from The Hill
Do Voters Focus On Prices or Inflation?
by Scott Sumner
Econlib
In my previous post, I expressed concern that the Fed may be planning to move policy even further away from a “level targeting” approach. One criticism of symmetrical level targeting is that it might be politically unpopular to bring prices down at a time when inflation has overshot the central bank’s target path. A recent article in the Financial Times suggests that the exact opposite may be true:
Many big central banks have implicitly returned to setting monetary policy with reference to Taylor Rule models, where interest rates are anchored around how far the economy is from the inflation target, and the degree of slack in the economy. However, these elections suggest that voters would prefer more price-level stability, over low inflation rates, or full employment.
If that’s the case, then central banks might want to revisit an alternative policy framework; the idea of price-level targeting, as proposed by Professor Michael Woodford of Columbia University. In this framework, policy targets a constant rise in the level of prices over time, so that if prices rise above that rate, policy has to respond sufficiently to reverse any price level divergence. This contrasts with the current framework, which can celebrate a return to 2 per cent inflation, even though the target has been missed for multiple years, and has left households with major losses in real purchasing power. By encouraging early action to limit the initial divergence from the desired price levels, this framework can, theoretically, deliver gains for consumers.
We need to be careful in interpreting election results. If we did see a return to high unemployment, then voters might start caring more about unemployment than high prices. But I don’t see a tradeoff here. A policy of NGDP level targeting, or even a true “flexible average inflation targeting” policy (not the policy adopted by the Fed) would deliver both more stable prices and more stable employment in the long run. In the end, it is economic success that is politically popular.
Fed’s Key Inflation Measure Likely Stayed Above-Target in October
Inflation as measured by Personal Consumption Expenditures likely reaccelerated in October, according to forecasts of the report due Wednesday.
by Diccon Hyatt
Investopedia
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The Federal Reserve’s preferred measure of inflation likely stayed too hot for comfort in October, though possibly not hot enough to derail the central bank’s expected move to cut interest rates again in December, according to forecasts.
Forecasters expect a Bureau of Economic Analysis report Wednesday to show the cost of living as measured by Personal Consumption Expenditures rose 2.3% in October over 12 months, according to a survey of economists by Dow Jones Newswires and The Wall Street Journal. That would be up from a 2.1% annual increase in September.
If forecasts prove accurate, the uptick would mirror a separate inflation measure, the Consumer Price Index, which also showed inflation rising in October on a year-over-year basis.
Survey: Most Say Ending Inflation and Price Increases the ‘Greatest Hope’ for Trump Administration
by Hannah Knudsen
Breitbart.com
Ending inflation and price increases is the “greatest hope” people have for the incoming Trump administration, according to the latest survey by the Harris Poll and HarrisX.
The survey asked respondents, “What are your greatest hopes for the newly elected Trump administration?”
WATCH — More Inflation Coming? Mitch Doesn’t Rule Out Omnibus Spending Bill at the End of the Year:
[…] One issue emerged above all others: Most, 68 percent, identified ending inflation and price increases as their greatest hope for President-elect Trump and his incoming administration. There is bipartisan consensus on that as well, as 81 percent of Republicans, 68 percent of independents, and 57 percent of Democrats also identify it as a top hope for the incoming administration.
Joe Biden Added $1 Trillion to the National Debt in Just 118 Days
by James Hickman
Schiff Sovereign
Andrew Jackson was never supposed to be President.
When he entered the presidential race in 1828, most of the ‘experts’ viewed him as a joke candidate with no chance of victory. Party insiders assumed that, at most, Jackson might steal a few votes from opposition candidates… but that he was no real threat.
Instead, Andrew Jackson caught fire. He was the ultimate outsider with very little experience in Washington (he had briefly served as US Senator from Tennessee for just six months), and he spoke bluntly about the problems affecting everyday Americans.
And when he unexpectedly won the election and became the country’s 7th President, Jackson’s first order of business was to clean house. He announced in his inaugural address that he would remove incompetent bureaucrats from office, and he immediately launched an investigation into all departments to root out corruption.
Trump’s Treasury Pick is Scott Bessent. He’s Said It’s Absurd to Fear ‘Trump-Flation.’
