John T Chang’s Post

I saw that the FRB of NY released its inflation expectations survey for the next 12 months today. The University of Michigan also does an inflation expectations survey for the next 12 months. I thought it would be interesting to compare these inflation surveys to the actual inflation over the 1 year forecast horizon. To do this, I plotted the inflation surveys with a 1 year lead such that the forecasts line up with the actuals in the lower panel. The first thing that pops out to me is that both surveys tend to over-estimate inflation by around 1% in the longer term. The second thing is that the surveys are really bad at identifying inflation inflection points. See that the YoY inflation growth rate in June 2009 was -2%-ish CPI and 1.5%-ish core CPI. These were a large departure from Michigan's survey of 5%. More recently, in February of 2022, CPI was at 8%-ish and core CPI was at 6.5%-ish. In contrast, both the Michigan and FRB survey showed an expectation of around 3%. I think this is a good relationship to keep in mind when interpreting these inflation expectation numbers. They have a much stronger relationship with what has happened in the past 12 months than what will happen in the next 12 months. #macrobond

Today’s NY Fed’s Survey of Consumer Expectations revealed that inflation expectations were flat for the next 12 months, but rose 0.3% to 2.7% for the three-year time horizon and increased 0.4% to 2.9% for the next five years.     The CPI report showed headline CPI rose 0.44% for the month (5.30% annualized) with the trailing 3-month average up to 3.93% annualized. While Core CPI fell from 0.39% to 0.36% for the month (it is still at 4.3% annualized) there were some disturbing underlying components. Shelter decelerated 20 bps to 0.43% but remained above 5% annualized on a T1, T3 and T6 basis. Both Owner’s Equivalent Rent and Rent of Primary Residence were near or above 5% annualized on a T1, T3 and T6 basis.    Of greater concern was the Bloomberg Super Core Services index, which is a popular indication of labor inflation. That index fell back from a two-year high in January (10.2% annualized) but only to 5.6% - higher than October, November and December. These are all strong indications that the Fed may be slower to react than the market expects….Try to enjoy the read!  Read the full article here: https://lnkd.in/gsMK44MR Ramsey Daya, Chris Moritz, Joshua Braceros, Meghan Walsh Varga, Lillian Aceituno, Alec Newman, Garrett Swanky, John Kelley, Caitlin Barrett, Travis Bailey #newmark  #multifamily  #multifamilyrealestate  #commercialrealestate #capitalmarkets  #realestate  #cre

ATTENTION: Those that like to eat crow. 🍽 October CPI Print: https://lnkd.in/g4A2n-HW "The Consumer Price Index for All Urban Consumers (CPI-U) was unchanged in October on a seasonally adjusted basis, after increasing 0.4 percent in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.2 percent before seasonal adjustment." Chairman Powell be like. 😎 😉 Buckle-up, buttercup. #financeandeconomy #cpi #inflation #dontfightthefed #correction #economictrends #economicoutlook #interestrates #consumerspending #marketcommentary #commerciallending #mortgagerates

Headline inflation ticked up to 3.4 percent over the year ended December 2023, as both energy and shelter costs accelerated during the month. While this higher reading appears to complicate the Federal Reserve's stance on monetary policy in 2024, market probabilities for a rate cut in March actually grew over 500 basis points, to about 70 percent shortly after the CPI data release. The continued cooling of core inflation, which ticked down to 3.9 percent in the 12 months ended December, is signaling that most consumer prices — aside from food and energy — remain on a steady downward path from their highs noted in June 2022.25 years, excluding 2020 and 2021. Even so, it was 11,000 below the average since 2000. To read the Inflation Research Brief by Marcus and Millichap in its entirety, click here: https://buff.ly/48DGyAf. #themcdanielteam #marcusmillichap #northcarolina #charleston #southcarolina #raleigh #charlotte #thecarolinas #triadarea #commercialrealestate #inflation #federalreserve #CPI #consumerprices #apartmentdemand #affordablehousing

