Boston Fed Fireside Chat: Inflation Expectation is 2.1%, Real Growth 7%
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6 comments on Boston Fed Fireside Chat: Inflation Expectation is 2.1%, Real Growth 7%
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6 Comments
Newest
2 years ago
Inflation is fine in things you own, not so much in things we need to live: Fuel, medical care/insurance, FOOD, etc.
Of course, there’s estimates out there where nearly half the population here doesn’t own any assets, at all.
2 years ago
Don’t let anyone tell you that economists don’t have Physics Envy. In the Fed paper the author recognizes that swaths of the data are not based on actual prices but guesses of what those prices could be and that the BEA has recently published a ” market‐based PCE”. I was wondering where we can find that so I looked it up and found it at: link to bea.gov
It opens an Excel spreadsheet that gives monthly inflation Market-based PCE figures using market prices from September 2020 to April 2021.
It clearly shows an acceleration this year at an annualized rate of 5.1 %.
Market-based PCE
2020 2021
Sept .1% Jan .3%
Oct .0% Feb .4%
Nov .0% Mar .5%
Dec .3% Apr .5%
If the inflation rates stays the same as in the last two months then we will see inflation around 6% to 7% easily. If it accelerates then a rate rise is certain. Seeing that the acceleration occurred in the months Dec to April I would expect that the Fed is getting nervous but doesn’t want to pull the trigger on four months of data. However if the next two months show no slowdown then they will have to act.
That’s my take.
2 years ago
All of our PCE’s are getting trimmed whether we like or not, I ‘m afraid. Get used to it.
Real growth is going out of style.
2 years ago
I’m curious how much typical house cost (payments+utlilities+insurance) for an 1800 sq. ft. home with a 70% mortgage has risen since, let’s say, 2001. House prices could be elevated, and stay there, so long as payments can be made at today’s interest rates. I wonder if house cost is actually less
2 years ago
If you already have a house and it is paid off, all that’s really there is taxes.
Nonetheless the OER estimate (what one would pay if one rented their house from themselves, unfurnished and without utilities) is what the BLS uses, mortgage or not.
2 years ago
There is also insurance costs too.
Depending on where you live they can be significant. I live in South Florida and insurance costs are high due to Hurricane frequency. It’s not uncommon to pay 5-8K in insurance costs on a home that’s worth 500K.