Rick Scott, the Florida Republican who’s leading the GOP’s charge to take over the upper house: “Even if it comes down a little bit, it’s still going to be bad.” Republicans are keenly aware of how difficult that will make things for their opponents in the midterms. What’s more, if those declines aren’t matched by similar downturns in “core inflation” - a gauge that measures prices without factoring in volatile food or energy costs – both the Fed and the economy will be in for a very challenging next several months.įinally, if a reduction in CPI matches the consensus expectation - economists forecast 8.7 percent, less than half-a-percentage point off the previous month’s 9.1 percent increase - that would still constitute a massive spike compared to where prices were last year. Zandi and other economists who spoke to Victoria Guida and me yesterday said it will be some time, perhaps in 2024, before the Fed sniffs its 2 percent target rate. ![]() If those factors translate into a meaningful decline in the CPI - the Fed’s preferred measure is the Personal Consumption Expenditures Index - expect President Joe Biden and Democrats to seize on the news as a sign that better, cheaper days are finally ahead.īut turning the corner on inflation is not the same as beating it back. is finally “turning the corner on inflation,” Moody’s Analytics Chief Economist Mark Zandi said in an interview on Tuesday. Consumers have told the New York Fed that they no longer expect inflation to be quite as bad as they did as recently as June. Home sales are on ice now that mortgage rates have started to ascend. New data produced by Adobe on Tuesday found evidence of deflation for the first time in more than two years on e-commerce hubs for electronics, apparel and other consumer goods. Gas and many commodities prices are continuing to fall. The question is, how big of a drop will we actually see? And will it be enough to relieve pressure on the Fed as it plots a course for additional rate increases that could push the economy into a recession?ĭata from both public and private sources released in the run-up to today's Consumer Price Index report for July offers faint but important glimmers of hope that the economy might not be running headlong into a period of declining growth and rapid inflation. ![]() Investors, consumers and economists generally expect inflation to decelerate after the Federal Reserve raised its benchmark rate by 75 basis points in consecutive months earlier this summer - marking one of the most aggressive pivots in the central bank’s history. The POLITICO Pro platform combines the news you need with tools you can use to take action on the day’s biggest stories. By SAM SUTTON, ELEANOR MUELLER and AUBREE ELIZA WEAVERĮditor’s note: Morning Money is a free version of POLITICO Pro Financial Services morning newsletter, which is delivered to our subscribers each morning at 5:15 a.m.
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