U.S. inflation dropping to a 3% range by end of 2023 is already 'baked in' the data, Adam Posen says - MarketWatch

  

Category:  News & Politics

Via:  jbb  •  one month ago  •  56 comments

By:   Greg Robb (MarketWatch)

U.S. inflation dropping to a 3% range by end of 2023 is already 'baked in' the data, Adam Posen says - MarketWatch
U.S. core inflation will have a "3-handle" and will be trending down in December 2023, said Adam Posen, the former Bank of England official on Tuesday.

S E E D E D   C O N T E N T



Published: Dec. 27, 2022 at 2:54 p.m. ET By

Greg Robb


Former Bank of England official says key unknowns are how high interest rates will go above 5.25% to get inflation all the way back to Fed's 2% target


im-693027?width=700&height=466

Federal Reserve Board Chairman Jerome Powell speaks at a news conference earlier this month.


Nicholas Kamm /AFP/Getty Images

"'Getting from the high inflation where we are now towards 3[%] is baked in.' "

— Adam Posen, president of the Peterson Institute for International Economics

The inflation outlook will look a lot different in 12 months, according to Adam Posen, the former Bank of England official who now runs the Peterson Institute for International Economics.

In an interview with Bloomberg Television, Posen said that one year from now inflation is going to have a "three handle and will be trending down." This decline is "pretty much baked in," he added.

In November, the core rate of the Fed's favorite inflation measure, the personal consumption expenditure index, was up at a 4.7% rate.

Posen said the key question for the outlook was how fast inflation might go down from around 3.3% at the end of next year to the Fed's 2% inflation target. And the related question was how high the Fed would need to raise its benchmark interest rate above the high end of the range reading of 5.25% that he expects in February to get it there.

Inflation is already trending lower due to improvements in the supply chain, Posen said. Some more improvement should come from falling rents.

So most of the future improvement in inflation in 2023 will come from Fed tightening, he said.

What's keeping inflation high? Wages are rising at a pace that is out of step with low and declining productivity growth, he said. This is true despite the fact that workers are are still not seeing much benefit from higher wages due to inflation.

There are also mismatches with the right workers for the job openings, he said.

Higher immigration is the "simplist, fastest, cleanist, most beneficial answer" to this problem, Posen said.

Read: 'We need more people,' says Fed's Powell

"I wish there were people in the cabinet and within President Biden's hearing who would stand up for immigration," he said.


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JBB
Professor Principal
1  seeder  JBB    one month ago

Happy New Year!

 
 
 
Drinker of the Wry
Sophomore Principal
2  Drinker of the Wry    one month ago

Hope that this prediction is based on different models than those used to previously predict last year’s transitory inflation.

 
 
 
Sparty On
Professor Principal
2.1  Sparty On  replied to  Drinker of the Wry @2    one month ago

Lol ..... our friends on the left are mining furiously for news that somehow justifies the abysmal job they’ve been doing on the economy.    It’s tough mining in those used up mines.

Thank God Powell is still acting independently from those kooky Bidenites .....

 
 
 
Just Jim NC TttH
Professor Principal
2.2  Just Jim NC TttH  replied to  Drinker of the Wry @2    one month ago

End of NEXT year? Bring on the champagne............./S

Thinking this is a much more optimistic one than the last one. And that one was crap from the word go.

 
 
 
Ronin2
Professor Quiet
2.2.1  Ronin2  replied to  Just Jim NC TttH @2.2    one month ago

Grasping at straws; and praying they can spin the coming recession into a good thing.

Garland might have to indict Trump just to deflect the news; and given Brandon and the Democrats a respite.

 
 
 
JBB
Professor Principal
2.2.2  seeder  JBB  replied to  Just Jim NC TttH @2.2    one month ago

original Is our inflation subsiding really such a bad thing in Downer Land? 

 
 
 
Jeremy Retired in NC
Professor Expert
2.2.3  Jeremy Retired in NC  replied to  Ronin2 @2.2.1    one month ago
Garland might have to indict Trump just to deflect the news

The only ones that will really pay attention to that is the left. 

