though eggs are 0.1% of the index. It is when you get 200-300% that you get to 0.2 and 0.3 plus eggs are in bread, pasta and other items. Those items magnify the effect.
https://www.nextbigfuture.com/2025/03/share-of-eggs-in-cpi-inflation.html
All good and well, except while 200% or 300% increase in egg prices is possible and historically has actually occurred, the same is not true for a 200% nor 300% reduction in price.
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At a 100% reduction in price, eggs are free. At any percentage over 100% reduction in the price of eggs, the store would have to be paying the consumer to haul those eggs away.
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The contribution to CPI of eggs through other products is small. If the cost of eggs were to go to 1/3 of their current cost (a 66% reduction…say from $6/doz to $2/doz) the effect on CPI would not even reach a 0.1 reduction.
Dear leader’s tariffs will cripple the economy. Our trade partners and allies do not trust us any longer, this is going to supercharge the move away from greenbacks as the reserve currency. Its only a matter of time before Trump starts talking about stopping debt payments to countries like China.
What you’re seeing in this administration is a direct attack on the structural advantages the US economy holds.
From what I can see, I’d wager to guess that this is an engineered recession. Why, I don’t know, but if I had to guess, it would be something to do with consolidating power and ownership. When people get desperate they will sell their houses, they will sell their assets, and then those with truly deep pockets will be able to snatch them up at firesale prices.
Trump picking winners and losers in this economy is straight graft, and the rest of us are marks.