Another Key Inflation Measure Hits Highest Mark Since 1982

Again, the highest level since the very, very bad year of 1982, when Paul Volker (IIRC -- might be way wrong) jacked up interest rates into the double digits (IIRC) to wring Jimmy Carter's inflation out of the economy.

It worked -- by 1984, the economy was soaring.

But 1982 was miserable.

And I don't think Brandon is working on some clever plan to get rid of the inflation in a year.

So here we are again.

Let's go Brandon.

Annual inflation is running at the hottest pace in nearly four decades as widespread supply disruptions, extraordinarily high consumer demand and worker shortages fuel rapidly rising price increases.

Prices soared by 5.7% in the year through November, according to the Personal Consumption Expenditures price index data released Thursday morning. That topped the previous month's rate of 5%, becoming the fastest pace increase since February 1982, when the gauge hit 6.17%.

...

In the one-month period between October and November, prices jumped 0.6% (0.5% when excluding food and energy costs).

More from the NYT. This is the Fed's "preferred" measure of inflation.

Federal Reserve policymakers are finishing a year that has been colored by surprisingly high inflation with yet another piece of bad news: The price measure they follow most closely last month touched its highest level since 1982.

The Personal Consumption Expenditures price index, which is the one the Fed officially targets when it aims for 2 percent annual inflation on average over time, climbed 5.7 percent in November from a year earlier.

Part of the jump owed to gasoline prices -- they were up sharply in November but have moderated this month -- but a so-called "core" index that strips out food and fuel prices also increased sharply, to 4.7 percent.

Rapidly rising prices are lasting longer than policymakers had hoped and have become broader in recent months, and the new data point reconfirms the pop that a more timely and related measure -- the Consumer Price Index -- had previously shown. Earlier this year, big price increases were largely reserved to goods that were in short supply as demand surged and as overtaxed shipping lines struggled to keep up. More recently, they have spread into categories like rent -- which can be more long-lasting.

Fed officials are tasked with keeping inflation moderate and setting the stage for full employment, and they have grown increasingly worried about the surge in prices. This month they pivoted on policy, speeding up their plans to cut back on economic support and preparing to raise interest rates early next year if necessary. Higher interest rates can weaken down demand for everything from homes to cars, helping to slow down the economy and restrain inflation.

And indeed, consumer spending is slowing down:

Consumer spending rose more slowly in November, raising risks of a broader economic slowdown amid the latest wave of Covid-19 cases.

U.S. consumer spending rose 0.6% last month, after climbing 1.4% in October, the Commerce Department reported Thursday. Holiday shoppers snatched up gifts earlier than usual this year in anticipation of product shortages, helping to boost spending in October while contributing to a November sales slowdown, economists say.

Soaring inflation, stagnating economic activity -- stagflation, here we come.

But inflation is a Good Thing, you guys. All this means is that Karen's Peloton is being delivered late or something.

Let's Go Brandon song.

posted by Ace at 12:16 PM

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