While Fed Studies Nuance, Americans See a Canyon
Financial conditions look tighter or easier depending on the metric, but the divide in perception of the economy can be seen from outer space.
Can the Fed bridge the great divide, we ask ourselves?
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Victory is at hand for the Federal Reserve, and yet the pressure is ratcheting up. Ahead of the Federal Open Market Committee this week, the latest printout of the personal consumption expenditure deflator, the Fed’s favorite measure of inflation, continued its unmistakable decline. The core metric, excluding food and fuel, has dipped just below 3%. The statistical purists’ “trimmed mean” PCE inflation (excluding the biggest outliers in both directions and taking the average of the rest) also suggests ongoing improvement, particularly over the last six months: