Turbo29
Full time employment: Posting here.
Regular unleaded $4.99/gal in the Phoenix area
PCE, like CPI measures the rate of pricing changes overall in the economy. But they are not identical
Unlike CPI which has a static basket of goods, PCE considers the impact of substitution of goods, which is how most folks make purchases. PCE is also a broader measure and has different data sources.
The more important measure to the Fed is the so-called Core PCE which excludes food and energy costs. The reason for excluding these is because food and energy prices are highly volatile (both up and down). It is difficult to set policy based on measures which change so rapidly. Instead the Fed is interested in the extent to which all other prices are changing.
It doesn't mean food and energy price changes are not important.
We can always find individual prices we perceive to be rising more rapidly than overall prices. But these measures look at overall price changes but in a very methodical fashion.
Also the current report does not attempt to measure price changes more than a year ago. So even with relatively low inflation currently, prices reflect inflation which has happened prior to that also.
Looking at the PCE data in depth, the automobile components are down significantly month over month. The effect of the strike is still playing out and won't impact the Sept data. We'll see about October...
Incomes are up and the Fed looks at that too.
There's a lot of data here, all very interesting. And frankly, it is a PITA that BEA presents the data completely different than BLS. Leave it to competing government agencies. Full employment, I guess.
Core PCE is declining month over month and together with the 3 month average both are less than 3%. Core PCE has also declined in 6 of the past 7 months and is on a clear downward trend. See the chart below by Jason Furman. I do not know if this trend will continue or plateau, but it certainly can, and that would probably mean the Fed should do nothing but monitor.So the Fed's preferred inflation gauge is still running about 200% of the target rate after all this time. Not good. They really need to reel in this high inflation.
If anything, the sharply declining PCE, flattening yield curve and lower jobs numbers would be a recession sign. that is the risk here as i see it.
Probably so. Ongoing inflation running 200% of the target year over year is definitely not acceptable or sustainable. Something has to give. Wages are running too high also, and that feeds into inflation.Why would a recession sign be a risk? I think a recession is necessary to get inflation under control and welcome the coming recession.
Marc
Because people lose jobs.Why would a recession sign be a risk? I think a recession is necessary to get inflation under control and welcome the coming recession.
Marc
If anything, the sharply declining PCE, flattening yield curve and lower jobs numbers would be a recession sign. that is the risk here as i see it.
Why would a recession sign be a risk? I think a recession is necessary to get inflation under control and welcome the coming recession.
Marc
Great for people who are financially independent, not reliant on jobs for income.
But a lot of people would be hurt, be forced to move out, maybe lose homes.
So that maybe the price of gas and some grocery items might be cheaper for those who don't need to work.
Great for people who are financially independent, not reliant on jobs for income.
But a lot of people would be hurt, be forced to move out, maybe lose homes.
So that maybe the price of gas and some grocery items might be cheaper for those who don't need to work.
...All I was stating is that for ME in MY current circumstances I would like to see some number of people lose their jobs to lower overall demand such that prices did not continue to increase. Yes, a selfish response...
I wouldn't buy a used car from Jason Furman.
People suffer during times of inflation and a tight labor market, too.
I wouldn't buy a used car from Jason Furman.
How will these numbers affect the FOMC position, SS COLA and interest rates, if at all?
How will these numbers affect the FOMC position, SS COLA and interest rates, if at all?
Getting back on topic, the BLS released the employment report this morning. Job growth was strong, hours worked flat, wage growth positive. Key measures, such as employment population rate, labor force participation rate and total hours worked were flat. A positive employment picture but not one that points to a naturally slowing economy.
News release here https://www.bls.gov/news.release/empsit.nr0.htm
If you expect a cooling economy the threads supporting that are flat labor hours (suggesting growth of 2nd and 3rd jobs) and wage growth less than expected.Getting back on topic, the BLS released the employment report this morning. Job growth was strong, hours worked flat, wage growth positive. Key measures, such as employment population rate, labor force participation rate and total hours worked were flat. A positive employment picture but not one that points to a naturally slowing economy.
News release here https://www.bls.gov/news.release/empsit.nr0.htm