If the Cleveland Fed nowcasts are accurate, month-on-month CPI inflation will be down, core CPI rising slightly from 4 to 4.2% (annualized).
Category Archives: inflation
Measured Inflation in July
A CNN headline notes “A key inflation measure rose at fastest pace in 30 years in July”, with that key inflation measure being the year-on-year (y/y) personal consumption expenditure (PCE) inflation. In point of fact, that headline was actually incorrect as annualized m/m inflation was actually slightly higher in June. But in any case, by focusing on the y/y rate, they missed the main message In today’s release — that month-on-month (m/m) annualized PCE inflation was down sharply, from 6.6% to 5.1%. Moreover, the core counterpart was also down, from 5.8% to 4.1% (0.3% m/m hitting the Bloomberg consensus on the nose.)
Guest Contribution: “Inflation Prospects: A Difficult Transition for Policymakers”
Today we are pleased to present a guest contribution written by Jongrim Ha (Senior Economist), M. Ayhan Kose (Chief Economist and Director) and Franziska Ohnsorge (Manager) from the World Bank’s Prospects Group. The findings, interpretations, and conclusions expressed in this blog are entirely those of the authors. They do not necessarily represent the views of the World Bank, its Executive Directors, or the countries they represent.
Messages from the (Bond) Market
Today, the CEA published a blogpost on how the administration’s infrastructure and Build Back Better plans won’t be inflationary. I think it’s of interest to see how the market (which will undoubtedly turn out to be wrong) thinks inflation and output will evolve.
Forecaster Views on the Overheating Hypothesis
Earlier in the year, one fear was that excessive fiscal stimulus would push up inflation, push up long term yields. Professional forecasters don’t seem to view that outcome as imminent.
The Outlook – The August Survey of Professional Forecasters
Growth prospects decelerate, while the CPI level looks higher, according to the August Survey of Professional Forecasters.
PPI and CPI for July
From BLS today:
Inflation Deceleration – Multiple Measures
In today’s release, headline m/m CPI inflation was down sharply, from 11.4% to 5.8%, annualized. Various measures derived from the data in the release, including the inflation rate of the sticky price CPI — that focuses on infrequently changed prices — declined slightly, suggesting easing pressures. The trimmed CPI — which excises highly volatile components — was also falling indicating it’s not outliers driving July decreases.
Perspective on the Employment Release
Some observations: (1) The blockbuster number (943 K vs 870K fm Bloomberg consensus) has to be kept in perspective, as NFP employment is far below trend, (2) high contact intensive services employment was recovering quickly through the reference period before the delta variant surge, (3) both average nominal wages and aggregate hours continued to rise, and (4) average real wages likely stabilized in July, at about 1.5% above 2016-19 trend.
Predicting the Lumber PPI for July-September
Calculated Risk (h/t pgl) noted the decline in futures lumber prices. Joseph has argued that this won’t necessarily show up in actual prices paid by the consumer for a while. I don’t have retail prices, but I have the BLS measure one step removed from consumers, the PPI for lumber.