The severe facts of the end of the cheap money period are starting to emerge in 2023, which is quickly becoming that year. Although there was previously evidence that lending was being reduced, the latest banking turbulence has made the situation worse.

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The amount of loans and leases from U.S. commercial banks are depicted in the graph below. The most significant two-week decrease in the history of the series dating back to 1973 has now occurred. Credit was reduced in all industries, including real estate, business, and industrial loans.

There is little doubt that the disinflationary process is well under way given this CPI figure. In the upcoming month, slower final demand growth for goods and services, declining home price inflation, and moderate wage growth should all work in concert to cause faster disinflation than anticipated.

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Significantly below expectations, March PPI came in at -0.5% m/m vs. 0% est. and 2.7% y/y vs. 3% est. This data indicates more disinflation demand.

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