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The expectations game, and forecasts of a little light fascism on the horizon

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Check out the lede to the NYT story on the new CPI number:

A closely watched measure of inflation remained stronger than expected in March, worrying news for Federal Reserve officials who have become increasingly concerned that their progress on lowering prices increases might be stalling.

The surprisingly stubborn inflation reading could raise doubts about when the Fed will be able to start cutting interest rates, and how much they will be able to reduce borrowing costs this year.

The Consumer Price Index climbed 3.8 percent on an annual basis after stripping out food and fuel prices, which economists do in order to get a better sense of the underlying inflation trend. That “core” index was stronger than the 3.7 percent increase economists expected, and unchanged from 3.8 percent in February. The monthly reading was also stronger than what economists had forecast.

OK we have at least a few professional economists here at LGM, and I have some questions:

(1) What’s the confidence interval for a statement like “core inflation was up 3.8% in March, year over year?” I mean I assume there’s some uncertainty in the measurement here? What’s the probability that the actual number was, say, 3.7% or lower? Significant? Because if so, then this next statement . . .

(2) “That ‘core index’ was stronger than the 3.7 percent increase economists expected, and unchanged from 3.8 percent in February,” is very problematic for at least a couple of reasons. First, if there’s a good chance that the number “economists expected” was the actual number, then there isn’t even a story here. But beyond that, who exactly are these economists who are doing the expecting? I assume there isn’t some Monthly Convocation of the Grand Imperial Order of Economists that issues formal decrees on what The Official Expectation of the Ancient and Sacred Order actually is, right? I’m assuming if last week you had asked a bunch of economists about what they expected core inflation to be year over year in March of 2024 in the USA you would get a bunch of answers, and that at best 3.7% (which for you lawyers out there is exactly one tenth of one percent less than 3.8%) would be some sort of median or average or mode or some goddamned statistical thing, as opposed to a new law of thermodynamics.

You see where I’m going with this, which is that this whole narrative about what’s happening with inflation, and what it means or should mean to the Fed in regard to interest rates, is based on what by the skin of my yellow country teeth looks like statistical vaporware, or magical journalistic framing incantations, or what have you.

So I have questions. Please discuss, before we all go to hell any faster than we are currently going.

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