“Sometimes the lights all shining on me. Other times I can barely see.”
- Trucking, by the Grateful Dead
Federal Reserve Chairman Jerome Powell told us in 2021 that we needn’t worry about inflation. It was “transitory.”
“An episode of one-time price increases as the economy reopens is not likely to lead to persistent year-over-year inflation into the future,” he said then, blaming supply chain bottlenecks and other pandemic-era issues for shocking price spikes.
This week, a new snapshot of the economy piles onto the painful yet long-obvious reality that Powell was wrong, and may continue to be wrong, about the economy.
Inflation surges
The core Personal Consumption Expenditures index – the Fed’s favorite inflation gauge – rose at an annualized pace of 3.7% in the first quarter. That’s far better than the 7% mark it eclipsed in July 2022, but still well above the Fed’s 2% goal. (More detailed PCE data from the Commerce Department is due out today.)
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