Inflation, finance, economics.
May 30, 2025
Core PCE inflation flatlined in April. The six month lag shows 2.6% inflation, with the 3 and 12 month clocking in at a virtually identical 2.7% and 2.5%. Probability of rising inflation is 60%, close to a 50-50 coin toss. There is little or no obvious evidence of the on and off trade war: monthly goods prices declined in both March and April.
May 21, 2025
Josh Marshall challenged his readers to create an economic dashboard to track the economy’s performance during the Trump administration. My attempt isn’t a side-by-side comparison with the two administrations (that can come later), but rather a snapshot of the economy inherited and what has happened since.
Unemployment and inflation are about where they were at the end of last year, at least through April. Unemployment rose by a trivial tenth of percentage point and progress on inflation has stalled above the Fed’s 2.0% target.
Inflation adjusted GDP declined in the first quarter. The mild 2 quarter annualized growth rate in the bottom right-hand corner is based on nowcasts by the St Louis and New York Federal Reserve. New York updates weekly; St Louis updates more often. The New York website provides a fair amount of detail including a range of probabilistic estimates. They say that there’s a 68% chance that growth will end up somewhere between 0.73% and 3.94% — quite a wide range.
Expanded dashboards could include manufacturing employment, output, and productivity growth, overall productivity growth, and median wage growth. Energy independence could be measured with the difference between nationwide energy production and consumption. I could also include mortgage rates.
May 1, 2025
The April 30th PCE report ran through March 2025, before Liberation day tariffs were announced on April 2nd. The headline PCE price index rose 2.3% relative to a year ago, down from 2.7% the previous month.
Underlying price pressures are better captured by stripping out food and energy: this is reflected in the core PCE metric. It rose by 2.6% relative to a year ago. The six month measure favored by this blog rose by 3.0%, down slightly from 3.1% from the previous month and well above the Fed’s target of 2.0%. There’s a 75% chance that inflation is rising, as measured by centered 1 year inflation.