Publications

The overall Consumer Price Index (CPI) was up 0.5 percent in December, and the core up 0.6 percent. Year-over-year, the overall CPI is up 7.0 percent, core 5.5 percent.

Rental inflation has also been accelerating. This has a huge weight in the CPI, so it’s a big deal. It will be interesting to see if this pattern continues.

The 3.9 percent December unemployment rate is better than all but five months in the 1990s boom.

There is much good news in the labor market, which is likely to continue with the December jobs report. But, we are still not over the pandemic, nor its influence on the labor market. 

Overall, reopening issues are still a big factor in inflation. Energy prices in the CPI are lagging world prices, and are almost certain to be sharply negative (lowering inflation) in December.

The argument that the rise in the inflation rate we have seen this year will be transitory depends largely on the belief that the price increases in cars and many other durable goods will be reversed in the months ahead.

The rise in the index of aggregate hours would be equivalent to more than 630,000 jobs with no changes in workweeks.

We still have a large amount of sorting taking place as workers switch jobs and employers compete to find workers. This is largely a positive picture for workers, but this sorting process will likely continue well into 2022.

The big increases here will be reversed, as is the case now with televisions. There are no grounds for slamming on the brakes at the Fed.

Thus far, inflation in the rent components has been relatively restrained, although that may be changing as rents begin to follow house sales prices upwards.