Accessible Version

Please enable JavaScript if it is disabled in your browser or access the information through the links provided below.

Accessible Version

Inflation Dynamics and the Phillips Curve

Governor Adriana D. Kugler
Federal Reserve Board

Harvard University
Ec10b Principles of Economics Lecture

April 7, 2025

Slide 1: Roadmap of Lecture

Bird's eye view of inflation since 1960
Pandemic waves of inflation for different components: food, core good, core services ex. housing, housing inflation and driving shocks
Basics on the derivation of the expectations-augmented Phillips curve
Baseline model: a better-fitting Phillips curve with long-run inflation expectations
How to augment baseline model to better capture recent inflation
Empirical results: Dynamic simulations with variants of baseline model

Slide 2: A Bird's Eye View of Inflation

"Two mountains enclosing a plain"

Slide 3: A Look at Inflation Data in the Long-run

12-month percent change

Make Full Screen

Date	Headline PCE	Core PCE
January 1960	1.694803482	2.07083414
February 1960	1.699716714	2.185263972
March 1960	1.692013957	2.073272809
April 1960	1.859517708	2.003853565
May 1960	1.911079004	2.046314709
June 1960	1.663283348	1.803645667
July 1960	1.633666601	1.741960184
August 1960	1.657422512	1.726444544
September 1960	1.451350472	1.544033549
October 1960	1.324503311	1.427212179
November 1960	1.602647288	1.513232873
December 1960	1.503564485	1.327601467
January 1961	1.58225796	1.327265832
February 1961	1.567662111	1.236437043
March 1961	1.450213648	1.261590866
April 1961	1.025674107	1.21521219
May 1961	0.979507669	1.181795323
June 1961	0.979066023	1.275365961
July 1961	1.01588118	1.254311696
August 1961	0.930740099	1.21492986
September 1961	0.987939441	1.332832739
October 1961	0.865051903	1.307066917
November 1961	0.530046619	1.054075968
December 1961	0.536329971	1.172947342
January 1962	0.70858602	1.266217565
February 1962	0.886536131	1.333499501
March 1962	1.078493937	1.538653211
April 1962	1.251516506	1.418351477
May 1962	1.257179324	1.428926441
June 1962	1.27575429	1.464019851
July 1962	0.999299854	1.393620316
August 1962	1.06207072	1.299344141
September 1962	1.442002287	1.296776584
October 1962	1.346801347	1.259336996
November 1962	1.410240122	1.314652512
December 1962	1.346373682	1.258016774
January 1963	1.400862069	1.330458885
February 1963	1.239094702	1.279055467
March 1963	1.022791843	1.104294479
April 1963	0.901809926	1.208366558
May 1963	1.002079788	1.24954061
June 1963	1.158909114	1.235020787
July 1963	1.417948072	1.240073305
August 1963	1.40960292	1.319325678
September 1963	0.895485002	1.304559863
October 1963	1.190998558	1.536304335
November 1963	1.265347031	1.553457204
December 1963	1.453816268	1.668696711
January 1964	1.419016066	1.616922983
February 1964	1.454976895	1.693989071
March 1964	1.599900006	1.729368932
April 1964	1.68125	1.696969697
May 1964	1.528765756	1.597096189
June 1964	1.450719133	1.497765431
July 1964	1.379481762	1.508477644
August 1964	1.315544524	1.549312756
September 1964	1.489572989	1.408111686
October 1964	1.356625163	1.2248574
November 1964	1.354695039	1.277744451
December 1964	1.352686844	1.275907512
January 1965	1.251232742	1.274152061
February 1965	1.15098172	1.200071646
March 1965	1.217936889	1.163137489
April 1965	1.30309177	1.191895113
May 1965	1.518038228	1.292128141
June 1965	1.669326132	1.196001428
July 1965	1.612013485	1.194792843
August 1965	1.561830097	1.25259721
September 1965	1.455479452	1.329219084
October 1965	1.424031292	1.251557032
November 1965	1.452548062	1.297162827
December 1965	1.669815345	1.460933341
January 1966	1.680160711	1.35262847
February 1966	2.056711695	1.480825959
March 1966	2.175630507	1.550707547
April 1966	2.366361264	1.79623086
May 1966	2.264196634	1.881135736
June 1966	2.221417361	2.234374081
July 1966	2.346483291	2.431860902
August 1966	2.713786033	2.427298311
September 1966	2.989752863	2.623565238
October 1966	3.229888521	2.993555946
November 1966	3.20640077	3.058121857
December 1966	3.05101001	3.060510668
January 1967	2.933604742	3.123725159
February 1967	2.629382304	3.057961746
March 1967	2.432641408	3.08308657
April 1967	2.252385751	2.99681805
May 1967	2.320625148	2.948473833
June 1967	2.391638124	2.875711739
July 1967	2.540225143	2.924647322
August 1967	2.465946454	3.050944476
September 1967	2.452300129	3.098607624
October 1967	2.469207869	3.145441101
November 1967	2.657962229	3.217021277
December 1967	2.605863192	3.15628712
January 1968	3.076833595	3.520768579
February 1968	3.375355836	3.779545326
March 1968	3.658111718	4.032893996
April 1968	3.808474871	4.128517666
May 1968	3.992131451	4.293240668
June 1968	3.996770287	4.438978029
July 1968	3.960225313	4.429462893
August 1968	4.062571625	4.515914014
September 1968	4.107397886	4.566336414
October 1968	4.272530477	4.604610125
November 1968	4.281171928	4.666886544
December 1968	4.33106576	4.721171245
January 1969	4.254598804	4.651162791
February 1969	4.096886591	4.560526173
March 1969	4.246022855	4.634542501
April 1969	4.377931651	4.649908296
May 1969	4.411928341	4.675408426
June 1969	4.580745342	4.625020074
July 1969	4.721623265	4.764445393
August 1969	4.581245526	4.650297619
September 1969	4.653204565	4.647469828
October 1969	4.550917832	4.670778639
November 1969	4.649896548	4.674124258
December 1969	4.911975657	4.749188397
January 1970	4.876596666	4.700052165
February 1970	5.026183664	4.741110418
March 1970	4.793121977	4.641415709
April 1970	4.863043013	4.654639175
May 1970	4.774337934	4.605195605
June 1970	4.539187613	4.620107444
July 1970	4.461221688	4.532491342
August 1970	4.449007529	4.601086791
September 1970	4.483011745	4.618108245
October 1970	4.64545122	4.683958701
November 1970	4.604578564	4.82163464
December 1970	4.588771494	4.95876031
January 1971	4.438251535	5.027153605
February 1971	4.328158733	5.02283105
March 1971	4.414931802	4.969589082
April 1971	4.295699199	4.945082008
May 1971	4.399125261	5.030674847
June 1971	4.590646241	5.071400626
July 1971	4.523400384	5.071616486
August 1971	4.551870148	4.855075982
September 1971	4.240477744	4.593144128
October 1971	3.884949566	4.243444792
November 1971	3.690624223	3.944093433
December 1971	3.639694959	3.748154498
January 1972	3.844443346	3.780834915
February 1972	3.95151754	3.667296786
March 1972	3.756813829	3.53778029
April 1972	3.507313017	3.393251044
May 1972	3.307677319	3.182242991
June 1972	3.006935351	2.983476844
July 1972	3.065615783	2.884035795
August 1972	3.066390242	2.95874427
September 1972	3.37473522	3.129478112
October 1972	3.331090175	3.027645729
November 1972	3.424953231	3.066863142
December 1972	3.349419466	3.052699229
January 1973	3.235783964	2.678612241
February 1973	3.369987677	2.726112327
March 1973	3.956834532	2.939169207
April 1973	4.569943289	3.295506128
May 1973	4.852171453	3.455459445
June 1973	5.292151231	3.692488475
July 1973	5.296739385	3.839740412
August 1973	6.202928381	4.101457097
September 1973	6.147254692	4.280591663
October 1973	6.62883193	4.623034538
November 1973	7.184267891	4.852113305
December 1973	7.720758206	5.118268074
January 1974	8.425904586	5.569158171
February 1974	9.115502774	5.906629981
March 1974	9.602076125	6.302762431
April 1974	9.562977358	6.481806996
May 1974	10.10073754	7.091577657
June 1974	10.40558065	7.723488646
July 1974	10.818036	8.215789245
August 1974	10.69902656	8.752376015
September 1974	11.40701092	9.176875134
October 1974	11.57403368	9.608220938
November 1974	11.49718736	9.8772797
December 1974	11.46351931	10.043224
January 1975	11.09127237	10.14168845
February 1975	10.40887507	10.21998743
March 1975	9.512732107	9.937216748
April 1975	9.111908592	9.65292394
May 1975	8.479699371	9.070470896
June 1975	8.238153098	8.488772001
July 1975	8.366838212	8.197641774
August 1975	7.711284418	7.535552554
September 1975	7.13188674	7.157480315
October 1975	6.987292278	6.855736552
November 1975	6.873132301	6.78275033
December 1975	6.618921104	6.677449168
January 1976	6.363845094	6.604387611
February 1976	5.926010505	6.276611922
March 1976	5.727724462	6.073900382
April 1976	5.610161803	5.972901769
May 1976	5.689434445	6.022561181
June 1976	5.493189642	5.937418416
July 1976	5.127444069	5.867744088
August 1976	5.249353528	6.113553249
September 1976	5.319070725	6.157689764
October 1976	5.259118485	6.149009286
November 1976	5.062096013	5.930633739
December 1976	5.070422535	5.862392607
January 1977	5.281525454	5.965378538
February 1977	5.968164996	6.192094437
March 1977	6.339468303	6.293008165
April 1977	6.71534937	6.399829527
May 1977	6.747657558	6.440438317
June 1977	6.877837684	6.64319662
July 1977	6.889006529	6.71545114
August 1977	6.798638166	6.624660586
September 1977	6.603608949	6.451166332
October 1977	6.541439533	6.443725031
November 1977	6.667357943	6.510559517
December 1977	6.58898742	6.482302394
January 1978	6.598776612	6.470089815
February 1978	6.262715313	6.228525231
March 1978	6.417004049	6.353146384
April 1978	6.60472293	6.515571281
May 1978	6.825084271	6.598698193
June 1978	6.923102453	6.556186452
July 1978	6.95347839	6.525804652
August 1978	6.996845011	6.572202814
September 1978	7.199685689	6.736458807
October 1978	7.554179567	7.001650112
November 1978	7.546741842	7.02352979
December 1978	7.526361614	6.888269767
January 1979	7.703404501	6.796332845
February 1979	7.776253231	6.735373395
March 1979	7.919599264	6.768434997
April 1979	8.225040118	7.063395068
May 1979	8.569732567	7.36160005
June 1979	8.756246702	7.364148956
July 1979	8.989596518	7.271775286
August 1979	9.269895875	7.407634336
September 1979	9.611508155	7.520560463
October 1979	9.632457655	7.51716005
November 1979	9.771015366	7.624289452
December 1979	10.17843755	7.978309066
January 1980	10.49796113	8.244657069
