QI PCE Core Inflation Close to 50-Year Low of 0.9%
So I ask: Where's the inflation? It's sure not showing up yet in PCE inflation, and core PCE is suggesting deflationary, not inflationary, pressure.
CARPE DIEM
Professor Mark J. Perry's Blog for Economics and Finance
Thursday, April 28, 2011
So I ask: Where's the inflation? It's sure not showing up yet in PCE inflation, and core PCE is suggesting deflationary, not inflationary, pressure.
About Me
- Name: Mark J. Perry
- Location: Washington, D.C., United States
Dr. Mark J. Perry is a professor of economics and finance in the School of Management at the Flint campus of the University of Michigan. Perry holds two graduate degrees in economics (M.A. and Ph.D.) from George Mason University near Washington, D.C. In addition, he holds an MBA degree in finance from the Curtis L. Carlson School of Management at the University of Minnesota. In addition to a faculty appointment at the University of Michigan-Flint, Perry is also a visiting scholar at The American Enterprise Institute in Washington, D.C.
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11 Comments:
Here, taken from a tweet by Steve Forbes
http://www.marketwatch.com/story/the-9-places-where-inflation-is-crushing-us-2011-04-28
So I ask: Where's the inflation? It's sure not showing up yet in PCE inflation, and core PCE is suggesting deflationary, not inflationary, pressure.
Gasoline. Electricity. Water. Insurance. Healthcare. Grains. Beef. Pork. Lamb. Doesn't the Fed count any of these price increases as legitimate? And don't you go shopping?
Yeah.. no kidding. All of my bills are inflating except for natural gas. I'm not sure how you could miss it.
Of course; everyone is sending all their money to Saudi Arabia, and Venezuela. There's no money left to run up "core" prices.
GDP Q1 1.8%.
Q4 likely negative.
Aggrogate! Aggrogate! That will make the economy great! Rah, rah, rah!
that is an awfully incomeplete assessment of the data.
"core" is a nonsense metric. do you not eat or drive? that's like saying "it would be really cold in here if we did not have a raging fire going. it's just another way to ignore inflation by pretending the things that go up in price don't exist. what's more "core" than food?
"PCE price index -- The price index for PCE increased 0.4 percent in March, the same increase as in February."
that's a 5% annualized inflation rate, which is hardly low.
the MIT BPP shows an even higher YTD annualized rate:
2.32% inflation YTD = 7.1% annualized.
this shows no signs of abating at present.
there's your inflation.
and as vangel mentioned, weight healthcare appropriately in the "core" and you'd see a marked jump in inflation as well.
From Reuters: Consumer spending rises on higher prices
Gas has never been cheaper! It is only $0.10/gallon now....if you have pre-1965 dimes.
Ben Bernanke was right during his speech. Inflation was only 2%....PER HOUR.
Inflation is not a concern at this time. Bernanke should think about boosting the economy. Japan is the example of what happens when a central bank gets too fussy about inflation.
And when the housing market was wildly over-inflated, did we 1) have the data, 2) see the data, 3) believe the data? To some degree, but the experts thought we could have a "soft landing" until the bottom fell out of the economy.
It's still wise to have some diversification in your portfolio to hedge against the chance of inflation & deflation.
Inflation is not a concern at this time. Bernanke should think about boosting the economy. Japan is the example of what happens when a central bank gets too fussy about inflation.
Wow. So many errors in so few words. Congratulations, if there were an ignorance contest you would be among the leaders.
First, inflation is a concern. The USD has lost more than 80% in the three decades since Nixon defaulted by closing the gold window.
Second, it is not Bernanke's job to boost the economy. He is supposed to keep the purchasing power of workers and savers from falling.
Third, Japan was never concerned about inflation. It borrowed and spent with the best of them. The problem is that you can't correct a balance sheet recession by borrowing and spending.
Forth, Japan owed most of its debt to its citizens and ran strong trade surpluses. It had more leeway and more time to do its damage. The US is dependent on external financing of it debt and deficits and has little leeway.
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