Does the Fed’s New Inflation Favorite Undercut the Case for Easing?
The Fed has a new favorite inflation gauge, the Dallas Fed trimmed-mean PCE deflator, a remarkable feat of economic engineering designed to help determine where inflation is more than where it is going. Given the difficulty all economists have in forecasting inflation these days, this is no small thing, because knowing whether a downward lurch in inflation, like the one this year, is real is critical. This week, we look at the index and ask, is it really better than the PCE ex-food and energy? The answer, perhaps not surprisingly, is complicated.Plus "The Week Ahead," a preview of next week’s potentially market-moving events.