Latest Inflation Numbers and Discussion

[MichaelB]

Fed Chairman Powell comments today, from WSJ and Barrons

Last year, rebounding supply supported U.S. growth in spending and also employment, alongside a considerable decline in inflation,” Powell said at the Wilson Center think tank in Washington, D.C., on Tuesday afternoon. “The more recent data show solid growth and continued strength in the labor market, but also a lack of further progress so far this year on returning to our 2% inflation goal.”
./.
The recent data have clearly not given us greater confidence” that inflation is making progress to the Fed’s goal “and instead indicate that it is likely to take longer than expected to achieve that confidence,”

 

[Chuckanut]

The recent data have clearly not given us greater confidence” that inflation is making progress to the Fed’s goal “and instead indicate that it is likely to take longer than expected to achieve that confidence,”

My Gloat-O-Meter has once again been pegged on the far right.

I'm glad the Fed Chairmen is coming around to what I have been saying for at least a year.

 

[explanade]

So the first print on GDP for the first quarter came out low this morning.

But the PCE for the first quarter came out hotter, 3.7% instead of the expected 3.4%.

Mixed signals for the Fed if economy is finally slowing down? Jobs report for April should be next week.

 

[MichaelB]

Th Employment Cost Index was released this morning (here). It is the Fed’s preferred index for looking at wage growth.

Compensation costs for civilian workers increased 1.2 percent, seasonally adjusted, for the 3-month period
ending in March 2024, the U.S. Bureau of Labor Statistics reported today. Wages and salaries increased 1.1
percent and benefit costs increased 1.1 percent from December 2023. (See tables A, 1, 2, and 3.)

Compensation costs for civilian workers increased 4.2 percent for the 12-month period ending in March 2024
and increased 4.8 percent in March 2023. Wages and salaries increased 4.4 percent for the 12-month period
ending in March 2024 and increased 5.0 percent for the 12-month period ending in March 2023. Benefit costs
increased 3.7 percent over the year and increased 4.5 percent for the 12-month period ending in March 2023.
(See tables A, 4, 8, and 12.)

The number is higher than expected and points to an ongoing inflation rate between 3.0%-3.5%.

 

[explanade]

I guess Powell saying he doesn't see a reason to tighten soothed the market today.

I think also this week EU had a good number on inflation.