Headline inflation ticked up to 3.4 percent over the year ended December 2023, as both energy and shelter costs accelerated during the month. While this higher reading appears to complicate the Federal Reserve's stance on monetary policy in 2024, market probabilities for a rate cut in March actually grew over 500 basis points, to about 70 percent shortly after the CPI data release. The continued cooling of core inflation, which ticked down to 3.9 percent in the 12 months ended December, is signaling that most consumer prices — aside from food and energy — remain on a steady downward path from their highs noted in June 2022.25 years, excluding 2020 and 2021. Even so, it was 11,000 below the average since 2000. To read the Inflation Research Brief by Marcus and Millichap in its entirety, click here: https://buff.ly/48DGyAf. #thekinggroup #marcusmillichap #california #longbeach #realestateinvesting #CRE #multifamily #realestateinvestor #commercialrealestate #inflation #federalreserve #CPI #consumerprices #apartmentdemand #affordablehousing

The Fed is powerless to do anything about rising inflation. It can’t even pretend to address inflation with a series of small rate hikes to at least give the illusion of an engaged Fed attempting to corral inflation. Get used to the higher inflation rate. It is quickly becoming the “new normal”, and at present there is little the Fed can do to change that. #CPI #inflation #FederalReserve #economy #BLS

I Told You So Inflation rose in March. That’s the bad news. Oil is surpassing its 2023 peaks and shows every indication of moving north of $100/bbl. That’s the even worse news. But the worst news coming out out of the CPI report is that the Fed has no tools left to use to tame this resurgent inflation. Yes, the Fed could try raising the federal funds rate drastically, but the punitive rate hikes that the Fed would have to utilize would almost certainly trigger another banking and liquidity crisis. https://lnkd.in/gBamtp52 #CPI #inflation #FederalReserve #economy #BLS

📊 Here’s the inflation breakdown for August 2023: ⬆️ The August 2023 consumer price index rose 3.7% on an annual basis, according to the U.S. Bureau of Labor Statistics. ⛽️ Gasoline prices spiked in August, contributing to the increase, but economists believe it's likely temporary. 🏷️ Inflation measures how quickly prices are rising across the U.S. economy. Gasoline prices jumped 10.6% in August alone, accounting for over half of the increase. 🏡 Housing was the largest contributor to the rise in core CPI in August. 🍎Groceries have been a bright spot for consumers, with easing price pressures. Inflation during the pandemic era has been a complicated phenomenon, influenced by multiple factors. Inflationary pressures occur when there's an imbalance between supply and demand. We've come a long way in getting back to normal, but there's still progress to be made. How has inflation affected you and your family? #InflationBreakdown #ConsumerPriceIndex #GasolinePrices #Housing #Groceries #SupplyAndDemand #GettingBackToNormal #retirement #family #money #lifeinsurance #investing #retirementplanning #entrepreneur #insurance #financialfreedom #wealth #graduation #finance #business #goals #travel #wedding #investment #community #financialplanning #financialeducation #investments --- Source: https://lnkd.in/gzNB3yUY

Chart from the February Survey of Consumer Expectations from the Federal Reserve Bank of New York showing that Median inflation expectations remained unchanged at 3.0 percent at the one-year horizon while increasing to 2.7 percent from 2.4 percent at the three-year ahead horizon and increasing to 2.9 percent from 2.5 percent at the five-year ahead horizon. The Fed likes to see consumer inflation expectations anchored near its 2% target over the long term even though consumer expectations of inflation tend to not be very accurate over time. This is the lead into the February CPI report tomorrow. The expectations are for overall inflation to rise 3.1% from a year ago with Core CPI coming in at 3.7%. Inflation has continued to slowly move lower and if you look at the metric ex-shelter, which feeds through official metrics of inflation with a lag, inflation is below the 2% Fed target based on the previous months reading. #inflation #inflationexpectation #shelter

 Wholesale prices rose more than expected in April. The Producer Price Index (PPI) increased 0.5%, surpassing the 0.3% estimate. Core PPI, excluding food and energy, also rose 0.5%. - Services prices drove the inflation, rising 0.6%, while goods prices increased by 0.4%. The increase in energy prices, including a 5.4% surge in gasoline prices, drove the rise in goods prices. - The PPI increase could impact interest rate decisions in the near future. #inflation #ppi #monetarypolicy #interestrates #economicdata