The latest official report on the Federal Reserve’s preferred inflation measure came in today, and it was pretty warm – …Continue reading →
The latest official report on the Federal Reserve’s preferred inflation measure came in today, and it was pretty warm – and sticky – as economists’ and investment analysts’ lingo puts it.
According to today’s release from the U.S. Bureau of Economic Analysis, the headline “Price Index for Personal Consumption Expenditures”(PCE) rose year-on-year in December by 2.6 percent. That’s much lower than this cost of living increase at its recent peak (7.2 percent, in July, 2022). But it’s the fastest rate since last May. And it’s still higher than the Fed’s target of two percent. These figures also mean that cumulative consumer inflation by this measure during the Biden years has reached 17.13 percent. (I’m starting from February, 2017 – Mr. Biden’s first full month in office.)
The core figure – which strips out food and energy costs supposedly because they’re volatile for reasons having little to do with the economy’s fundamental vulnerability to inflation – was up 2.8 percent annually in December. That’s also much lower than its 5.65 percent peak in February, 2022. The Fed doesn’t set a core PCE target, but obviously it’s still higher than what the central bank would like to see, too. And core inflation by this measure on former President Biden’s watch has been 16.36 percent.
And for some context, in the four years preceding the Biden era, headline PCE was up cumulatively by 6.91 percent, and the core increased 6.95 percent. True, these numbers include the deflationary pandemic period. But those price decreases were modest and short-lived.
Predictions remain almost universal that President Trump’s new tariffs, promised major illegal alien deportations, and proposed tax agenda will boost inflation even higher. (See, e.g., here.) But the new PCE results are a reminder that his predecessor’s cost of living record will be awfully hard to beat.
