Today is inflation day, and the news was generally good. Both CPI and core CPI were a little higher than last month but still in pretty good shape:
The core rate of CPI has been rising a bit since its low point in June, but even at that it's still only running at 3.5%. That's not too worrisome.
Measured on a year-over-year basis, headline inflation clocked in at 3.1% and core inflation at 4.0%. Both were lower than they were last month.
The numbers no longer have any political meaning. People have decided that the economy is bad and that it is all Biden's fault. You cannot change that with numbers.
So, we're still doing these concave trend lines, huh?
¯\_(ツ)_/¯
Can a trend line be curved?
A polynomial trendline is a curved line that is used when data fluctuates. It is useful, for example, for analyzing gains and losses over a large data set. The order of the polynomial can be determined by the number of fluctuations in the data or by how many bends (hills and valleys) appear in the curve.
Apparently they can be curved.
https://support.microsoft.com/en-gb/office/choosing-the-best-trendline-for-your-data-1bb3c9e7-0280-45b5-9ab0-d0c93161daa8#:~:text=A%20polynomial%20trendline%20is%20a,valleys)%20appear%20in%20the%20curve.
Of course a trendline can be curved. But should it be?
When Kevin started displaying inflation data this way I think he had a fair argument to make. As conditions have changed, I would submit that the justification for a concave trendline has also changed. If anything, I would argue that a convex line would be more appropriate at this point, though to your point, it could be a 3rd degree polynomial that allows for both concave and convex portions.
Ha Ha, I feel a bit like the monkey who got my hands on a chess board and started spotting off about how to play the game. I need a lot of stats courses to continue this conversation.
Just a guess, I don't think the inflation hawks are happy with rates above 3%. They're going to be reluctant to bring interest rates down just yet.
Given that we know that CPI without the housing component is well below 3%
And we know the housing component of the calculation uses 6-12 month old data.
Since we know that actual current inflation is quite low.....you have to wonder what the inflation hawks really want.
I think inflation hawks want the customary core measure to get down below 3%. I suppose it's possible that "3%*", with an explanatory footnote, will satisfy some of them. After all, the Fed has already seemed to indicate that further interest rate hikes are not too likely. But if they're going to start cutting rates, they probably need a little more clarity in the economic data.