US Inflation Report to Keep Fed Leaning Toward More Rate Hikes

[mahatmakanejeeves]

Economics | Inflation & Prices

US Inflation Report to Keep Fed Leaning Toward More Rate Hikes

• Core inflation may move sideways, Bloomberg Economics says
• Fed will probably keep ‘wait-and-see’ attitude toward hikes

By Matthew Boesler
November 14, 2023 at 12:00 AM EST

A monthly US government report on consumer prices due Tuesday is set to show slower progress toward the Federal Reserve’s 2% inflation target, keeping the central bank biased toward more tightening, according to Bloomberg Economics.

The figures are set to show the consumer price index excluding food and energy rose 0.3% for a second straight month in October, leaving the year-over-year rate unchanged at 4.1%, Bloomberg economists Anna Wong and Stuart Paul said Monday in a preview of the report.

{snip}

[Fiendish Thingy]

1. Except the report showed lower than expected numbers.

Instead of the expected 0.3% and 4.1% annual, the inflation numbers released today were 0.0% and 3.2% annual.

I’d say the odds just increased for the Fed to pause hikes.

[peppertree]

3. Exactly. The problem is that Scary Jerry wants Needy Amin back in office

And he knows he has more power than any single other individual - including Trump himself - to bring that about.

[Fiendish Thingy]

5. So many nicknames, so little clarity

I have seen no evidence that Powell wants Trump to be re-elected.

When congress refuses to act (by raising taxes or legislating against corporate profiteering and price gouging), interest hikes are the only remaining tool against inflation. If Powell hadn’t hiked rates over the past 18 months, we’d be looking at 12-15% inflation, which would almost certainly guarantee Trump’s re-election.

[texasfiddler]

2. Bloomberg Economics wrong again.

I generally like Bloomberg, but their prognostications have been off the mark. I wish they would just wait until the CPI report is released.

[peppertree]

4. True. What they fail (or refuse) to see is that Powell is putting his thumb on the scale for Cheeto

Powell knows he has more power than any single other individual - including Trump himself - to bring that about.

[Fiendish Thingy]

6. You simply don't know what you're taking about. Nt

[progree]

7. Economists surveyed by Dow Jones missed by 0.1 percentage points on the high side on all measures

https://www.democraticunderground.com/10143157774

The consumer price index ... increased 3.2% from a year ago despite being unchanged for the month ... Economists surveyed by Dow Jones had been looking for respective readings of 0.1% and 3.3%. ((so they overestimated by 0.1 percentage points on both measures -Progree))

Excluding volatile food and energy prices, core CPI increased 0.2% and 4%, against the forecast of 0.3% and 4.1%. ((so they overestimated by 0.1 percentage points on both measures -Progree))

Oddly enough, Bloomberg forecast the same 0.3% and 4.1% for CORE CPI as the Dow Jones economists, thus also missing on both measures by 0.1 percentage points on the high side. https://archive.li/l8CZj

I'm skeptical about the huge miss on regular CPI that one person is claiming in a linkless assertion. Edited to add: I can't find Bloomberg's forecast for regular CPI anywhere, except it's likely in a report that only Bloomberg Terminal clients have access to, End Edit

[progree]

8. GRAPHS: month-by month bar graph and rolling 3 months

though nowadays they look at things like "supercore service inflation" and core ex shelter and who knows what other series.

First the regular headline CPI number, and the regular month-by-month increases (rolling 3 months stuff comes later) :



After a frightening late summer jump, a nice downward trend to 0% in October (actually 0.04% which annualizes to 0.54%)

Now the CORE CPI number that the Fed is more interested in (though actually its the CORE PCE inflation gauge that historically has been their #1 gauge of underlying inflation trend to project FUTURE inflation)


After a bump-up in late summer, a nice move downward in October back to the June-July numbers.

CPI Rolling 3 month average thru October 2023:

For better accuracy, I calculate the rolling 3 months average using the actual index numbers, not the one digit monthly change numbers

A rolling 3 month helps smooth out month-to-month volatility, and since 3 months is an average of 3 data points, it is less likely to be dismissed as a "one off" like a single month's increase could be.



The big August & September jump hurt the 3 month average. As August and September fall out of the 3 month average in the coming one and two months, there should be a dramatic improvement.

CORE CPI Rolling 3 month average thru October 2023:



It has finally come down to about the 3% range. As August and September fall out of the 3 month average in the coming months, this may well improve considerably.

The next Fed rate-setting meeting is December 12-13.

BLS CPI press release: https://www.bls.gov/news.release/cpi.nr0.htm

Various series:

CPI: https://data.bls.gov/timeseries/CUSR0000SA0&output_view=pct_1mth
CORE CPI: http://data.bls.gov/timeseries/CUSR0000SA0L1E&output_view=pct_1mth

For all BLS timeseries data, one can see the index values and other periods like rolling 3 month, rolling 6 month, rolling 12 months by clicking "More Formatting Options" on the upper right and then on the page that shows up, check the various checkboxes

REAL AVERAGE HOURLY EARNINGS of production and non-supervisory workers https://data.bls.gov/timeseries/CES0500000032 ,
. . . private workers: https://data.bls.gov/timeseries/CES0500000013

CPI excluding shelter - https://data.bls.gov/timeseries/CUUR0000SA0L2
. . . FRED: https://fred.stlouisfed.org/series/CUUR0000SA0L2
. . . Table 3 has CPI ex shelter, as well as Core ex shelter https://www.bls.gov/news.release/cpi.t03.htm

Rent (SA) https://data.bls.gov/timeseries/CUSR0000SEHA
Fred: (SA) Rent of Primary Residence in U.S. City Average https://fred.stlouisfed.org/series/CUSR0000SEHA
(NSA) https://fred.stlouisfed.org/series/CUSR0000SEHA

SA = Seasonally Adjusted, NSA = Not Seasonally Adjusted

[elleng]

9. Damn, and this from Bloomberg.

WHO wrote the headline???

[mahatmakanejeeves]

10. This article went online at midnight, eight and a half hours before the BLS released its report.

It serves as a placeholder, until the report comes out.

And good afternoon.

[elleng]

11. Thanks. They'd better change the damned headline.

and 'my' S + P UP +1.79%!

Good afternoon! Sunny and 63 here, that's 63 @ my front door, 'officially' 57 in Calvert County.