In retrospect the inflation freakout yesterday seems like it may not have been necessary. Analysts now see another moderation in the Fed's preferred core PCE inflation gauge after the release of data on producer prices this morning (bloomberg.com/news/articles/…)

Another way of seeing the extent to which rent is skewing the CPI: Cleveland Fed's median CPI rose 4.6% over the last 12 months. Modifying it to ignore component weights in selecting the median item (which effectively de-emphasizes the heaviest-weighted rent items), it rose 2.9%

'Right now core PCE is on track to run at a 2.75% year-over-year pace as of March, 75 basis points above the Fed's 2% inflation target for PCE ... Rent is contributing 42 basis points to the 75 basis point core PCE overshoot'—Skanda Amarnath on today's inflation data

Whether the impact of generative AI will ever show up in the productivity data is unclear, but it certainly seems as though it's already boosting inflation bloomberg.com/news/articles/…

Construction share of total U.S. employment is at boom-times levels, higher than any point between 1975 and 2002

The trend of wage compression spurred by the pandemic (but also in train before that) appears to have been definitively arrested over the last year or so

Powell reframes signs of tight labor markets as evidence of room for more non-inflationary growth: 'There may be more supply-side gains to be had. Surveys of businesses still show difficulties in hiring people, difficulties in getting the inputs they need' bloomberg.com/news/articles/…

The incredible run for U.S. corporate profits continues: Margins for nonfinancial firms widened again in the fourth quarter, remaining well above 1951-2019 levels (bloomberg.com/news/articles/…)

The Fed is making the last mile harder than it needs to be bloomberg.com/news/articles/…

High interest rates apparently not very romantic (bloomberg.com/news/articles/…)

Taylor rule model says the Fed’s benchmark interest rate is more than a percentage point too high after today’s inflation data

Who are these warnings directed at?

Forecasters marked up the outlook for US GDP growth in 2024 to 2.1% in the latest monthly Bloomberg survey, from 1.5% last month, on strength in consumer and government spending bloomberg.com/news/articles/…

Added Omair Sharif comments: (1) PPI data out Friday could show a big jump in the portfolio management component, reflecting the recent market rally; (2) that could give January core PCE a big boost; (3) after that, core PCE is on track to hit 2% year over year by May or June

Many of the sources of surprising strength in the CPI numbers today probably won't be reflected in the Fed's preferred PCE gauge. Morgan Stanley's estimate for the latter post-CPI implies 3m annualized core PCE of 2.1% in January, and 6m annualized at 2.2% bloomberg.com/news/articles/…

The last time this many economists were describing Fed policy as 'too restrictive' it was 2010, shortly before the central bank announced QE2 (bloomberg.com/news/articles/…)

'On the inflation side, the Fed is running out of reasons not to cut. If concerned about growth, it speaks to a renewed belief in the Phillips Curve, which most economists view as having been flat for about 25+ years'—karim basta on today's CPI revisions (bloomberg.com/news/articles/…)

“The prospect of a strong economy galvanizing voters to believe that it’s morning again in America … hasn’t materialized yet. But Trump perceives enough of a threat that he’s begun predicting a crash and criticizing Powell”—Joshua Green (JoshuaGreen.bsky.social on 🟦) on Biden vs Reagan bloomberg.com/news/newslette…