Inflation came in a touch above expected, with core CPI at an annual rate:

1 month: 3.8%
3 months: 3.7%
6 months: 2.9%
12 months: 3.3%

The last mile is proving very, very stubborn. Here are the full set of numbers.

I believe it is useful to make small contributions to big things (many engaged in doing that now) & also bigger contributions to small things.

On the later, in @BostonGlobe I argue for zoning reform to enable Cambridge to help build more than 1,000 additional housing units.

A🧵 States and localities can resist the likely regressive thrust of federal policymaking while doing what they can to build a more progressive, inclusive and upwardly mobile society.

To do that we need cheaper housing.

And to do that we need more housing.

I know many skeptics of prediction markets. I don't have an ideological faith in them (OK, maybe quasi ideological). But the empirical evidence is they have worked really, really, really well. And did again on Tuesday night.

A short 🧵 about this remarkable picture. Markets gave Trump a 60% chance. How does that prove they know what they're doing? If Harris won could say, "but she had a 40% chance" so wasn't wrong.

That's correct. Can only judge when you've seen them many, many times. Do 60% chance things happen 60% of the time?

The macroeconomy is strong--high growth, low unemployment, falling inflation--the best of any advanced economy.

But there was a reluctance to present/understand how families were still not out of the deep inflation hole. And too much masked by cherrypicking/misleading stats. IF Donald Trump had been President for the last 4 yrs here are some stats you would have heard more from progressives. Relative to 2019:

--Real median household income down 0.7%

--3m more people in poverty (poverty rate up 0.6pp)

--Unemp rate up 0.6pp

--Mortgage rate up 3pp

Another strong GDP report (2.8% in Q3) pushes real GDP even further above the pre-pandemic forecast. The 2.8% (annual rate) was just below the strong expectation. Excluding volatile components, private domestic sales to final purchasers was 3.2%.

Consumption and equipment investment were very strong while structures (both residential and non) subtracted.

I was asked to recommend 5 books on economic policy by @nytimesbooks--ostensibly to help people make up their minds for this election but even if you don't have time to read them before voting the issues will still be relevant in 2028, 2032, etc.

One tweet for each. 1. The Little Book of Economics by @greg_ip

I was looking for a primer on deficits, inflation & other macro issues. I had this on my shelf unread but a colleague suggested it for this purpose--and it fit the bill perfectly.

Except is really The Little Book of MACROeconomics...

Today's monthly core CPI print was 0.31% (or 3.8%) at an annual rate.

The puts it at the 92nd percentile of the monthly prints from 1992 to 2019.

Inflation is down. The inflation risk scenario is much less bad than it was. But we're not all the way there yet. Over different windows:

3 months (3.1% annual rate): 91st percentile
6 months (2.6% annual rate): 76th percentile
12 months (3.3% annual rate): 94th percentile

Inflation came in a touch above expectations--despite a big slowdown in shelter inflation--with core CPI at an annual rate:

1 month: 3.8%
3 months: 3.1%
6 months: 2.6%
12 months: 3.3%

(Note the Fed targets PCE inflation which will come in lower than this.) Here are the full set of numbers. Note the "ex shelter" numbers were much higher in September than the overall. But the reverse was true if you go back further.

Very strong jobs report.

254K jobs in September and upward revisions for July and August.

Unemployment rate fell again, now at 4.1%.

Participation flat, employment rate up, hours down a little, wage growth moderate. Here's the unemployment rolling off its July high.

Overall the jobs report is reassuring. A healthy 142K jobs added, average weekly hours increased, participation stayed the same, and most importantly the unemployment rate fell back to 4.2%.

Pace of job growth (adjusting for benchmark revision) mostly unchanged over last year. Here's the unemployment rate. It is what most people were watching most closely because of difficulties measuring monthly jobs and knowing what numbers for them are hot or cold. It broke from four increases in a row to tick down as the surge in temporary layoffs receded a little.

Hopefully last words on capital gains taxes.

