Inflation numbers

Posted by: Paul Donovan

13 Feb 2020
  • The US offers consumer price inflation numbers. There is evidence of some price pressures in the details. However, around half of CPI is either fictitious prices (which no one really pays), regulated prices, or unrepresentative prices. Add in inflation inequality, and inflation reality for most Americans may be different from the reported number.
  • Final German consumer price data will not excite much attention. French unemployment has some relevance given labor market protests, but is not timely enough for most investors.
  • The agenda is packed with at least central bank speakers. In the golden era of the past, when economists ran central banks, markets could focus on the Fed chair or the ECB president and ignore the rest as noise. That is no longer true. ECB Chief Economist Lane should be listened to with the respect all chief economists deserve. Fed President Williams is also worth hearing.
  • China changed the method of counting virus cases, increasing reported numbers. Reporting reality more accurately only matters economically if it changes fear levels. The politburo aims to meet this year's growth targets, implying policy stimulus. A global communications conference has been cancelled – it is not clear whether cancelling conferences is good or bad for economic activity.

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