Inflation: The Good, The Bad, and The Transitory

Summary

Three Scenarios

The Committee …expects it will be appropriate to maintain this target range until labor market conditions have reached levels consistent with the Committee’s assessments of maximum employment and inflation has risen to 2 percent and is on track to moderately exceed 2 percent for some time.

Source: Bloomberg
Source: Bloomberg
Source: Bloomberg
Source: Bureau of Economic Analysis (BEA)

Scenario 1: Neither Transitory nor Persistent Inflation

Source: Institute For Supply Management (ISM), Bloomberg

Scenario 2: Transitory Inflation, No Persistent Inflation

Source: Federal Reserve Bank of New York (FRBNY) (Abel, Deitz)
Source: BEA
Source: BEA (Underlying Table 2.4.5U), Author’s Calculations. Composed of 205 Subcategories. Includes: gasoline and other motor fuel, segments of transportation services, segments of recreation services, segments food services, lodging/accommodation, segments of personal services.
Note: The PCE deflator for airfares uses PPI source data (results are nevertheless similar). Source: Bureau of Labor Statistics (BLS)
Source: Bloomberg
Source: BLS
Source: Bloomberg
Source: Bloomberg
Source: BEA, BLS

Scenario 3: Persistent Inflation

Source: BLS
Source: BEA, BLS
Source: OECD
Source: BLS
Source: BLS, Federal Open Market Committee, Federal Reserve Board of Governors

Conclusion

--

--

Get the Medium app

A button that says 'Download on the App Store', and if clicked it will lead you to the iOS App store
A button that says 'Get it on, Google Play', and if clicked it will lead you to the Google Play store