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The PCE index, an inflation measure closely watched by the Fed, slowed to 5.5% in November
Over the year ending in November (the most recent data available), the Consumer Price Index rose 7.1 percent. But inflation ran at an annual rate of only 4.8 percent over the past six months, 3.6 percent over the past three months and 1.2 percent in November. True, inflation has been held down in part by events that probably won’t be repeated, like the plunge in gasoline prices over the second half of 2022. On the other hand, there’s good reason to believe that housing inflation — which accounts for about a third of the Consumer Price Index — has declined sharply, but that this decline isn’t yet reflected in official statistics. Add in the latest data on wages, which were seriously encouraging, and a reasonable estimate is that we’ve regained full employment with underlying inflation only a point or two above prepandemic levels. That’s not a perfect situation, and squeezing out the remaining inflation may (or may not!) be hard, but it’s hardly a picture of catastrophe. For what it’s worth, financial markets have basically declared the inflation threat over: They’re implicitly predicting roughly 2 percent inflation as far as the eye can see. They’re also willing to buy federal debt at interest rates that are up a bit but still low by historical standards, showing no hint of concerns about U.S. solvency. Still, Republicans are determined to see economic and fiscal disaster, ...
(Jason Furman Twitter) Excluding housing (which is ~40% of core) and used cars, supercore inflation was consistently modest for the last three months -- a 1.8% annual rate over this period. That is the lowest since February 2021.
Ditto. Plus headline CPI (CPI-U) is +0.9 for the past six months, or 1.8% annualized. (See the bar graph partway down this page.)
Think how meager the yield of an I-bond priced now would be, even if the fixed portion was bumped up a bit. Per Yogi's thread on I-bonds, it's not likely to be any better when the re-rate comes around again in May.
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https://messaging-custom-newsletters.nytimes.com/template/oakv2?campaign_id=116&emc=edit_pk_20230110&instance_id=82350&nl=paul-krugman&productCode=PK&regi_id=22268089&segment_id=122135&te=1&uri=nyt://newsletter/caa72e77-00ff-5014-961e-6dee698abe00&user_id=83d45440ead1d14c2a89a1e7221337d1
https://www.nytimes.com/2023/01/09/opinion/election-deniers-recession-inflation.html
Over the year ending in November (the most recent data available), the Consumer Price Index rose 7.1 percent. But inflation ran at an annual rate of only 4.8 percent over the past six months, 3.6 percent over the past three months and 1.2 percent in November.
True, inflation has been held down in part by events that probably won’t be repeated, like the plunge in gasoline prices over the second half of 2022. On the other hand, there’s good reason to believe that housing inflation — which accounts for about a third of the Consumer Price Index — has declined sharply, but that this decline isn’t yet reflected in official statistics.
Add in the latest data on wages, which were seriously encouraging, and a reasonable estimate is that we’ve regained full employment with underlying inflation only a point or two above prepandemic levels. That’s not a perfect situation, and squeezing out the remaining inflation may (or may not!) be hard, but it’s hardly a picture of catastrophe.
For what it’s worth, financial markets have basically declared the inflation threat over: They’re implicitly predicting roughly 2 percent inflation as far as the eye can see. They’re also willing to buy federal debt at interest rates that are up a bit but still low by historical standards, showing no hint of concerns about U.S. solvency.
Still, Republicans are determined to see economic and fiscal disaster, ...
(Jason Furman Twitter)
Excluding housing (which is ~40% of core) and used cars, supercore inflation was consistently modest for the last three months -- a 1.8% annual rate over this period. That is the lowest since February 2021.
Think how meager the yield of an I-bond priced now would be, even if the fixed portion was bumped up a bit. Per Yogi's thread on I-bonds, it's not likely to be any better when the re-rate comes around again in May.