CPI m/m (headline, core) below consensus (-0.1% vs +0.1%, +0.1 vs +0.2, respectively).
Figure 1: Instantaneous inflation per Eeckhout (2023) T=12, a=4, for CPI (blue), for chained CPI (tan), for PCE deflator (green). Chained CPI adjusted by author using X-13. Source: BLS, BEA, and author’s calculations.
On the same vertical axis, here’s core measures.
Figure 2: Instantaneous inflation per Eeckhout (2023) T=12, a=4, for core CPI (blue), for chained core CPI (tan), for core PCE deflator (green). Chained CPI adjusted by author using X-13. Source: BLS, BEA, and author’s calculations.
Market reaction:
Source: TradingEconomics, accessed 7/11/2024. Time is Central.
Addendum, 3:21 Pacific:
Figure 3: Instantaneous inflation per Eeckhout (2023) T=12, a=4, for core CPI (blue), for chained core CPI (tan), for core PCE deflator (green), for supercore CPI (red), for services supercore CPI (pink). Chained CPI adjusted by author using X-13. Source: BLS, BEA. Paweł Skrzypczyński, and author’s calculations.
This marks two full years of exactly 3% inflation. Higher than “target”, but given all the discussions during the great recession about how 2% might be too low, probably totally reasonable.
Did you forget to read the post? And in the title of it?
So say many respected economists.
Even though Project 2025 claims 2% is the highest inflation target Fed officials think they can get away with, it was in fact a sort of generally accepted “correct” rate for inflation-targeting central banks before the Fed started targeting. There is no evidence that 2% is a better target than 3%. There is, as you note, good reason to think 3% is better than 2%.
Here is an official insider history of the Fed’s march toward inflation targeting:
https://www.richmondfed.org/publications/research/econ_focus/2024/q1_q2_federal_reserve#:~:text=Cutting%20rates%20becomes%20difficult%20when,appears%20to%20be%20'acceptably%20small.
For the curious (anyone not steeped in conventional conspiracy-theory thinking about how the FOMC operates), this link provides easy knowledge of the history of inflation targeting, the culture of the FOMC, policy discretion, and Treasury Secretary Yellen’s admirable career.
A 12 basis points drop in that interest rate. I guess getting inflation below 2% per annum means the FED has to lower that Federal Funds rate!
https://jabberwocking.com/yes-donald-trump-even-lies-about-bacon/
Yes, Donald Trump even lies about bacon
The price of bacon is up a mere 14% since Trump left office, and if you adjust for wages it’s cheaper than when Trump left office. Meanwhile, total bacon production is 13% higher than it was when Trump left office. For better or worse, the American love affair with bacon is far from over.
Kevin’s graph shows that the price of bacon/wages has actually been falling. Two things in Trump’s defense, however:
(1) I have long suspected Trump relies on Bruce Hall for his weird claims;
(2) Trump should lay off all pork products until he loses at least 100 pounds.
In case you are wondering – the nominal price of bacon per pound has dropped from $7.61 in October 2022 to $6.83 in June 2024. But no – tub of lard Donald Trump should still not have this product.
https://fred.stlouisfed.org/series/APU0000704111
Average Price: Bacon, Sliced (Cost per Pound/453.6 Grams) in U.S. City Average
Nick Wehry accused of cheating in Nathan’s Hot Dog Eating Contest, per report
https://www.msn.com/en-us/tv/news/nick-wehry-accused-of-cheating-in-nathan-s-hot-dog-eating-contest-per-report/ar-BB1pKFjc?ocid=msedgdhp&pc=U531&cvid=4139a7c44c9544dcae76d3dbb6cf4aa2&ei=13
I know – total slime bucket. But I bet he wears a MAGA hat and justifies this by how Trump cheats at golf.
Off topic – maybe Alexandria O-C has a point:
https://www.thedailybeast.com/clarence-thomas-accepted-yacht-trip-to-russia-chopper-flight-to-putins-hometown-democrats?s=04
I have to wonder, was it Crow’s idea to send Thomas to Putin’s birthplace, or did Clarence ask? Which man thinks breathing in some Putin ambiance is a good use of a Supreme Court Justice’s time?
Or was it Ginni? Seems like something Ginni would do.
One of my favorite New Yorkers is a crazy MMA type from East Europe who has been calling Trump Putin’s Poodle for over 8 years. He may be crazy but he is onto something. So the Thomases are just serving the MAGA cause.
The story has an “Other-worldly” feel to me. The fact that very few people are getting upset about it. More concerned about verbal gaffs at a debate. Every day I feel more and more ashamed of my country. We’re headed to new territory, and none of it looks good at the horizon.