Hedge-fund manager Bessent was among a flurry of cabinet selections announced by Trump late Friday
by Victor Reklaitis and Robert Schroeder
Market Watch
Bessent, who for months has been viewed as a likely choice for the Treasury post, has called for a second Trump presidency to focus on deregulation, increased energy production and a lower federal deficit. He also has defended the president-elect’s economic policies from the charge that they would boost inflation, telling MarketWatch in July that it was “absurd” to think they’d be inflationary.
Three Unusual Inflation Hedges
by Adam Sharp
Daily Reckoning
As we float in the trough following the first wave of inflation, bracing for the next, it seems an excellent time to review a few alternative inflation hedges.
Today we’ll examine the benefits of owning firearms, farmland, and fixed-rate mortgages during inflationary periods. Let’s get started.
Inflation Hedge No. 1: Firearms
I’ve honed my “firearms as a hedge” pitch to perfection. I’ve found that it works fairly well on skeptical wives when one needs to justify certain purchases.
But it’s also real. High-quality firearms tend to hold their value remarkably over time. As long as they are properly stored and maintained, firearms tend to keep pace with inflation.
Egg Shortage and Price Increase Hit U.S. Amid Holiday Season
by Amy Furr
Breitbart.com
Americans may find it hard to get eggs this holiday season because of bird flu outbreaks and the economy.
There has been a shortage of eggs in some stores across the nation, CBS News reported on Friday, noting the businesses in states that require eggs from cage-free hens have been affected by Highly Pathogenic Avian Influenza (HPAI).
“More than 40% of the nation’s roughly 300 million egg-laying hens are raised in cage-free facilities, but roughly 60% of ‘bird flu’ cases recently detected involved cage-free farms,” the report continued. There have been outbreaks recently in Utah, Oregon, California, and Washington, per Emily Metz, who is the chief executive and president of the American Egg Board.
She added that the reports of shortages are coming from grocery stores such as Whole Foods and Trader Joe’s. Meanwhile, shortages related to the virus have caused egg prices to rise, and experts predict the cost may remain high into 2025.
Does Government Spending Cause Inflation, and Did Biden-Harris Make it Worse?
by Daniel de Visé
USA Today
Prices rose 2.6% between October 2023 and the same month in 2024, an unremarkable figure.
Yet, inflation seems to be on everyone’s minds.
This month, higher prices helped deliver the presidency from the Democrats to Donald Trump. A CBS News Election Day poll showed three-quarters of voters considered inflation a hardship.
“I think that cumulative inflation is the main reason people were annoyed, going into this election,” said?Ryan Bourne, an economist at the Cato Institute, a libertarian think tank.
The emphasis here is on “cumulative.” Inflation has eased, but prices are likely higher for good: about 21.4% higher since February 2020, according to an?analysis?by the personal finance site Bankrate.??
Fed’s Barkin Says U.S. is Vulnerable to Inflation Shocks, FT Reports
by Reuters
Yahoo! Finance
(Reuters) – The US is more vulnerable to inflationary shocks than in the past, Federal Reserve Bank of Richmond President Tom Barkin said in an interview with the Financial Times published on Thursday.
[…] Barkin said he expected inflation to continue dropping across the US while cautioning that businesses were passing on costs to consumers more readily than in the past.
“We’re somewhat more vulnerable to cost shocks on the inflation side, whether they be wage-[related] or otherwise, than we might have been five years ago,” Barkin told the FT.
Oh… Canada: Liberals Wanted to Rename Inflation to ‘Heat-Flation’ to Show Effects of Climate Change On Prices
from Western Standard
In an attempt to link rising living costs with climate change, the Canadian government explored renaming inflation as “heat-flation,” documents reveal.
Blacklock’s Reporter said focus groups rejected the idea, showing little support for the term.
A report from the Privy Council Office dated April 24 indicated that in-house research was conducted on the concepts of “climate-flation” and “heat-flation” to see if Canadians would connect with the terms.
According to the report, Continuous Qualitative Data Collection Of Canadians’ Views, none of the participants had previously heard of the phrases.