February 1980	11.10255803	8.966398289
March 1980	11.59518214	9.349521446
April 1980	11.01904347	8.903848968
May 1980	10.73638169	8.835819163
June 1980	10.52286089	8.948203722
July 1980	10.53958363	9.164776479
August 1980	10.61419536	9.229891614
September 1980	10.66064811	9.513017366
October 1980	10.64341385	9.612734483
November 1980	10.77594489	9.775318578
December 1980	10.56642805	9.647346078
January 1981	10.4703157	9.764560099
February 1981	10.39279433	9.474602612
March 1981	9.813883697	9.071507686
April 1981	9.721094671	9.207944742
May 1981	9.36281898	9.080971552
June 1981	9.110393802	8.901896387
July 1981	8.922256957	8.795139528
August 1981	8.698635359	8.73720493
September 1981	8.354525998	8.427969061
October 1981	7.980915745	8.184733804
November 1981	7.683540226	7.965480373
December 1981	7.318874474	7.718001923
January 1982	6.92984809	7.445874414
February 1982	6.177279969	7.078103208
March 1982	5.712573415	6.952321981
April 1982	5.305869155	6.694066399
May 1982	5.458001663	6.540708332
June 1982	5.800771543	6.544738186
July 1982	5.789498447	6.592529917
August 1982	5.456585776	6.370971615
September 1982	5.112355634	6.06942622
October 1982	5.225779587	6.109332385
November 1982	4.979291302	5.882907736
December 1982	4.814882782	5.828321744
January 1983	4.681549723	5.90254267
February 1983	4.544731158	5.886867935
March 1983	4.410630868	5.560187115
April 1983	4.834542158	5.462136415
May 1983	4.510837727	5.042556608
June 1983	4.145042949	5.005934989
July 1983	4.116168916	5.032658986
August 1983	4.238715971	5.090868044
September 1983	4.315433423	5.126071212
October 1983	3.90880911	4.648979683
November 1983	3.743643696	4.507192803
December 1983	3.643884184	4.253146574
January 1984	3.611728314	3.889146108
February 1984	4.131871955	4.15815486
March 1984	4.339421845	4.420507645
April 1984	4.26134521	4.595262571
May 1984	4.098395999	4.686919868
June 1984	3.89629916	4.445555531
July 1984	3.6821871	4.19338818
August 1984	3.5580604	4
September 1984	3.335805871	3.739997432
October 1984	3.404210304	3.788898144
November 1984	3.403617003	3.767313019
December 1984	3.638244858	4.100926222
January 1985	3.704482382	4.337768723
February 1985	3.489683402	4.222025391
March 1985	3.555296518	4.191352578
April 1985	3.311629064	3.826690644
May 1985	3.42549446	3.943003776
June 1985	3.522771909	4.041959789
July 1985	3.407218194	3.898203221
August 1985	3.431704762	4.065107825
September 1985	3.466026785	4.120777132
October 1985	3.394442853	4.053915012
November 1985	3.549026418	4.088463592
December 1985	3.604246042	3.959829007
January 1986	3.564043304	3.937760602
February 1986	3.085460599	3.668555241
March 1986	2.458340871	3.621478838
April 1986	2.101523454	3.685652139
May 1986	2.046496726	3.506412701
June 1986	2.148776835	3.47483396
July 1986	1.924379457	3.36099254
August 1986	1.715511079	3.066693132
September 1986	1.877143254	3.19309088
October 1986	1.889854155	3.377830515
November 1986	1.775848461	3.343920772
December 1986	1.575221239	3.197119641
January 1987	1.585623679	2.890354396
February 1987	1.941899616	2.834110827
March 1987	2.436631876	2.825507404
April 1987	3.029409452	3.074861117
May 1987	3.102372402	3.187899942
June 1987	3.108443628	3.160947318
July 1987	3.320694238	3.240124279
August 1987	3.599593972	3.377948965
September 1987	3.60923029	3.447481572
October 1987	3.75233064	3.537198936
November 1987	3.763086468	3.533521686
December 1987	3.812123676	3.616639976
January 1988	3.726827764	3.857126555
February 1988	3.517935325	3.858783335
March 1988	3.598651703	3.99500388
April 1988	3.715010781	4.059172713
May 1988	3.753187926	4.121095952
June 1988	3.801596481	4.274737631
July 1988	4.065225205	4.430072152
August 1988	3.962541453	4.336891522
September 1988	4.118232521	4.481184591
October 1988	4.12766754	4.432578249
November 1988	4.172194092	4.500783627
December 1988	4.304364043	4.627500046
January 1989	4.434495058	4.662491301
February 1989	4.626400534	4.713257063
March 1989	4.656794779	4.578541272
April 1989	4.843991464	4.422390844
May 1989	4.921671497	4.378508131
June 1989	4.705366602	4.216315307
July 1989	4.44812041	4.059568984
August 1989	4.152242864	3.94593533
September 1989	3.877786595	3.750865789
October 1989	3.944269663	3.733125741
November 1989	3.929762887	3.724680641
December 1989	3.906808754	3.675436128
January 1990	4.159032287	3.550181971
February 1990	4.271125137	3.789029094
March 1990	4.276478485	3.977865943
April 1990	3.804242924	3.938537313
May 1990	3.65928283	3.945844068
June 1990	3.890303897	4.07332678
July 1990	3.898431925	4.068047337
August 1990	4.576619218	4.356115911
September 1990	4.98489426	4.358171143
October 1990	5.174769539	4.333884805
November 1990	5.078954181	4.182897579
December 1990	4.873264158	4.031957119
January 1991	4.481410005	4.149980568
February 1991	4.075768139	3.933207776
March 1991	3.706401504	3.651638384
April 1991	3.676657031	3.550690783
May 1991	3.872491145	3.646344506
June 1991	3.59013971	3.468160201
July 1991	3.497546023	3.52225583
August 1991	3.053447817	3.375964973
September 1991	2.776813032	3.428196506
October 1991	2.382792587	3.305433859
November 1991	2.478320851	3.37328152
December 1991	2.638444499	3.484371688
January 1992	2.38815241	3.251293866
February 1992	2.596065874	3.247205009
March 1992	2.822560886	3.288878843
April 1992	2.913650297	3.420883016
May 1992	2.625596727	3.155343701
June 1992	2.634138434	3.012395503
July 1992	2.811270979	3.087878401
August 1992	2.709466987	2.899496847
September 1992	2.524781153	2.65641107
October 1992	2.695149374	2.82463525
November 1992	2.671602801	2.857278241
December 1992	2.594599779	2.795109346
January 1993	2.704428622	2.814223535
February 1993	2.598850264	2.73137556
March 1993	2.56080319	2.699576384
April 1993	2.557074732	2.661140801
May 1993	2.737211841	2.864344281
June 1993	2.590223486	2.88232825
July 1993	2.416409546	2.707307251
August 1993	2.454055244	2.805415861
September 1993	2.393546058	2.793140738
October 1993	2.353842785	2.566983179
November 1993	2.346091409	2.607453817
December 1993	2.190850162	2.463137243
January 1994	1.977243052	2.246607165
February 1994	2.059631532	2.272831277
March 1994	2.131317669	2.397260274
April 1994	1.980442742	2.253722056
May 1994	1.814177691	2.135704994
June 1994	2.02755754	2.265137434
July 1994	2.185708357	2.267997708
August 1994	2.246432408	2.191516903
September 1994	2.253287961	2.192731973
October 1994	2.105649191	2.265668372
November 1994	2.10624247	2.189496999
December 1994	2.148455369	2.178043052
January 1995	2.321504786	2.351200263
February 1995	2.265952917	2.296896207
March 1995	2.173286622	2.199925678
April 1995	2.320684693	2.284196153
May 1995	2.32941568	2.230252051
June 1995	2.180408015	2.092322241
July 1995	1.987033889	2.039281607
August 1995	1.971966263	2.169558429
September 1995	1.929303832	2.148624204
October 1995	2.020322952	2.15678507
November 1995	1.823803549	2.035675581
December 1995	1.95399382	2.144791743
January 1996	1.973870425	2.006571742
February 1996	1.95401957	1.972677038
March 1996	2.073623274	1.959130245
April 1996	2.111122626	1.860262642
May 1996	2.130049814	1.864352764
June 1996	2.029032592	1.854049673
July 1996	2.116456742	1.884365833
August 1996	1.994172014	1.728487609
September 1996	2.211927348	1.903308474
October 1996	2.2560913	1.897252503
November 1996	2.44099224	1.964921346
December 1996	2.363103953	1.860398452
January 1997	2.268743061	1.853999341
February 1997	2.320595099	1.930225908
March 1997	2.120203004	1.937177256
April 1997	1.915242196	1.998660911
May 1997	1.693394315	1.89564698
June 1997	1.825129177	1.968084351
July 1997	1.671071826	1.846677541
August 1997	1.655051008	1.717541025
September 1997	1.612972849	1.62051427
October 1997	1.4388386	1.533517506
November 1997	1.264445176	1.431567686
December 1997	1.125668679	1.452130354
January 1998	1.044211128	1.498369504
February 1998	0.781172043	1.377472296
March 1998	0.690637237	1.244052617
April 1998	0.716988648	1.231843575
May 1998	0.900913723	1.25607101
June 1998	0.686547646	0.979681708
July 1998	0.87507458	1.194869581
August 1998	0.933995742	1.433586893
September 1998	0.632965166	1.206779095
October 1998	0.722649621	1.250763507
November 1998	0.721194638	1.237891698
December 1998	0.844401069	1.353675451
January 1999	0.935874237	1.343304251
February 1999	0.932120681	1.221773301
March 1999	0.992787442	1.144452584
April 1999	1.354558038	1.218233492
May 1999	1.282177869	1.21705811
June 1999	1.399025905	1.397993403
July 1999	1.418110125	1.29498383
August 1999	1.462563987	1.146867746
September 1999	1.885544627	1.431416993
October 1999	1.833677323	1.406693448
November 1999	1.920646955	1.48594928
December 1999	2.054756094	1.439597132
January 2000	2.189136951	1.538671768
February 2000	2.568737913	1.72237031
March 2000	2.930879964	1.900870492
April 2000	2.350990147	1.706535814
May 2000	2.368948805	1.718526588
June 2000	2.684264751	1.742112856
July 2000	2.668814308	1.79197348
August 2000	2.475467095	1.872572717
September 2000	2.548096179	1.850020992
October 2000	2.514856127	1.818476806
November 2000	2.566327796	1.900478159
December 2000	2.484779352	1.871087848
January 2001	2.701443237	2.005221651
February 2001	2.537197196	2.035879863
March 2001	2.108700088	1.932464328
April 2001	2.373236752	2.02768806
May 2001	2.55764914	1.942514425
June 2001	2.391734686	2.092195735
July 2001	2.101732509	2.122122122
August 2001	2.096464414	2.04209488
September 2001	1.313095944	1.21670678
October 2001	1.531881699	1.787326712
November 2001	1.321568153	1.814663114
December 2001	1.062075069	1.738727405
January 2002	0.665937116	1.418280648
February 2002	0.679565078	1.432898723
March 2002	0.943308241	1.448512676
April 2002	1.187705321	1.569683436
May 2002	0.988260264	1.658612176
June 2002	0.936200641	1.593333159
July 2002	1.192163512	1.538260472