Again, it;s not donald trump in and of himself that is scary. These guys are always there. It’s how American society is responding to him, that is incredibly frightening. Very little anger on the Thomas story. Even Richard Nixon drank alone in personal shame. Even Nixon. But here we are, no shame, no anger. EXTREMELY dangerous times for America right now. EXTREMELY dangerous. No cognition of what is happening 2 inches from Americans’ nose.
“Which man thinks breathing in some Putin ambiance is a good use of a Supreme Court Justice’s time?”
Destination used as potential lever for later blackmail. “Please do this more me—no?? OK, what if this trip showed up in WaPo?? Doesn’t hurt me. But what will publishing of a trip to Russia do to you?? OK, let’s try that again, would you do this for me??”
Just to be picky I would have preferred the trimmed mean measure in there as I agree with our central bank hat it is the best measure and on an annual not annualised basis.
Inflation is clearly falling whilst most yanks thinks the opposite is occurring.
pgl: “A 12 basis points drop in that interest rate. I guess getting inflation below 2% per annum means the FED has to lower that Federal Funds rate!”
Perhaps the Fed is waiting for Larry Summers to give them all clear.
There is a reason Obama selected Janet Yellin to head the FED over LARRY.
pgl: “There is a reason Obama selected Janet Yellin to head the FED over LARRY.”
So what was Obama’s excuse for selecting Summers as head of the National Economic Council instead of Christina Romer. That was a critical error at a critical juncture.
Agree 100%.
Oh, and by the way, we don’t know that Obama selected Yellin over Summers. What we do know is that Summers withdrew his name from consideration saying “I have reluctantly concluded that any possible confirmation process for me would be acrimonious and would not serve the interest of the Federal Reserve, the Administration or, ultimately, the interests of the nation’s ongoing economic recovery.” So it seems that Summer’s numerous critics forced Obama’s hand.
“So it seems that Summer’s numerous critics forced Obama’s hand.”
My colleagues at Econospeak – take a well deserved bow!
https://x.com/chrislhayes/status/1811421228915417536?ref_src=twsrc%5Etfw%7Ctwcamp%5Etweetembed%7Ctwterm%5E1811421228915417536%7Ctwgr%5E379de01e9499ae943314c334c286dd02892cc46f%7Ctwcon%5Es1_&ref_url=https%3A%2F%2Fjabberwocking.com%2F
OK Chris Hayes is happy with Biden and Powell re the economy. Kevin Drum is not but his post on this is just all grumpiness. Besides if you read the replies – you’ll see why the Twitter is not exactly the place to have an economic discussion. But it still beats that Faux News show hosted by Kudlow the Klown.
Here’s another look at CPI, with an emphasis on shelter:
https://fred.stlouisfed.org/graph/?g=1q52V
The shelter component of CPI rose 0.2% in June, the smallest rise since March 2020 (January 2020, at 2 decimal places).
Note that shelter prices are less volatile than CPI, exclusing shelter. That doesn’t guarantee that slower shelter cost increased will persist, but it strongly suggests there won’t be an re-acceleration past 0.3%-0.4%.
At today’s borrowing rates, shelter is a supply problem, not a demand problem, and not a problem we’re rushing to solve:
https://fred.stlouisfed.org/graph/?g=1q53p
Just for fun, here’s sticky core CPI, excluding shelter, Q/Q annualized
https://fred.stlouisfed.org/graph/?g=1q53d
It reads 1.7% for Q2, but is rather noisy, so try not to extrapolate.
https://prospect.org/blogs-and-newsletters/tap/2024-07-11-teamster-presidents-trumpian-tilt/
Almost picked up the hardcopy at B&N today. Sometimes “Half Priced Books” sells used magazines. I will try to hunt some down there. They have the New Republic but I don’t remember American Prospect, so if it’s not crazy priced I think I will pick one up next time I’m out to B&N.
So there will be two guys at the Convention to vote against.
Well actually there’ll be thousands, but you know who I mean. Trump needs to stay gone. O’Brien needs to go.
A great set of charts; please contine publishing them monthly.
Off topic – climate risk:
https://www.rand.org/pubs/research_reports/RRA1645-8.html
The federal government asked Rand to look into risks to critical functions – the things that have to work in order for society to hold together – from climate change. As the authors put it:
“The authors examined the current and future risk that eight climate hazards — drought, extreme cold, extreme heat, flooding, sea-level rise, severe storm systems, tropical cyclones and hurricanes, and wildfire — pose to the 55 NCFs (national critical functions) on a national scale.”
An 8-by-55 matrix is a slog, but the mere fact of that 440-cell matrix shows what a massive task adaptation to climate change will be.
Building acres of factories where water is scarce, building homes where flood or fire insurance won’t be available, chasing AI when it drives up CO2 emissions, fracking – all stupid ideas, all carrying on like there’s no tomorrow.