Good news on the inflation front today. The Fed's Favorite Measure of Inflation™ was down from its spike in January:
The core rate of PCE inflation is still too high, but the headline rate clocked in at 3.2%, which isn't bad. On a trendline basis, it was around 2.9%.
On a year-over-year basis, headline PCE was 5.0% and core PCE was 4.6%. Both were down from the previous month.
This is not new information - the CPI (which came out two weeks ago) and PCE are based on the same data. They are pretty strictly parallel based on yr/yr average:
https://fred.stlouisfed.org/graph/fredgraph.png?g=121z0
But there is certainly no reason to think that inflation will go back to 2021 level - this is not Germany 1922. Nor are wages excessive.
Uummmmm. Aren’t all of Kevin’s posts avoiding the elephant in the room? Maybe todays cat blog will be something extra special.
If you want "news" about Trump's indictment you can find hundreds of redundant pieces anywhere you click.
Indeed. Also, the fact is that the indictment is for something that really is a pretty minor crime. I hope he gets nailed for it, but this is more news because it's a historical first than because it's substantively significant. We can add "first indicted ex-president" to the list reasons Trump will be regarded as our worst president.
Now, if he were indicted for election tampering . . .
Since we don’t know the details, why do you think it’s a “minor crime”?
I'm operating under the assumption that this is related to tax and potential campaign finance violations around the Stormy Daniels payment. Which means probably penalties in the $10s to $100s of thousands, which isn't that big of a deal.
But like I said, an indictment on something related to the election stuff he pulled would be a much bigger deal.
I think discussion about how relatively trivial the crime was just shows how much people have bent over backward to cut Trump slack.
The nominee for a major party pays off a porn star as hush money to keep quiet about an affair he had with her, then falsified documents to both hide and take advantage of the payment.
Is there any other parallel in American history when public knowledge of those facts would not have been (a) disqualifying for a candidate, and (b) widely condemned with the expectation that he should face whatever penalties the justice system deemed appropriate via a trial and sentencing?
It is only because we know Trump's likely crimes include more serious offenses that anyone thinks these are not so serious.
That said, we'll find out more when the indictment is unsealed. As far as we know, the grand jury did its job and Alvin Bragg did his job. It is not the Manhattan D.A.'s job to weigh his case versus other pending cases or other suspected cases. It's his job to decide to indict based on the law, the evidence, and the findings of the grand jury.
I’ve been meaning to make a quick comment whenever Kevin posted on inflation, but never got around to it. I wish people would have a little more perspective on the current economy. A quick search produced inflation numbers from worlddata.info and macrotrends.net. Many people remember the Reagan years as some kind of perfect economy. Here are the inflation numbers for the years after the massive 1982 recession ended:
1989 4.83%
1988 4.08%
1987 3.66%
1986 1.90%
1985 3.55%
1984 4.30%
1983 3.21%
One year under 2%. All other years over 3% and some over 4%. I have not double checked, but I have heard many times that real income fell during this time. Yet even people who thought Reagan was an idiot thought the economy was pretty good. Maybe the Clinton years were better, but still pretty good.
To all the people who keep bringing up the FED 2% inflation target, the FED just pulled that number out of their ass. There is no hard evidence that this is the number they should be targeting, let alone used as the maximum allowed rate which is how they had been using it. Another look at the past: from 1993 to 1999 inflation was below 2% once. The other 6 years it was between 2% and 3%.
The world is crazy right now. Really, really crazy. Inflation is definitely lower since July. The rate hikes and bank problems should slow the economy a bit and keep inflation reasonable this year. The unemployment rate is currently really low. I wish Biden was breaking up monopolies and screaming about windfall profit taxes, but the economy is still pretty damn good. I wish prices were lower, but keep some perspective.
"Yet even people who thought Reagan was an idiot thought the economy was pretty good."
I never thought Reagan was an idiot & I did not think the economy was pretty good. I always thought "Morning in America" was bullshit heavily promoted by the definitely not liberal media.
Let's consider the 30-year fixed mortgage rates for those same years:
1989 10.25%
1988 10.38%
1987 10.40%
1986 10.39%
1985 12.43%
1984 13.88%
I wasn’t trying to sell the world on Reaganomics. My main point is that before people start panicking about inflation ruining everything, they should get more perspective. Having said that, thanks for the mortgage rates. I had no idea they were that high. I didn’t join the workforce or housing market until the 90s. I also looked up the unemployment rate. It didn’t dip below 6% until September 1987. That economy really doesn’t compare to Clinton’s. I also agree with Joseph Harbin. If Carter had been reelected, the same Fed and the same business cycle would have resulted in basically the same recovery.
Having said that, I do think Reagan was an idiot. He normalized limitless deficits. Made tax cuts the only thing. Gave a real push to the anti-environmental movement. Turned a very blind eye to corruption. Started turning conservative justices into whatever republicans want judges. And you can draw a straight line to how he campaigned through Dubya to Trump.
Agree about the 2% target. We lived with that the last decade when it was hard to got up to that level. No harm done (arguably). But the Fed is scared to change the target now lest investors see the Fed as going wobbly on the fight against inflation. A more realistic number might be about 3%. But what do economists even know? They don't seem to agree on what it should be. But whatever the target, the speed in getting there ought to be a factor. If you're going 80 in a 40 zone, you can't just slam on the brakes.
There's a lot of myth about the Reagan years. No president is entirely responsible for economic performance. Reagan benefited from inheriting Carter's Fed and got a favorable bounce on the business cycle rebound. Fwiw, GDP growth was stronger under Carter and job growth stronger under Clinton.
As you note, inflation was hardly in the 2% neighborhood, so it's questionable why we should be aiming for that now. I find it frustrating that every historical reference on inflation seems to be about that era. We are a long, long way from any kind of a comparable, persistent problem.
The Fed table here shows that inflation exceeded 4% for 19 of 24 years between 1968 and 1991. We have now had 24 months of inflation over 4%. We're nowhere close. It's much more likely that today is similar to almost every other high-inflation period, when inflation over 4% lasted from 1 to 3 years, then fell.
And if the trendlines were the old standard, linear?