Free Exchange applies “Big Data” to the Transcripts: “Big data meets the double mandate”
The lines show the number of times, per year, that words related to employment, inflation and crisis are mentioned in the meetings. So, if someone mentions “price stability” in a meeting, that gets counted as a mention of “inflation”. If someone blurts out “spare capacity”, that goes in the “employment” bin. And so on.*
Over time, but especially in the 2000s, members of the Fed started using inflation-related words relatively more frequently. In 1978, every time someone mentioned a word related to unemployment, someone else would mention 1.6 words related to inflation. By 2008, the ratio was more than four-to-one. This may not be especially surprising to people who remember central bankers’ obsession with inflation-targeting from the late 1990s; the extent of the shift is more so.
The question is whether the Fed’s shifting priorities are a good thing. With America’s unemployment rate still a percentage point higher than it was just before the recession hit, perhaps the Fed should think a little bit more about joblessness?
I´ve added a couple of bars. Those indicate when Ben (IT) Bernanke became a Fed Governor in 2002 and the time he became Fed Chairman. Bernanke “correlates” pretty strongly with “inflation phobia” at the Fed!
It´s fantastic to observe that in 2009, with inflation “diving” south and unemployment “shooting” to the moon, inflation was still very much in members head, while unemployment not so much!