Including PPI and nowcasted PCE:
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. PCE deflator for November is y/y nowcast as of 12/11/2024. Source: BLS, BEA via FRED, BLS, Pawel Skrzypczynski, Cleveland Fed, and author’s calculations.
Notice supercore inflation is flat, and services supercore down. PPI core is also down for two months.
given this data, would you recommend the fed drop rates again and by how much, or should they hold steady?
my personal situation would benefit greatly from another drop in rates. but the data suggests holding steady is a real option.
personally, i can live with inflation where it is right now. i don’t think 2% target is necessary. the current rate gives my savings a nice boost. but i want to refinance my mortgage to the 2% rate that trump promised me during the election, so we have quite a bit of rate movement left to take.
recommending policy is above my pay grade, baffling. but the possibility they’d hold interest rates steady was my first thought when i saw today’s PPI report…not only was it a 0.4% increase, but August, September and October were all revised higher…
the more often cited year over year measure, which often tells us more about inflation during the year ago month that dropped out of the comparison than the current rate, in this case rose from 2.4% to 3.0%..
pjs, the data suggests they should hold. however, the general message and expectation has been another quarter point drop. the market will react to a deviation from this plan, good or bad.
however, I am still holding trump to his promise of 2% mortgages. if we cannot continue moving steadily in that direction, we will never get there before his term is up. a 2% mortgage will free up thousands a month for me and others to spur on the economy. so what is the convicted felon waiting for? he should be stumping for change now.
Biden is making good use of presidential power:
https://www.politico.com/news/2024/12/12/biden-commutes-1500-pardons-39-in-single-day-00193951
Sounds like maybe more to come.
He should enact the trump tarrifs before walking out the door. Leave trump a mess to have to clean up. For some reason, i no longer feel the need to play fair against a criminal.
Here’s the NY Fed on winners and losers under tariffs:
https://libertystreeteconomics.newyorkfed.org/2024/12/do-import-tariffs-protect-u-s-firms/
“What we find… is that most firms suffered large valuation losses on tariff-announcement days. We also document that these financial losses translated into future reductions in profits, employment, sales, and labor productivity.”
So, tariffs aren’t just bad for the economy in aggregate, but pretty much for everybody.
Imagine – a policy that hurts most businesses and most individuals, and the Felon-in-Chief used it to get elected. Thank goodness his other central policy goal, expelling immigrant workers, will make it all better…?
Rybczynski help us!
I have some concern about FRED series, PCEPI for November. Since May 2024, the monthly % change looks like there is an upward trend.
May 2024 showed a monthly % change of -0.01%. October 2024 showed an increase of 0.24%. My FWIW forecast was 0.18% for October and is 0.20% for November, but the shape of the upward curve for October makes me think, my 0.20% may be low. See the FRED chart below.
https://fred.stlouisfed.org/graph/fredgraph.png?g=1Calw