Right here’s a graphic depiction of the extent of the shock, in ranges, relative to Bloomberg Consensus and Cleveland Fed nowcasts.
Determine 1: CPI (black), Bloomberg consensus (tan sq.), Cleveland Fed nowcast (sky blue inverted triangle), all on log scale. Supply: BLS by way of FRED, Bloomberg, Cleveland Fed, and creator’s calculations.
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Determine 2: Core CPI (black), Bloomberg consensus (tan sq.), Cleveland Fed nowcast (sky blue inverted triangle), all on log scale. Supply: BLS by way of FRED, Bloomberg, Cleveland Fed, and creator’s calculations.
Right here’s what “pattern” inflation measures seem like, specifically instantaneous inflation (T=12, a=4) per Eeckhout (2023).
Determine 3: Instantaneous CPI inflation (daring black), instantaneous core CPI inflation (sky blue), trimmed imply inflation m/m annualized (purple), median inflation m/m annualized (pink), and CPI supercore m/m annualized (inexperienced). Instantaneous inflation calculated per Eeckhout (2023), for T=12, a=4. Supply: BLS, Dallas Fed by way of FRED, BLS, and creator’s calculations.
Recall, the Fed doesn’t goal the CPI explicitly, however the PCE deflator (headline, in line with textual content, however in apply it appears all people makes use of core). However clearly info from the CPI is related to the PCE deflator. The Cleveland Fed nowcast utility reveals how the PCE deflator nowcasts are affected.
Supply: Cleveland Fed, accessed 4/10/2024.
Whereas y/y core PCE inflation could be lowering with the pre- and post-CPI launch nowcasts, the q/q core PCE inflation would now be rising as a substitute of stabilizing.
Determine 4: Core PCE quarter-on-quarter annualized inflation (daring black), and nowcast as of three/10 (sky blue inverted triangle), and as of three/9 (gentle inexperienced sq.), all in %. Supply: BEA, Cleveland Fed, and creator’s calculations.
Modal forecast from the CME for the June twelfth assembly was for a drop by 25 bps (56%); post-CPI launch, it’s a no-change (81%). The anticipated worth was 5.23% pre-release, and 5.33% post-release.
CEA’s take, right here.