 
 
 
Drakkonis
Professor Guide
2.2.4  Drakkonis  replied to  Jeremy Retired in NC @2.2.3    one month ago
The only ones that will really pay attention to that is the left.

Well, it worked for the Romans. It's their Circus Maximus. 

 
 
 
Jeremy Retired in NC
Professor Expert
2.3  Jeremy Retired in NC  replied to  Drinker of the Wry @2    one month ago
last year’s transitory inflation

Wait!!!!  I thought it was Putin's fault?  Damn it's hard to keep up with the Democrats excuses.

 
 
 
JBB
Professor Principal
2.4  seeder  JBB  replied to  Drinker of the Wry @2    one month ago

"Economics is just math" - Bill Clinton 

Things like Covid and its related supply chain disruptions or Putin's War in Ukraine are the kind wild cards that are not predictable, but once they happen get "Cooked into the books". Raising interest rates and cutting the deficit are proving effective just as our best economists predicated they would. Month over month inflation is steadily declining already!

 
 
 
Greg Jones
Professor Guide
2.4.1  Greg Jones  replied to  JBB @2.4    one month ago

The deficit is not being reduced.

 
 
 
Greg Jones
Professor Guide
3  Greg Jones    one month ago

Reality has a perverse way of messing up these economic experts "expectations".

They can't even get it right on a short term basis.

Plus, we have no idea of what kind of calamities the New Year will bring.

 
 
 
Just Jim NC TttH
Professor Principal
3.1  Just Jim NC TttH  replied to  Greg Jones @3    one month ago
Reality has a perverse way of messing up these economic experts "expectations".

In pretty much every case it seems..................in all categories.

 
 
 
JBB
Professor Principal
3.2  seeder  JBB  replied to  Greg Jones @3    one month ago

original

 
 
 
Snuffy
PhD Guide
3.2.1  Snuffy  replied to  JBB @3.2    one month ago

256

One poor meme deserves another

 
 
 
JBB
Professor Principal
3.2.2  seeder  JBB  replied to  Snuffy @3.2.1    one month ago

original

 
 
 
Snuffy
PhD Guide
3.2.3  Snuffy  replied to  JBB @3.2.2    one month ago

Just trying to copy  your poorly done style.

 
 
 
Tessylo
Professor Principal
3.2.4  Tessylo  replied to  Snuffy @3.2.3    one month ago

[Deleted]

 
 
 
Drinker of the Wry
Sophomore Principal
3.2.5  Drinker of the Wry  replied to  JBB @3.2    one month ago

Such a great, original retort.  Do you copyright your work?

 
 
 
Snuffy
PhD Guide
3.2.6  Snuffy  replied to  Tessylo @3.2.4    one month ago

You bitch when people get your name wrong.  Use my correct name or do not respond to me.

 
 
 
Sparty On
Professor Principal
3.2.7  Sparty On  replied to  JBB @3.2.2    one month ago

256

 
 
 
JBB
Professor Principal
3.2.8  seeder  JBB  replied to  Sparty On @3.2.7    one month ago

original

 
 
 
Sparty On
Professor Principal
3.2.9  Sparty On  replied to  JBB @3.2.8    one month ago

256

 
 
 
JBB
Professor Principal
3.2.10  seeder  JBB  replied to  Sparty On @3.2.9    one month ago

original

 
 
 
Sparty On
Professor Principal
3.2.11  Sparty On  replied to  JBB @3.2.10    one month ago

Too calm .... here you go:

256

Patient zero TDS

 
 
 
Tessylo
Professor Principal
3.2.12  Tessylo  replied to  Snuffy @3.2.6    one month ago

[deleted]

 
 
 
Tessylo
Professor Principal
3.2.13  Tessylo  replied to  Snuffy @3.2.6    one month ago

[deleted]

 
 
 
Snuffy
PhD Guide
4  Snuffy    one month ago
What's keeping inflation high? Wages are rising at a pace that is out of step with low and declining productivity growth, he said. This is true despite the fact that workers are are still not seeing much benefit from higher wages due to inflation.

