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06/23/2014 | | CPI, Economic forecasting, Eisenberg and housing economics, Eisenberg and public speaking, Elliot eisenberg, Graphsandlaughs, MLS, Multiple listing service, PCE, Public speaking economist, econ70, economist on TV, economist on radio, eisenberg and economics, funniest economist, funny housing economist, graphsandlaughs and eisenberg, housing sales, mortgage banking, politics and economics, 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.