Momentary (Eckhout, 2023) PCE and CPI inflation.
figure 1: Instantaneous PCE deflator inflation (blue), core PCE deflator (tan), per Eckhout, T=12, a=4 (bold red). The dashed red line at 2% inflation. Recession peak-to-trough dates as defined by NBER are grayed out. Source: BEA via FRED and author’s calculations.
figure 2: Instantaneous CPI deflator inflation (blue), core CPI deflator (tan), per Eckhout, T=12, a=4 (bold red). The dashed red line represents an inflation rate of 2.46%, consistent with a PCE inflation rate of 2% over the period 1986-2023. Recession peak-to-trough dates as defined by NBER are grayed out. Source: BLS via FRED and author’s calculations.
Note that if we take Jason Furman’s proposal to 3% target, we are already below the target (2.5%). By the way, 3% is still less than 4% Blanchard Consider ten years ago.