There are also mismatches with the right workers for the job openings, he said.

Higher immigration is the "simplist, fastest, cleanist, most beneficial answer" to this problem, Posen said.

I really love this piece of the article.  What is keeping inflation so high is that wages are rising too fast and are too high.  So we need more immigration with people who will work the jobs for less money.

So just ignore that even though inflation might be back in the 2% range by the end of the year, prices will still be how much higher than a year previously, wages lost ground already against inflation and they want to be able to pay people even less in wages in the future to combat inflation.  Somehow I don't see this getting a vote of approval from local unions.

 
 
 
GregTx
Junior Participates
4.1  GregTx  replied to  Snuffy @4    one month ago
Somehow I don't see this getting a vote of approval from local unions.

No probably not. It might factor into this administration's border policy or lack of one though.....

 
 
 
Snuffy
PhD Guide
4.1.1  Snuffy  replied to  GregTx @4.1    one month ago
It might factor into this administration's border policy or lack of one though....

[deleted]

 
 
 
JBB
Professor Principal
4.2  seeder  JBB  replied to  Snuffy @4    one month ago

[Deleted]

 
 
 
Snuffy
PhD Guide
4.2.1  Snuffy  replied to  JBB @4.2    one month ago

[Deleted]

 
 
 
JBB
Professor Principal
4.2.2  seeder  JBB  replied to  Snuffy @4.2.1    one month ago

And yet, I do have a diploma from a major university with my name and the word "Economics" engraved on it. Do you? 

If you didn't like inflation, you would dislike deflation even more

 
 
 
Sparty On
Professor Principal
4.2.3  Sparty On  replied to  JBB @4.2.2    one month ago
And yet, I do have a diploma from a major university with my name and the word "Economics" engraved on it. 


[Deleted]

 
 
 
George
Freshman Guide
5  George    one month ago

The gullibility of some of the left will never cease to amaze me. Where is the huge recession that their poster child Paul Krugman said was coming. These idiots will believe anything that makes democrats look good and republicans look bad.

 
 
 
JBB
Professor Principal
5.1  seeder  JBB  replied to  George @5    one month ago

In our rearview mirror. It was January to June...

 
 
 
George
Freshman Guide
5.1.1  George  replied to  JBB @5.1    one month ago

[Deleted]

 
 
 
Ender
Professor Principal
5.1.2  Ender  replied to  George @5.1.1    one month ago
In 2022, holiday retail sales in the United States were forecast to reach about 942.6 billion U.S. dollars. This figure was given as a conservative value; retail sales over the holiday season was projected to be between 942.6 billion U.S. dollars to 960.4 billion U.S. dollars in 2022. Holiday retail sales have risen substantially since the turn of the century, with holiday retail sales amounting to approximately 416 billion U.S. dollars back in 2002. Holiday retail sales are a  fraction of total retail sales in the United States which were around 6.6 trillion U.S. dollars in 2021. Holiday season e-commerce is also on the rise, with increasing numbers of retailers and consumers going digital.

Seems Santa was very busy this year despite all the republican doom and gloom...

 
 
 
Sparty On
Professor Principal
5.1.3  Sparty On  replied to  Ender @5.1.2    one month ago

Sure, they’re just good little worker drones and following the Democrat principle of overextending on debt.

Ho ho ho!

 
 
 
Ender
Professor Principal
5.1.4  Ender  replied to  Sparty On @5.1.3    one month ago

Since a lot of shopping was done online, of course people are going to use cards...

 
 
 
Just Jim NC TttH
Professor Principal
5.1.5  Just Jim NC TttH  replied to  Ender @5.1.4    one month ago

I use/used my debit card. I hate interest. Not that I don't have some old CC debt but the summbitches keep raising the interest rates because of the damned Fed's moves. It's ridiculous what they charge.

 
 
 
Ender
Professor Principal
5.1.6  Ender  replied to  Just Jim NC TttH @5.1.5    one month ago

I have a separate card that I use for online transactions. It has a smaller limit, in case something happened.

