Daily update
Daily update
- At the risk of tempting fate, financial markets seem to have got the past week’s hysteria out of their systems and are prepared to go back to looking to economists for guidance. Unfortunately, there is relatively little economic news today—although inflation data is likely to be significant this week.
- The US and the UK both release consumer price inflation figures on Wednesday. The US data will overstate the inflation experience of middle-income consumers because of the fantasy of OER. Middle-income consumers’ better spending power is a reason to be wary of too much pessimism on the economic outlook.
- US Vice-President Harris has said she would not interfere in the independence of monetary policy— a response to contrary suggestions from former US President Trump. Markets have not priced in any threat to US central bank independence, seeming to regard this as campaign rhetoric rather than a serious risk.
- The New York Fed survey of inflation expectations is due and should not be taken seriously. Registered Republicans will declare inflation is mimicking that of Weimar Germany. Registered Democrats will deny inflation exists. Frequency bias and loss aversion will distort the data. Inflation expectations only matter if consumers change behavior in consequence (which they are not doing).
