#US Core #PCE #Inflation:
▪️ Annualizing 4.8% in 2021 vs Fed SEP projection 3.0%
▪️ Last Jul 3.6%. Even if annualizes only 2.5% for rest 2021, full year YoY would still be 3.9%
▪️ Sept FOMC will have to revise higher from 3.0% towards 4.0%
▪️ Can 2022 proj be left at 2.1%?
▪️ Annualizing 4.8% in 2021 vs Fed SEP projection 3.0%
▪️ Last Jul 3.6%. Even if annualizes only 2.5% for rest 2021, full year YoY would still be 3.9%
▪️ Sept FOMC will have to revise higher from 3.0% towards 4.0%
▪️ Can 2022 proj be left at 2.1%?
Core PCE MoM past its peak?
- 5y avrg 0.17%
- Post Covid avrg 0.30%
- Post Vaccine avrg 0.39% (since Nov'20)
- Post Covid peak 0.63% (Apr'21)
- Last July print 0.34%
Transitory assumption: will ease towards 0.17-20% MoM into H1'22 (equivalent to 2.0-2.4% YoY)
- 5y avrg 0.17%
- Post Covid avrg 0.30%
- Post Vaccine avrg 0.39% (since Nov'20)
- Post Covid peak 0.63% (Apr'21)
- Last July print 0.34%
Transitory assumption: will ease towards 0.17-20% MoM into H1'22 (equivalent to 2.0-2.4% YoY)
Trimmed Mean Inflation?
▪️ Powell at JH "..to capture whether price increases for particular items are spilling over into broad-based inflation. These include trimmed mean.."
▪️ Excluded: 50 components from lower tail of distribution of monthly price changes & 71 from upper tail
▪️ Powell at JH "..to capture whether price increases for particular items are spilling over into broad-based inflation. These include trimmed mean.."
▪️ Excluded: 50 components from lower tail of distribution of monthly price changes & 71 from upper tail
▪️ Out of total 178 components, 121 components with weight of 54% excluded from Trimmed Mean
- Most price spike (July MoM): Hotels & Air transportation
- Most MoM price collapse: Motor vehicle rental & leasing
- Most price spike (July MoM): Hotels & Air transportation
- Most MoM price collapse: Motor vehicle rental & leasing
https://twitter.com/VaradMarkets/status/1399347401530306560?s=20
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