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Ordinary Americans are concerned about inflation. federal Reserve? Not so much.

Ordinary Americans are concerned about inflation.  federal Reserve?  Not so much.

Ordinary Americans are concerned about inflation. federal Reserve? Not so much.

If you go by PCE instead of CPI, the disparity is less dramatic; The proportion of people who view inflation as the most pressing issue has grown more than twice as fast (nine points) as compared to the inflation rate (3.924 points) and the core inflation rate (3.387 points). But voters are still disproportionately concerned about the actual growth of inflation.

Am I telling you to stop worrying about inflation? Not at all Inflation is a real problem because it exceeds wages. Compensation costs (ie, wages plus benefits) rose 5 percent In the last one year, while inflation increased 8.2 percent according to the consumer price index, and 6.2 percent According to PCE. that stinks. Powell, unfortunately, remains stagnant on the labor market, which, he said, “continues to be out of balance,” by which he means it remains very healthy. But Powell also isn’t particularly concerned that we’re entering a 1970s-style pay-price spiral. You can worry that inflation is eating into your paycheck, or you can worry that inflation will get worse, but it’s not logical to worry about both at the same time, because the more inflation you now eat into your paycheck. So, the lower the inflation will be, the later it will remain.

When ordinary people worry about inflation, they don’t worry like Powell that the labor market is too strong; They worry that it is not strong enough to keep pace with rising prices. And in a slightly longer period, as Paul Krugman Told Monday, real wages are rising very little. Wages for non-supervisory workers (that is, 80 percent of the workforce) increased from February 2020 (ie just before Covid hit) 1 percent faster compared to the consumer price index. Krugman acknowledged that you may get less encouraging results when you compare compensation cost To PCEBut he also noted that depending on the indicators you choose, you can get more encouraging results.





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