SIX Five Measures of Instantaneous Core Inflation

With August CPI release, we have core, chained core, supercore, and services supercore (via P. Skrzypczynski). PPI comes tomorrow.

Figure 1: Instantaneous inflation for core CPI (blue), chained core CPI (tan), supercore CPI (pink), services supercore (light green), PPI core (red), and PCE core (green), per Eeckhout (2023), T=12, a=4. Source: BLS, BEA, Pawel Skrzypczynski, and author’s calculations.

While instaneous core has risen, supercore has stabilized.

9 thoughts on “SIX Five Measures of Instantaneous Core Inflation”

  1. Macroduck

    We won’t have a Taylor rule update from the Atlanta Fed until after the FOMC meeting – no new PCE deflator data – but for now, standard settings put the “appropriate” funds rate at between 3.40% and 4.75%, compared to the current effective fed funds rate of 5.33%. Today’s CPI data don’t seem likely to change that much.

    I’d love to see Trump’s reaction to a 50 basis point cut.

    1. pgl

      “I’d love to see Trump’s reaction to a 50 basis point cut.”

      Trump: Very unfair to me! Vary unfair to me!

  2. pgl

    The market opened down a bit which some cable babbling claimed was because core inflation was still too high. It seems the market is rallying now.

  3. Macroduck

    VoxEU has published a howl against “degrowth” research, as it currently stands:

    https://cepr.org/voxeu/columns/no-solid-scientific-basis-degrowth

    This is a literature survey, and to a substantial degree, probably a fair one. How would one use standard techniques of economic analysis to study something that has never been tried? By analogy, we know that estimates of the budget and growth effects of changes in tax policy are often badly wrong, and there is a long record of taxation on which to base those projections. So “degrowth” estimates are all wild speculation, because they can’t be otherwise.

    We should understand that, and Jeroen van den Bergh and Ivan Savin make it clear, but we needn’t blame “degrowth” researchers unless they do a bad job with what they have. The authors appear to blame “degrowth” researchers for failing to do the impossible.

    Where I think the authors of this review show their own bias is in praising “degrowth” studies which take into account political feasibility, and declare “degrowth” non-viable. That’s not economics. That’s Larry Summers telling Obama that a large enough fiscal package is politically non-viable, and then admitting to Chistina Romer that he was wrong. These two a steeped in the social side of environmental research, but that doesn’t excuse condemning other authors for failing to adopt their own political assumptions. We need to know what is economically possible, what is economically beneficial, what is economically inevitable, and then we can deal with politics.

    And, oh, by the way, demographic trends throughout much of the world make falling output likely, with or without policy aimed at managing that outcome. A bias against “degrowth” is kinda like a bias against climate change. Fingers jammed in ears, shouting “no, no, no, no!” until a thirty-year drought has the West on fire, Phoenix at 100+ degrees for weeks on end and northern ice melting faster than anyone had guessed just 5 years ago.

  4. pgl

    Your good buddy was on Faux Business News touting his Great Replacement Theory this morning. And of course he is again accusing the BLS of lying.

    1. pgl

      The Chinese should study up on the Debt Deflation Theory introduced by Irving Fisher and most recently discussed by Ben Bernanke.

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