Last edited Sat Feb 25, 2023, 05:05 PM - Edit history (3)
It all points to a Core PCE that is a bit more than double the Fed's target. Before January's number, one could argue there's been a very slow downward tilt over the last 6-8 months. With January's number, it's more like a flatlining.
Some may say that January is an anomalous "one off" on the high side. Others may say that December is an anomalous "one off" on the low side that January corrects.
There's a lot of chatter about the "no landing" scenario -- that inflation continues to stay elevated like in the graphs. I think with just a quarter percent rate hike on March 22, and another quarter point increase on May 3, that will likely continue to be the case for a long time.
With the hawkish noises from several FOMC members since the mid-month CPI and PPI reports, and more since yesterday, I think a half percent rate hike in March is a better bet. Note that before the March 22 FOMC meeting, new CPI and PPI reports will be released. (The next PCE report is March 31).
GRAPHS: The "x" axis is the month of the year, where the "1" is January 2022, "12" is December 2022, and "13" is January 2023.
All of the percentage increases are annualized numbers
On the rolling 3 month one can say its been flatlined since April 2022 at around 4.5%, with wiggles
The rolling 6 month - one can say its been flatlined since January 2022 at close to 5%, with wiggles
The rolling 12 month average has basically flatlined since July to about 4.7%.
I've always been a severe critic of 12 month inflation numbers when assessing RECENT or CURRENT inflation, but provide it for comparative purposes.
CORE PCE, which is shown in the above graphs: https://fred.stlouisfed.org/series/PCEPILFE
(PCE is at: https://fred.stlouisfed.org/series/PCEPI )
Percentages are calculated from the actual index numbers, not on averaging one-significant-digit numbers.
At 4.5% inflation, the value of a dollar drops to 50 cents in just 16 years.
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