Chair Powell shared cloudy comments about the US labor market in Philadelphia. According to Michael McKee of Bloomberg, Mr. Powell gave “his version of the Hippocratic Oath,” regarding the upcoming rate cut, highlighted uncertainties in the labor market, and discussed the lack of data due to the government shutdown. Link to video- https://youtu.be/Krvi7vDWDMo?si=p2mjSdv4Bxhnpt9t&t=1535. The word “data-dependent” gets thrown around in the world of investing, finance and economics semantics consistently. While the word data is self-explanatory, as an adjective the word dependent means contingent on or determined by. A continued government shutdown will create a lag in data and depending on one’s tribe affiliation, the pungency of Chair Powell’s reaction function will be different. In this contemporaneous moment, the lack of government data supporting FOMC’s decision will be alarming. However, if we pull forward further along the x-axis, this cloudy period can just be a rounding error.
Category Archives: Macroeconomy
Notes on June 2025 CPI Print
Headline YoY CPI for June 2025 was 2.7% compared to 2.9%, 0.7% and 0.2%, a year, five, and ten years ago, respectively. Taking a different perspective, the Median CPI and Sticky CPI measures provided by the Federal Reserve of Cleveland and Atlanta, respectively, suggest YoY readings of 3.6% and 3.3%. The Median CPI published by the Cleveland Fed excludes “all price changes except for the one in the center of the distribution of price changes, where the price changes are ranked from lowest to highest.” The Sticky CPI from the Atlanta Fed breaks down the various components of the Consumer Price Index into sticky and flexible categories, whereby the Sticky CPI index only includes “price changes for a particular CPI component occur less often, on average, than every 4.3 months.” By comparing the larger dataset against a refined one, it allows for the removal of noisy data points. In general, the Median and Sticky CPI suggest a certain inelasticity in prices.