Usually, the Friday after Thanksgiving holiday is a quiet trading day. Today, there was lots of news to react to.
Expectations and forecasts from economists continue to diverge from consumer based expectations.
With PCE inflation figures in, we have the key price indices for October. Core PCE inflation was at market expectations (Bloomberg). Nowcasts for November inflation is down markedly.
GDP growth in Q3 was revised up 0.1% (SAAR). Real GDI was released; taking average of GDP and GDI reveals the possibility that actual growth was faster than indicated by GDP alone. And while forecasted levels have been downwardly revised over the past months, the most recent nowcasts suggest acceleration.
Over the next week, you’re going to hear a lot about how high prices are, how much more a turkey dinner cost than a year ago. But when you hear somebody, say the word “hyperinflation”, remember this picture:
As noted by Jeff Frankel:
In terms of what the president can actually control to reduce inflation, one neglected tool is trade policy. Former President Donald Trump put these tariffs on aluminum and steel, and everything we import from China — all kinds of goods. The tariffs raise prices to consumers. It seems to me a no-brainer to undo those barriers. Biden should be able to get China and other countries to reciprocally lower some barriers against us. But with or without that, removing tariffs could bring down consumer prices and prices to businesses for steel and aluminum and all kinds of inputs immediately. That’s the one thing that the government could most rapidly control.
Some do; some don’t. Now published, an article in Journal of International Money and Finance (pre-proof) by me, Hiro Ito, and Robert McCauley answering this question. From the abstract:
As of September 4th, enhanced unemployment benefits were ended in Wisconsin. What do the latest data reveal?