August 2002	1.40294632	1.687719619
September 2002	1.932816675	2.435691952
October 2002	1.760451439	1.805515694
November 2002	1.929985021	1.697695613
December 2002	2.133673023	1.768886344
January 2003	2.346515358	1.780905673
February 2003	2.604621615	1.726869044
March 2003	2.589654581	1.768901569
April 2003	1.988696109	1.598448109
May 2003	1.804807566	1.631551072
June 2003	1.788127255	1.527071994
July 2003	1.862736115	1.57416465
August 2003	2.00671518	1.48885606
September 2003	2.141338793	1.464628328
October 2003	1.968211817	1.56590379
November 2003	1.996176704	1.605346033
December 2003	2.122877447	1.637100797
January 2004	2.212406575	1.82898773
February 2004	2.000619147	1.853270026
March 2004	1.89642972	1.860488824
April 2004	2.259224415	2.012448925
May 2004	2.709537572	2.005745227
June 2004	2.890910966	2.110063772
July 2004	2.684537884	1.975543306
August 2004	2.39116792	1.899903802
September 2004	2.273916985	1.949086129
October 2004	2.700011489	1.98208428
November 2004	2.965626275	2.062544098
December 2004	2.793715413	2.066266501
January 2005	2.532030567	2.171430006
February 2005	2.598732881	2.175438596
March 2005	2.747509438	2.255610879
April 2005	2.844503819	2.107509171
May 2005	2.568966384	2.176892788
June 2005	2.341195776	2.086365842
July 2005	2.679431825	2.11496881
August 2005	3.040802542	2.15887212
September 2005	3.830020973	2.193265225
October 2005	3.551362371	2.265220027
November 2005	2.938408579	2.306030492
December 2005	2.883627678	2.280881283
January 2006	3.246937842	2.142479822
February 2006	3.02223537	2.137706044
March 2006	2.913671275	2.167928845
April 2006	3.102827102	2.36218548
May 2006	3.321534863	2.408565958
June 2006	3.511627907	2.595788242
July 2006	3.427345635	2.545755452
August 2006	3.335882589	2.671351969
September 2006	2.080026932	2.60600546
October 2006	1.67697017	2.496915148
November 2006	1.924673106	2.28421802
December 2006	2.286752234	2.315601683
January 2007	2.133263102	2.500451019
February 2007	2.389213247	2.556466816
March 2007	2.564898622	2.376989307
April 2007	2.330777916	2.210973688
May 2007	2.352983013	2.075642461
June 2007	2.317634121	1.987266291
July 2007	2.124726013	2.041106945
August 2007	1.873715125	1.984841307
September 2007	2.534687051	2.102325801
October 2007	3.088474888	2.183509194
November 2007	3.599627055	2.335842201
December 2007	3.471634208	2.403393025
January 2008	3.387406817	2.193044213
February 2008	3.272922728	2.072405395
March 2008	3.191142571	2.169742906
April 2008	3.139518677	2.083722669
May 2008	3.282143933	2.14893195
June 2008	3.81143894	2.214095203
July 2008	4.135655024	2.244499232
August 2008	3.980627306	2.217938594
September 2008	3.667838353	2.043983278
October 2008	2.671843148	1.634402144
November 2008	0.925029334	1.390265834
December 2008	0.129569013	1.137827888
January 2009	-0.111103553	0.905928146
February 2009	-0.131248444	0.887838675
March 2009	-0.525751678	0.762458643
April 2009	-0.567573959	0.92791762
May 2009	-0.889212828	0.822302676
June 2009	-1.01862469	0.720145852
July 2009	-1.466009197	0.62558293
August 2009	-1.100119771	0.650944039
September 2009	-1.022748679	0.725180444
October 2009	0.013385238	1.239899535
November 2009	1.460612012	1.373476442
December 2009	2.089718268	1.509515522
January 2010	2.301720616	1.690903712
February 2010	2.116330184	1.698653811
March 2010	2.372716034	1.776969835
April 2010	2.28212243	1.602974686
May 2010	2.208469571	1.636855877
June 2010	1.562218823	1.55557064
July 2010	1.637390072	1.470588235
August 2010	1.482395156	1.417623224
September 2010	1.419551296	1.296828348
October 2010	1.358419861	1.078781348
November 2010	1.307196814	1.121579183
December 2010	1.477668197	1.056748398
January 2011	1.559865093	1.123444633
February 2011	1.845030732	1.211904389
March 2011	2.110546083	1.214570379
April 2011	2.488096556	1.394700139
May 2011	2.766247136	1.523561143
June 2011	2.788451955	1.586329052
July 2011	2.875699838	1.73445176
August 2011	2.976729796	1.839630516
September 2011	3.019030378	1.85082197
October 2011	2.693632332	1.744721966
November 2011	2.699259845	1.827861579
December 2011	2.526624885	1.974960911
January 2012	2.569312447	2.061479219
February 2012	2.513154025	2.025847785
March 2012	2.298027472	2.044845423
April 2012	1.999848742	1.965337001
May 2012	1.576940477	1.826744684
June 2012	1.546019673	1.819258479
July 2012	1.410026135	1.773865055
August 2012	1.511867462	1.635922542
September 2012	1.677971005	1.691602053
October 2012	1.976877498	1.889449211
November 2012	1.699101796	1.783069014
December 2012	1.624382841	1.689865159
January 2013	1.470807506	1.591586708
February 2013	1.604607668	1.560131653
March 2013	1.276992915	1.480744912
April 2013	1.04122532	1.377062626
May 2013	1.229030137	1.392916824
June 2013	1.505506398	1.46365105
July 2013	1.595112846	1.487960751
August 2013	1.40478833	1.5332509
September 2013	1.141285448	1.529226044