When I got my current mortgage the changing interest rate loans were still available. I don't even know if they still do that or not. I would never trust that as of course rates could rise. I feel sorry for people that happen to be in that position.

I locked mine in at a fixed rate. It is either 3 or 4 percent. I think 3. I need to check.

 
 
 
Just Jim NC TttH
Professor Principal
5.1.7  Just Jim NC TttH  replied to  Ender @5.1.6    one month ago

Mine is locked at 3.75. I wouldn't think of selling and buying in this environment. Double what my rate is now at 7+%

 
 
 
Ender
Professor Principal
5.1.8  Ender  replied to  Just Jim NC TttH @5.1.7    one month ago

What gets me is a lot of apartments around here are more expensive than my mortage payment.

 
 
 
Just Jim NC TttH
Professor Principal
5.1.9  Just Jim NC TttH  replied to  Ender @5.1.8    one month ago

Here too. 

 
 
 
Jack_TX
Masters Quiet
5.1.10  Jack_TX  replied to  Ender @5.1.2    one month ago
Seems Santa was very busy this year despite all the republican doom and gloom...

Or stuff just costs more.

Meanwhile, outside the North Pole, food banks are straining under the increased demand.  

 
 
 
Ender
Professor Principal
5.1.11  Ender  replied to  Jack_TX @5.1.10    one month ago

So people spent on themselves instead of donating...

 
 
 
Jack_TX
Masters Quiet
5.1.12  Jack_TX  replied to  Ender @5.1.11    4 weeks ago
So people spent on themselves instead of donating..

How...exactly.. does that explain increased demand?

 
 
 
Ender
Professor Principal
5.1.13  Ender  replied to  Jack_TX @5.1.12    4 weeks ago

Imo there is always increased demand. Every year.

There would especially be increased demand if no one is donating.

 
 
 
Jack_TX
Masters Quiet
5.1.14  Jack_TX  replied to  Ender @5.1.13    4 weeks ago
Imo there is always increased demand. Every year.

There is a big difference between a 3% increas and a 17% increase.

There would especially be increased demand if no one is donating.

That's not how that works. 

Seriously??  

We're not talking about shortages, which could be caused by lower donations.  We're talking about the number of people who need to go to a food bank in order to feed their families.  That has nothing to do with whether or not anybody donated.

 
 
 
Ender
Professor Principal
5.1.15  Ender  replied to  Jack_TX @5.1.14    4 weeks ago

I take your numbers. I just go by what I see where I am. And things around here are about the same as always.

 
 
 
Snuffy
PhD Guide
5.1.16  Snuffy  replied to  Ender @5.1.15    4 weeks ago
And things around here are about the same as always.

I cannot say that here.  The local news has been running hard with requests for more donations to food banks as they have had record numbers coming thru to get food aid.  There's one near where I bank and when they are open the lines are crazy long, never less than 20 cars in line every time I go past that parking lot.  I would say the demand is definitely greater this year for people looking for help.

 
 
 
Ender
Professor Principal
5.1.17  Ender  replied to  Snuffy @5.1.16    4 weeks ago

Maybe because I live in a gaming and shopping town.

That is basically what we are known for and have. Casinos and shopping.

I think it was last year the casinos made record breaking numbers.

 
 
 
cjcold
Professor Quiet
5.2  cjcold  replied to  George @5    one month ago
democrats look good and republicans look bad

The word you are looking for is reality.

 
 
 
Sean Treacy
Professor Expert
6  Sean Treacy    one month ago

It's amusing watching people cling to the predictions of the same crowd who so spectacularly fucked up their predications about inflation to begin with. 

And 3% inflation is 50% higher than where it should be in a healthy economy.  But when you shill  for Biden and bad is the best you can hope for, suddenly bad news is good. 

 
 
 
Sparty On
Professor Principal
6.1  Sparty On  replied to  Sean Treacy @6    one month ago

Yeah, my favorite is when they come back with inflation/gas/food costs are down when they’re still 50,100, 200% higher than when bonzo was elected.

 
 

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