skip to Main Content

Update on the CPI

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…

Read More

The Core PCE Deflator Head Fake

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…

Read More

Reaffirming Disinflation

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…

Read More

Favorable Wage Developments

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…

Read More
Back To Top