The inflation bogeyman

Calculated Risk (Bill McBride) presents this chart

Inflation Bogeyman

And remarks:

Using these measures, inflation has been moving up, and most of these measures are at or above the Fed’s target (Core PCE is still below).

OMG! None of them are above the Fed´s target because none of them are targets, other than the PCE (advised by the much less volatile PCE-Core), which is below target!

And aren´t we lucky that none of those other measures of inflation are the target. Quite likely the outcome of yesterday´s FOMC Meeting would have been very different (and much more painful too!).

PS In addition to those measures of inflation, the Cleveland Fed also provides (CPI) inflation expectations. The chart shows how the 5 and 10 yr expected inflation have behaved for the past two years, since the Fed began the rate rising mantra!

Inflation Bogeyman_1

2 thoughts on “The inflation bogeyman

  1. The mid to late ’90s were the best of times as far as my recollection. Plenty of jobs, lots of entrepreneurs around. I got married, bought a house and had a family without too much to worry about. But now, that has all changed. I would gladly go back to deal with a 3% trimmed mean if it meant that I don’t have to get shuffled around to a new account to save my job, which I will be doing later this year. Granted, it could be worse, like getting shuffled to the unemployment line. But this doesn’t do much for the constant worry about what tomorrow will bring.

    • Kevin Erdmann has been pointing out that much of inflation is shelter related. Sure, the Fed can get inflation down, but the shelter costs are going to be stubborn, due to artificial constraints on supply. To reach the Fed target, suffocation is in order.

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