I don't remember: have I posted this chart before? I guess it can't hurt to post it again:
There are technical differences between the CPI and PCE measures of inflation, but they mostly only show up over long stretches of time. Over short periods, as you can see, they're generally quite close.
Except during the recent inflation spike. Did we really hit a high of 9%, as CPI suggests, or only 7%, as PCE suggests? Or did we actually top out at 10%, as the European HICP says? I don't know, but it's an intriguing mystery.
In any case, CPI and PCE are now back together and both say inflation has risen about 3.5% over the past year and 3% over the past six months. That's pretty close to the Fed's 2% target. Core PCE is already there, increasing at an annualized rate of 2.16% over the past three months.
Paul Krugman says that signs are good for a soft landing even though the Fed has hiked short-term interest rates sharply and long-term rates have followed right along:
If you had told me two years ago that interest rates would soar like this, I would have predicted a nasty recession with spiking unemployment. But in fact job growth, and probably G.D.P. growth, have just kept chugging along.
The problem for economic analysts is that there are two possible reasons the recession dog hasn’t barked. One is that we’re seeing fundamental economic change — that new investment opportunities have increased r-star, so that the economy can handle high interest rates indefinitely. The other is that there are, as Milton Friedman claimed, “long and variable lags” in the effects of monetary policy, and high rates will eventually break something major.
R-star is the "neutral" rate of interest, an estimate of what interest rates would be at full employment if the Fed left things alone. Here's an estimate of r-star over the past few years:
It sure doesn't look like r-star has gone up lately. The Fed is holding interest rates above 5% right now, which continues to look extremely contractionary. For now, count me as team long and variable lags. I hope to be wrong since a recession could easily hand the presidency to Donald Trump, but I suspect a recession is coming.
That's my kind of doctor! In case you're wondering what set this off, Sipes recently lost her cat and was feeling sad. She's known her pulmonologist, Earl King, for 15 years, and he felt that getting a new cat was the best thing for her:
King was serious when he advised Sipe to get a new cat, he said. But he was surprised when Sipe, who has one adult daughter, took him up on it immediately. After leaving King’s office, Sipe stopped at a farm produce stand for some fresh corn and cantaloupe on her way to her home in Grottoes, Va. While she was browsing, she noticed a black and white kitten romping around.
“She was from a litter of five, and she was missing her front left paw,” Sipe said. The workers at the stand told her the kitten lost her paw shortly after she was born when something fell off a wall in a shed and severed it. The kitten’s missing paw didn’t seem to affect her ability to play and get around, Sipe said. She was instantly smitten, and the words “get a cat” were echoing in her mind.
A cat is sometimes the best medicine. Frequently, in fact. Pictures of the adorable little furball are at the link.
The topline numbers don't mean much at this point, but what's interesting is that when the pollsters added RFK Jr. to the mix he took nine points from Trump and only five points from Biden. Apparently both Trump and RFK Jr. appeal to the folks who want to set the world on fire.
Jim Jordan has already lost five votes and the roll call is only through the Ds, so he's not going to be elected Speaker of the House today. Better luck tomorrow, Jim.
UPDATE: Jordan won only 199 votes today, less than the 200 he won yesterday. Things are not improving for Jim Jordan.
Here's a brief little timeline of Donald Trump's recent cognitive decline:
September 16: Says you need ID to buy a loaf of bread. (No you don't.)
September 18: Claims that under Biden, we would be in World War II. (World War II already happened.)
September 18: Says he beat Obama in 2016. (He beat Hillary Clinton in 2016.)
September 26: Tells a rally audience that Jeb Bush invaded Iraq. (George W. Bush led us into Iraq.)
October 8: Says Hannibal Lecter was a great actor. (Lecter was a fictional character played by the great actor Anthony Hopkins.)
October 13: Thinks Obama is currently president. (Joe Biden is the current president.)
October 14: Says Republicans "eat their young" when they attack him. (The teleprompter probably said "eat their own.")
These aren't examples of routine Trump crackpottery. He says crazy stuff all the time. These are examples of Trump flatly forgetting or confusing things that he once knew. He's losing it.
David Leonhardt complains today that planes, trains, and automobiles aren't any faster than they were half a century ago. Fair enough. That's true. But then he adds this about a typical person taking a cross-country flight:
They leave their homes several hours before their plane is scheduled to depart. Many sit in traffic on their way to the airport. Once they arrive, they park their cars and make their way through the terminal, waiting in a security line, taking off their shoes, removing laptops and liquids from their bags. When they finally get to the gate, they often wait again because their flight is delayed....A cross-country trip today typically takes more time than it did in the 1970s.
It's true that security lines have increased waiting time in airports significantly. That's a social decision entered into with our eyes open. But the rest of this is just wrong. Over the past two decades, anyway, traffic congestion and flight delays haven't changed much:
Then Leonhardt tries to explain why travel hasn't gotten any faster over the past 50 years or so:
Why has this happened? A central reason is that the United States, for all that we spend as a nation on transportation, has stopped meaningfully investing in it.
This makes no sense. Cars are no faster than they used to be, but that's not unique to America. It's true everywhere in the world. Ditto for airplanes and ditto for trains—though it's true that a few places have more bullet trains than us. But even Leonhardt admits this is mostly due to higher population densities.
As it happens, I agree with Leonhardt's larger point about government investment in R&D. We should do more of it. But it's silly to cherry pick transportation as an example of the perils of low R&D spending. Different times call for different investments, and our current era demands investment in things like health care, gene therapy, artificial intelligence, and communications. And guess what? Those areas have all been growing like gangbusters. The result, contrary to Leonhardt's gloomy implication, is that the US economy has been far more dynamic than any of its peer countries:
As a nation we have problems. The opioid epidemic has decimated life expectancies among the poor. US income inequality is the worst among large, rich countries. A national addiction to sugar has ravaged our health. Unions have withered. And our government is uniquely dysfunctional.
Nonetheless, taken as a whole the United States is hardly a nation in decline, as Leonhardt says. We are growing faster than our peer countries. We have more entrepreneurs. Our military is unsurpassed. Our infrastructure is mostly fine as long as you don't uncritically accept the word of the civil engineering lobby. Driverless cars are right around the corner. Our universities continue to be the best in the world. And contra Leonhardt, we also spend more on K-12 education than any large country:
I too would like a cheap, ballistic rocket-plane that gets me to New York in an hour. We aren't there yet. Neither is anyone else in the world. But that hardly points to national stagnation. It's just a problem that isn't ripe for a solution yet. In the meantime, the US and the world are progressing at almost breakneck speed in lots of other areas that matter a great deal more. You just need to take a fair look at things instead of letting your gloom about our lack of flying cars overpower your common sense.
Vox points me today to an an interesting fact: the number of retractions in academic journals has skyrocketed over the past two decades. However, since the total number of journal articles has also skyrocketed¹ I adjusted the raw numbers to show the percentage of articles retracted:
Even accounting for the growth in journal articles, the number of retractions has nearly tripled since 2017. Is this because researchers are doing sloppier work? Or because more people are on the lookout for sloppy work? Your guess is as good as mine.
¹The number of retractions comes from the Retraction Watch database here. The number of journal articles comes from Fire and Guestrin, here. Their numbers go through 2014, so I extrapolated to 2018 and then used the growth numbers here up to 2022. This is admittedly a little dodgy, but probably in the right ballpark.
There are technical differences between the CPI and PCE measures of inflation, but they mostly only show up over long stretches of time. Over short periods, as you can see, they're generally quite close.