October 2013	0.97610692	1.454818148
November 2013	1.19547046	1.514259725
December 2013	1.388100196	1.547361892
January 2014	1.405405405	1.452461501
February 2014	1.093982053	1.390117798
March 2014	1.389703418	1.447423076
April 2014	1.673113816	1.571265848
May 2014	1.766166288	1.623656257
June 2014	1.651458614	1.563544884
July 2014	1.66924169	1.610321322
August 2014	1.506243876	1.5397486
September 2014	1.497249312	1.554848059
October 2014	1.332944861	1.470914332
November 2014	1.085759408	1.392578537
December 2014	0.732258801	1.35634629
January 2015	0.041401867	1.209711352
February 2015	0.170701428	1.277481626
March 2015	0.199349274	1.280839895
April 2015	0.110324064	1.294372884
May 2015	0.185286216	1.247201122
June 2015	0.270428676	1.254154386
July 2015	0.21973283	1.178950004
August 2015	0.239271301	1.221254628
September 2015	0.06569965	1.232124816
October 2015	0.095498234	1.177988678
November 2015	0.253877543	1.196702051
December 2015	0.345963756	1.191700693
January 2016	0.871148633	1.406240256
February 2016	0.640330493	1.465885968
March 2016	0.685510473	1.457447911
April 2016	0.925906853	1.51994868
May 2016	0.84868536	1.568732819
June 2016	0.829607449	1.552403955
July 2016	0.755084268	1.599331807
August 2016	0.888210466	1.696958457
September 2016	1.219774921	1.685254537
October 2016	1.427003293	1.78240836
November 2016	1.397404089	1.718859162
December 2016	1.657158102	1.770093228
January 2017	2.00521047	1.863334939
February 2017	2.197136846	1.867275108
March 2017	1.906361021	1.678654624
April 2017	1.767473187	1.636821346
May 2017	1.55777205	1.545521143
June 2017	1.465547928	1.576443803
July 2017	1.485631775	1.503110759
August 2017	1.571908732	1.43359371
September 2017	1.757444307	1.422587369
October 2017	1.682040701	1.541011105
November 2017	1.793712905	1.545376496
December 2017	1.766409948	1.576876513
January 2018	1.757649496	1.632037028
February 2018	1.837607696	1.644218118
March 2018	1.998292058	1.909183171
April 2018	2.046628228	1.884219287
May 2018	2.266206537	1.980902378
June 2018	2.26830784	1.936219818
July 2018	2.338607056	1.99580042
August 2018	2.180411289	1.895763
September 2018	2.009960159	1.960295291
October 2018	2.053098049	1.87090739
November 2018	1.941892227	2.010245188
December 2018	1.864690888	2.038079914
January 2019	1.43183233	1.844426624
February 2019	1.400173543	1.744105615
March 2019	1.521807651	1.616067995
April 2019	1.566338463	1.636778804
May 2019	1.465553605	1.563175477
June 2019	1.426065138	1.65698131
July 2019	1.453929526	1.639119267
August 2019	1.430416406	1.74580458
September 2019	1.283953992	1.632014089
October 2019	1.288561821	1.623585956
November 2019	1.358277307	1.49771832
December 2019	1.563762768	1.544751059
January 2020	1.725313693	1.572858948
February 2020	1.657979696	1.671474219
March 2020	1.147774792	1.492363523
April 2020	0.442143963	0.959666876
May 2020	0.463092764	0.966421917
June 2020	0.723783387	0.937620703
July 2020	0.909073363	1.17864928
August 2020	1.173917237	1.385396495
September 2020	1.265749569	1.465250835
October 2020	1.144182376	1.386165263
November 2020	1.15454126	1.427583292
December 2020	1.325893756	1.516458657
January 2021	1.593579713	1.68057576
February 2021	1.846165619	1.712773681
March 2021	2.666615509	2.200848981
April 2021	3.674735352	3.158571209
May 2021	4.109167196	3.576698285
June 2021	4.331641611	3.887841884
July 2021	4.505374699	3.967588179
August 2021	4.607816031	3.992017865
September 2021	4.760771472	4.043835097
October 2021	5.361254353	4.469517398
November 2021	5.972915182	4.93852886
December 2021	6.179392563	5.244372262
January 2022	6.309210712	5.406422951
February 2022	6.591466221	5.649107319
March 2022	6.967075267	5.629665663
April 2022	6.701538576	5.348259863
May 2022	6.801375434	5.185795029
June 2022	7.248868945	5.323449514
July 2022	6.760009151	5.112688196
August 2022	6.636893912	5.35655543
September 2022	6.66079039	5.606573224
October 2022	6.456506624	5.459957889
November 2022	6.018294323	5.200736515
December 2022	5.508772868	4.951640977
January 2023	5.525111726	4.945172697
February 2023	5.20931544	4.863456957
March 2023	4.423132353	4.771688689
April 2023	4.462536462	4.778422079
May 2023	3.979505288	4.70851032
June 2023	3.261568537	4.366300623
July 2023	3.37384924	4.272579773
August 2023	3.387121588	3.781505317
September 2023	3.416342214	3.657009628
October 2023	2.994291337	3.442340792
November 2023	2.701719661	3.221682654
December 2023	2.701789651	3.035639485
January 2024	2.611611082	3.064853734
February 2024	2.590430566	2.928884481
March 2024	2.809632548	2.979611847
April 2024	2.72068017	2.88506086
May 2024	2.567005161	2.66749536
June 2024	2.436168888	2.630476669
July 2024	2.468531816	2.665305849
August 2024	2.283305088	2.731117017
September 2024	2.10236681	2.66077974
October 2024	2.347205179	2.829450915
November 2024	2.463451798	2.838524134
December 2024	2.604397954	2.864894464

