The February CPI was yet another example of only modest progress towards the Fed’s 2% target because the pace continues to be hindered by recalcitrant prices for shelter. The most mystifying element within shelter is owners’ equivalent rent. which comprises…
BLS reported that the number of jobs increased by 275,000 in February but the number of persons with a job declined by 184,000! It is unbelievable that there could be that much divergence between the two surveys. Unfortunately this has…
The Covid induced spike in inflation was driven by supply not demand, i.e. it was microeconomic not macroeconomic. An update of the comparison to the World War II supply shock generated inflation spike remains remarkably similar (see Chart 1). The…
The unemployment rate is low and remains low because ageing baby boomers are increasing the supply of labor in age groups with lower rates of unemployment. A very interesting facet is that the Phillips Curve (the relationship between inflation and…
The Demographics of Unemployment The unemployment rate plays a major role in assessing the status of the US economy. That assessment, however, is incomplete because it overlooks the importance of changes in the age composition of the population. That…
We disagree with the assessment that August unemployment developments signal the end of favorable labor market news. For the record, the number of unemployed persons increased by 514,000 and the unemployment rate rose from 3.5% in July to 3.8% in…
The headlines read “Fed-Favored PCE Gauge Shows U.S.’s Core Annual Rate Ticking Higher.” That is factually correct but the interpretation that this signals a reversal in disinflation is incorrect. There was no difference in monthly inflation – the core PCE…
A while back we stated that the secular path for the core CPI (all items excluding food and energy) was disinflationary before Covid and that it would be true post Covid. And we have said many times that post-Covid disinflation…
The oft-expressed concern that higher prices will trigger a wage-price inflation spiral has not occurred. Wage gains as depicted by average hourly earnings in the monthly employment report continue to exhibit moderation not acceleration (see Chart 1). However, one can…