Alternative Approaches
06/23/2014 | | CPI, econ70, Economic forecasting, economist on radio, economist on TV, eisenberg and economics, Eisenberg and housing economics, Eisenberg and public speaking, Elliot eisenberg, funniest economist, funny housing economist, Graphsandlaughs, graphsandlaughs and eisenberg, housing sales, MLS, mortgage banking, Multiple listing service, PCE, politics and economics, Public speaking economist, www.econ70.com
Inflation as measured by the CPI is 2.1%, as measured by personal consumption expenditures (PCE) is 1.6%, below the Fed’s 2% target. Importantly, the Fed uses the PCE to monitor inflation. Historically, the PCE is 0.5% lower than the CPI, as is the case now. The reason; the PCE accounts for changes in consumer buying habits as prices change, and it covers more than just out-of-pocket spending, like medical care.