Note: Headline PCE is the personal consumption expenditure price index. Core PCE excludes food and energy. Data are monthly.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics.

Slide 4: Inflation Waves

How did inflation manifest itself in the recent run-up? Was it a uniform wave?

Slide 5: Waves in Inflation Components

6-month percent change

Make Full Screen

Date	Food Inflation	Core Goods Inflation	Core Services ex Housing Inflation	Housing Inflation
January 2018	0.93808681	-0.616940472	2.627294683	3.699433061
February 2018	0.482218711	-0.214251684	2.835512295	3.38470618
March 2018	0.451909043	0.261133207	2.948649458	3.450338222
April 2018	0.42938334	0.262681546	2.71739807	3.461677341
May 2018	0.123871162	0.930949209	2.884597238	3.430167525
June 2018	0.149765596	0.628999004	2.872614573	3.200179317
July 2018	-0.143262181	-0.288634846	2.595230074	3.233002785
August 2018	0.359187945	-1.125951619	2.2575111	3.455875381
September 2018	0.692712943	-1.237115918	2.235516648	3.284604539
October 2018	0.288863172	-1.360202756	2.230359705	3.210819038
November 2018	1.25946748	-1.366042878	2.225378907	3.354562415
December 2018	1.616147581	-1.136479463	2.414510675	3.362424384
January 2019	1.81480688	-0.194754628	2.035576207	3.275790279
February 2019	2.368179647	0.260357427	2.118145645	3.281654682
March 2019	2.09012893	-0.002017298	1.838046187	3.50901672
April 2019	1.250268277	-0.406618203	2.123420446	3.641464869
May 2019	1.263562193	-0.428711107	1.888080751	3.495425828
June 2019	0.636174206	0.143333702	1.629494443	3.663564836
July 2019	0.067129331	-0.954811243	2.034559564	3.67156819
August 2019	-0.626480585	-0.583306109	1.994721871	3.569800406
September 2019	-0.424106884	-0.527841773	1.935928705	3.498479224
October 2019	0.877080238	-0.268362815	1.742634609	3.176303549
November 2019	0.633756392	-0.558542661	1.715665598	3.194893148
December 2019	0.776673088	-1.057927576	2.103169941	3.059190929
January 2020	1.662534617	-0.64145069	2.044946683	3.182036945
February 2020	2.40577382	-0.290703389	2.160088081	3.160762985
March 2020	2.892478462	-0.744974113	1.819241314	3.093020949
April 2020	7.098407915	-2.245639798	0.762591967	3.119122125
May 2020	8.539867246	-2.565066138	1.107602327	3.078964377
June 2020	9.404735701	-2.313877961	0.907567309	2.745663877
July 2020	6.722707207	-1.244671196	1.170262836	2.526465459
August 2020	5.913018146	-0.531390021	1.360064699	2.334788531
September 2020	4.619360564	-0.028421491	2.123337087	1.960890796
October 2020	0.559567241	1.3109771	3.009849566	1.934803058
November 2020	-1.05342619	2.312801709	2.641481915	1.540751631
December 2020	-1.374052339	2.570098425	3.04586337	1.625514457
January 2021	0.47040014	1.988226684	3.242915641	1.484868891
February 2021	0.757389701	0.621709631	3.485731043	1.659873732
March 2021	1.474827658	1.119914708	4.059832689	1.96196878
April 2021	1.682498078	3.584927313	4.807986132	2.053185299
May 2021	2.464780248	5.051223089	5.475602397	2.558392469
June 2021	3.30102464	6.091230826	5.410497061	2.896978516
July 2021	4.269007504	6.113279171	5.710177729	3.194626658
August 2021	4.845926184	7.324798064	5.551374052	3.335099201
September 2021	6.584352598	7.332411609	4.684793257	3.679748469
October 2021	7.616786616	6.860921849	4.331432993	4.088740105
November 2021	8.470280933	6.138286902	4.735646764	4.357004624
December 2021	7.998175699	6.38732926	5.106553744	4.538443317
January 2022	8.690114409	7.709109934	4.553730479	4.904655841
February 2022	10.52143242	7.991156668	4.7026844	5.28493931
March 2022	11.23174395	7.60829813	5.484417814	5.446671463
April 2022	11.661924	5.847225685	5.725645503	5.622951694
May 2022	12.70140048	5.306112144	5.144367799	6.011959115
June 2022	14.10197875	5.059178068	5.002944343	6.699047754
July 2022	14.96882034	3.34292994	4.76741346	7.135029417
August 2022	13.88603315	3.272325827	5.102761957	7.677016213
September 2022	12.24832907	3.930980709	4.837470639	8.287562206
October 2022	11.23853609	3.533050452	4.931895068	8.562284124
November 2022	9.644946878	2.559688549	5.136080869	8.69307028
December 2022	8.186434018	1.298724047	4.864993721	8.78155166
January 2023	6.546739012	1.970156833	5.435448696	8.777911004
February 2023	5.374127834	1.262764769	5.042428356	8.693299931
March 2023	3.964359448	1.069960739	4.742418022	8.139564939
April 2023	2.974083565	1.477443124	4.620600882	7.979302252
May 2023	2.348313918	2.426317781	4.230218842	7.666601415
June 2023	1.546840036	2.115950342	4.170152699	7.061317662
July 2023	1.014801496	0.405275541	3.858223043	6.68546405
August 2023	1.007711989	-0.128541772	3.289019667	6.127366542
September 2023	1.589306639	-0.565671334	3.601773569	6.111358039
October 2023	1.973774314	-0.718353681	2.984624194	5.811854195
November 2023	1.354339294	-1.942556986	2.848551901	5.706862367
December 2023	1.478565737	-2.158952399	2.702547339	5.599745494
January 2024	1.997023277	-1.418285476	3.619535817	5.651916715
February 2024	1.80935342	-0.684429915	3.772035988	5.67006997
March 2024	1.35259695	-0.50126845	3.781116803	5.548816923
April 2024	0.603772213	-0.363549265	4.170985402	5.504484448
May 2024	0.996904371	-0.022127769	4.007727181	5.388807976
June 2024	1.037928638	0.69450988	3.91593622	5.084179125
July 2024	0.425580243	0.59464961	2.874556896	4.827213323
August 2024	0.298539124	-0.331717517	3.004152762	4.875001928
September 2024	1.087744492	-0.261546142	2.729295903	4.642270246
October 2024	1.760219127	-0.353184364	2.93280493	4.600436429
November 2024	2.151706374	-0.256191578	3.061796007	4.246975905
December 2024	2.520982974	-1.00893898	3.32284045	4.326152233