The platonic ideal in standard tax theory is:

1. Do not tax the normal return to capital, instead tax consumption.

2. IF you're taxing capital gains, better to tax a broader base & lower rate with more neutrality, so tax accruals. I come back to this below, the Platonic ideal may not be achievable in practice. And the "standard" theory may be wrong because it leaves out important considerations. But still, worth taking seriously.

Core CPI inflation (which excludes volatile food and energy) was moderate for the third straight month in a row in July. At an annual rate:

1 month: 2.0%
3 months: 1.6%
6 months: 2.8%
12 months: 3.2% Moreover, the relatively little core inflation we've had in the last three months was more than entirely shelter. If you take shelter out then the annual rates are:

1 month: -0.2%
3 months: -0.3%
6 months: 1.5%
12 months: 1.8%

The big news in this morning's job release is the unemployment rate up to 4.3% while job growth slows to 114K, wage growth slows and average weekly hours fall. The only contra-indicator was labor force participation up 0.1pp. The Sahm recession indicator has triggered. This is a variant of a rule Goldman Sachs economists developed--and was the basis for the fiscal stimulus calls that many of us were making in late 2007 and early 2008 when there was a similar run-up of unemployment.

The ratio of job openings to the unemployed fell further and is now *below* where it was pre-COVID.

Feb 2020: 1.22
Mar 2022: 2.01
May 2024: 1.24
June 2024: 1.20 At the same time openings are a little above pre-COVID and quits are a little below it.

Core PCE came in moderate for the month of June. Annual rates:

1 month: 2.2%
3 months: 2.3%
6 months: 3.4%
12 months: 2.6% Here are the full set of numbers I'll be discussing in this thread.

Surprisingly strong GDP growth in Q2: 2.8% annual rate. Volatile/transitory factors pushing in opposite directions so my preferred signal of Final sales to private domestic purchasers was an also strong 2.6% annual rate.

Overall GDP 1% above CBO's pre-pandemic forecast. Note the overperformance relative to CBO's pre-pandemic forecast is due to a combination of employment being well above expected while productivity has been a bit below expected.

https://x.com/jasonfurman/status/1809211801315230100

https://x.com/jasonfurman/status/1798824664824729886

The CPI-based Ecumenical Underlying Inflation measure came in at 2.5% in June.

This is the median of 21 different measures (7 concepts over 3, 6 and 12 months)--all remeaned to match the PCE targeted by the Fed. Note that core ex shelter is also below the Fed's 2% target on a 3, 6 and 12 month basis (a few other measures also below on the more volatile 3 month basis).

If you look at core PCE ex housing will still likely be above the 2% target. Plus the Fed includes housing.

Amazing inflation data for June!!!

A big slowdown in shelter growth meant that core was up only 0.1% (0.8% annual rate). That + transitory gasoline decline drove headline down 0.1% (0.7% annual rate).

Over the last 3 / 6 /12 months core has been:

1.1% / 3.3% / 3.3% No matter how you look at it inflation was basically non-existent during the month of June. Here are the full set of numbers.

The economy added 206K jobs in June, continuing at about the same pace it has all year.

The unemployment rate rose by 0.1pp but at the same time participation rose 0.1pp so the employment rate was unchanged.

Hourly earnings up 0.3%. The nerve wracking part of recent data is that the unemployment rate has been very slowly rising for a year now. The 4.1% by itself is perfectly fine, in fact low by historical standards. But whenever urate has risen a little it has risen a lot and tipping us into recession.

Job openings per unemployed worker remained at 1.2 for the second month in a row in May. That is what they were just prior to COVID. All five of the measures of labor market tightness I pay the most attention to are very close to their pre-COVID values (at most 0.7 standard deviations away).

PCE inflation came in even lower than you would have expected from the CPI/PPI earlier this month. Core PCE was up 0.08% and overall PCE actually fell 0.01%.

Core at an annual rate:

1 month: 1.0%
3 months: 2.7%
6 months: 3.2%
12 months: 2.6% Here are all the numbers I'll be discussing in this thread.