Claudia Sahm
@claudia-sahm
macro, fiscal, Fed. creator of the Sahm rule recession indicator. Stay-At-Home Macro (SAHM) Substack.
The two scenarios in the minutes also help us interpret the dot plot. Fed officials were divided in their outlook for inflation, not in how to react to inflation.
Pictures can help bring these scenarios to life. Here are my illustrations. The minutes speak in words, not numbers, so the specifics—the inflation measure, the size and timing of “some firming”—are my translation of the Fedspeak. (Explained in my post.)
My post unpacks a dense yet straightforward paragraph in minutes (below) into: Scenario A: Inflation improves soon, then hold rates and maybe eventually cut. Scenario B: Sticky inflation and a stable labor market, then some hikes.
You guessed it. Mission accomplished. (The 3 hundredths is a nice touch.)
Inbox on July 4th. 🇺🇸🎉❤️ Anybody wanna guess the inaugural reading?
This was another basic question about the *current* data—whether inflation is temporary. No answer.
At today's ECB panel, Warsh was all-in on saying nothing. Sara Eisen asks the bare minimum question for central bankers: Why are your rates where they are? Warsh says stuff, but not an answer. If we have to do filler for four years, I'd like to request recipe ideas or streaming suggestions.
Can anyone think of something that happened since January that might have made Waller more hawkish? WSJ Editorial Board seems to have missed it. www.wsj.com/opinion/kevi...
Yeah, @bhgreeley.bsky.social’s book *The Almighty Dollar* has arrived! You know I’m excited about a book when I preorder it twice!
#PuffiSays (very little) farm cousin … not sure of the right caption but she feels very 2026
Signs of stability came through loud and clear in today's report. A bit more wage growth would have been nice, but there are buffers, at least for now, for the energy price surge. www.bls.gov/news.release...
Some of its methodological. Their point prediction measure (which is closer to how Michigan asks the question) did move up. Their preferred measure tends to move more gradually.
Claude, help me design a campaign to get Powell to stay for his full Fed term until 2028. 👇
Fed Chair Powell is the only one with a net positive rating. www.washingtonpost.com/politics/202...
It's the challenges the Warsh Fed will face that matter now. What does maximum employment look like when labor supply is shrinking, and technology is reprogramming labor demand? We don’t know. And the man about to lead the Fed has shown very little interest in finding out.
It's not just about definitions. Warsh seemed puzzled by the Fed's 50 basis point rate cut in September 2024, called it "lurching" without rationale and inviting criticism as being political. But really, it's not that hard to follow *if* you take the dual mandate seriously.
Warsh has repeatedly derided the Fed's description in 2020 of maximum employment as a "broad-based and inclusive goal" as "redefining" the mandate and inviting inflation. No. It's not mission creep, it's the US labor market.
“the federal government is an insurance company with an army" … on the nose today.
Nice to be back at Denison this week. Giving a few talks and meeting with lots of students.
The CPI last year was based on fewer price quotes than during the pandemic! Responses rates declined last year and infuriatingly, the sample size was cut due to budget constraints.
Our grasp on reality is slipping. The response rate to the survey behind the unemployment rate (and the rest of the household survey) is now lower than during the pandemic. The decline in response rates during the first year of the Trump Admin 2.0 was larger than at any time outside the pandemic.