Shifting data: a challenge for monetary policymakers
A familiar old saw about the conduct of monetary policy is that it's like trying to drive a car while looking only in the rearview mirror. The idea is that policymakers are trying to steer a course that will keep the economy close to full employment with low, stable inflation, while their only knowledge of the road ahead is based on data about the past. ; As if this situation weren't challenging enough, the rearview mirror sometimes gives a distorted reflection, in the sense that the data policymakers see at any one point in time are often later revised. This Economic Letter discusses a ...
A fitter, trimmer core inflation measure
The breadth of disinflation
In recent months, inflation as measured by the personal consumption expenditures price index has been trending lower. This slowdown, known as disinflation, has raised concerns that inflation might actually drop below zero and enter a period of deflation. An examination of the distribution of inflation rates across the range of goods and services that compose the index suggests that downward pressures on inflation are relatively high by historical standards.
Inflation measurement gives us food for thought
Global food prices are soaring. Since February 2009, the United Nations Food and Agriculture Organization world food price index has risen roughly 67 percent, surpassing the previous peak in June 2008 (Chart 1). The last food price surge, from early 2007 to mid-2008, prompted riots in many countries; the latest rise has also fueled riots and may have been a factor in political unrest sweeping through North Africa and the Middle East.
Of moose and men (with no reference to Steinbeck)
Remarks before the National Association for Business Economics, Dallas, Texas, September 12, 2011 ; "It is incumbent on the Fed and other bank regulators to reduce the regulatory burdens that are inhibiting indeed, overwhelming community bankers whose business it is to lend to creditworthy small businesses."
Excluding items from personal consumption expenditures inflation
Core inflation measures constructed by excluding particularly volatile items from the price index have a long history. The most common such measures are indexes excluding the prices of food and energy items. This paper attempts to shed some statistical light on the impact of excluding certain items from the personal consumption expenditures (PCE) price index. In particular, I am interested in the trade-off between reducing shortrun volatility (relative to the volatility of the headline index) and possibly distorting the measurement of inflation over longer horizons. Some of the questions this ...
Trimmed mean PCE inflation
Research over the past decade has led to improved measures of core inflation in the Consumer Price Index, or CPI. This paper discusses the application of some of the insights and techniques of that line of research to the Federal Reserve Bard of Governors? preferred inflation gauge, the price index for Personal Consumption Expenditures (PCE). The result is a new measure of core PCE inflation?the trimmed mean PCE?and a somewhat different characterization of the economy?s recent inflation experience. ; Compared to the story told by the usual ?excluding food and energy? measure, the trimmed mean ...
Regional and national economic conditions
Remarks before the Morris County Chamber of Commerce, Florham Park, New Jersey.
Trends in consumer sentiment and spending
In 2008, personal consumption expenditures represented 70% of gross domestic product, or total spending on final goods and services, according to U.S. Bureau of Economic Analysis data. This article analyzes consumer sentiment and spending data to uncover differences across income and education level groups.