Inflation down, below consensus, but we’re still above pre-War trend:
Figure 1: CPI (bold bllue), WSJ July survey mean (dark blue square), core CPI (light blue), PCE deflator (bold dark red), core PCE deflator (light red), all in logs 2025M01=0. June PCE deflator is Cleveland Fed nowcast of 7/14.Source: BLS, BEA. WSJ July survey, Cleveland Fed, and author’s calculations.
Here are some alternative measures:
Figure 2: CPI (bold bllue), core CPI (light blue), CPI wage earners (purple), CPI chained, n.s.a. (light lilac), Everyday Price Index (light red), all in logs 2025M01=0. June EPI is estimated usign 2025-2026M05 regression in first differences. Source: BLS, BEA. AIER, and author’s calculations.
The decline in CPI was not a surprise, though the size of the decline was a bit more than the median forecast. With oil headed up, there is some chance it will add to measured inflation in July, but as of mid-month gasoline is still down from the June average.
Here is one bit of news in the report that isn’t so much just Iran war through a price lens:
https://fred.stlouisfed.org/graph/?g=1X3MU
Owners’ equivalent rent rose just 0.3% in June (2.9% annualized). Problem is, this series is pretty volatile lately, for reasons I don’t understand. The trend continues toward slower gain, but is pretty fuzzy. Mortgage rates, meanwhile, are the highest since last September.
it is interesting, warsh is arguing for “regime change” to eliminate inflation. this indicates inflation is a real problem. but trump has argued it is not a problem, and rates should fall. how do you fight inflation while keeping rates low?
If you’re interested in the topic of regime change, this is an interesting article (an update of an actually more meaty article in the Tuesday NYT hardcopy). What this should teach anyone is that when Netanyahu’s Mossad comes knocking at your door offering money, free dinners, and a ride out of Dodge City in a tiny Peugeot sedan, run for the hills. Or be prepared to be skewered over a very large bonfire by your prior compatriots:
https://www.nytimes.com/2026/07/14/world/middleeast/mahmoud-ahmadinejad-iran-israeli-asset.html
I kinda think Warsh is trying to leave his mark, without much regard to improving things. Bernanke, Yellen and Powell each reshaped the Fed. That’s what Fed Chairs do, so Warsh will do it. Of course, Bernanke won a Nobel and Yellen did every important econ policy job in Washington, so maybe they had some ideas worth implementing. Warsh seem to be doing dogma – “Let’s have some committees recommend what I want them to recommend.” But maybe he’s just a ladder climber.
my concern with warsh is, like trump, he has little regard for the damage he causes to other people. both are quite insulated from the struggles of the average American. neither have much understanding of poverty or barely scraping by.