Note: Food inflation is the personal consumption expenditures (PCE) price index for food. Core goods is the personal consumption expenditures (PCE) price index for goods excluding food and energy. Core services ex. housing is the personal consumption expenditures (PCE) price index for Core services ex. housing. Housing inflation is the personal consumption expenditures (PCE) price index for housing services.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics.

Slide 6: Food Inflation

6-month percent change

Make Full Screen

Date	Core PCE	Food Inflation
January 2018	2.003738722	0.93808681
February 2018	2.169090726	0.482218711
March 2018	2.366188277	0.451909043
April 2018	2.233539322	0.42938334
May 2018	2.49208511	0.123871162
June 2018	2.375814495	0.149765596
July 2018	1.987862735	-0.143262181
August 2018	1.623166493	0.359187945
September 2018	1.556011715	0.692712943
October 2018	1.509561747	0.288863172
November 2018	1.530670512	1.25946748
December 2018	1.701459509	1.616147581
January 2019	1.701192241	1.81480688
February 2019	1.865188663	2.368179647
March 2019	1.67615979	2.09012893
April 2019	1.764155295	1.250268277
May 2019	1.595690847	1.263562193
June 2019	1.612522563	0.636174206
July 2019	1.57708418	0.067129331
August 2019	1.626560413	-0.626480585
September 2019	1.587887556	-0.424106884
October 2019	1.483210789	0.877080238
November 2019	1.399840271	0.633756392
December 2019	1.477024755	0.776673088
January 2020	1.568633893	1.662534617
February 2020	1.716407875	2.40577382
March 2020	1.396929313	2.892478462
April 2020	0.438823886	7.098407915
May 2020	0.534856145	8.539867246
June 2020	0.401083868	9.404735701
July 2020	0.790162058	6.722707207
August 2020	1.055462312	5.913018146
September 2020	1.533618392	4.619360564
October 2020	2.342441987	0.559567241
November 2020	2.328237657	-1.05342619
December 2020	2.644224357	-1.374052339
January 2021	2.578855672	0.47040014
February 2021	2.374360507	0.757389701
March 2021	2.872464291	1.474827658
April 2021	3.981208649	1.682498078
May 2021	4.840390818	2.464780248
June 2021	5.146526841	3.30102464
July 2021	5.375121618	4.269007504
August 2021	5.63523646	4.845926184
September 2021	5.228543869	6.584352598
October 2021	4.960119306	7.616786616
November 2021	5.036758767	8.470280933
December 2021	5.342308734	7.998175699
January 2022	5.437733582	8.690114409
February 2022	5.662979999	10.52143242
March 2022	6.032316496	11.23174395
April 2022	5.737835756	11.661924
May 2022	5.335042758	12.70140048
June 2022	5.304593671	14.10197875
July 2022	4.788644865	14.96882034
August 2022	5.051019497	13.88603315
September 2022	5.182539405	12.24832907
October 2022	5.182810281	11.23853609
November 2022	5.066601518	9.644946878
December 2022	4.599871285	8.186434018
January 2023	5.101934342	6.546739012
February 2023	4.676229299	5.374127834
March 2023	4.362442786	3.964359448
April 2023	4.375588597	2.974083565
May 2023	4.351639579	2.348313918
June 2023	4.133251521	1.546840036
July 2023	3.449769603	1.014801496
August 2023	2.894429021	1.007711989
September 2023	2.956344814	1.589306639
October 2023	2.517437384	1.973774314
November 2023	2.103961306	1.354339294
December 2023	1.94959678	1.478565737
January 2024	2.681370061	1.997023277
February 2024	2.963351478	1.80935342
March 2024	3.002884139	1.35259695
April 2024	3.254002619	0.603772213
May 2024	3.234139681	0.996904371
June 2024	3.315903878	1.037928638
July 2024	2.649244151	0.425580243
August 2024	2.499406362	0.298539124
September 2024	2.319811575	1.087744492
October 2024	2.40664485	1.760219127
November 2024	2.444424671	2.151706374
December 2024	2.415853862	2.520982974

Note: Food inflation is the personal consumption expenditures (PCE) price index for food. Core PCE is PCE price deflator that excludes food and energy. Data are monthly. Dashed line represents Food PCE Inflation 2010-2019 Mean at 1.17.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics.

Slide 7: Core Goods Inflation

6-month percent change

Make Full Screen

Date	Core PCE Inflation	Core Goods Inflation
January 2018	2.003738722	-0.616940472
February 2018	2.169090726	-0.214251684
March 2018	2.366188277	0.261133207
April 2018	2.233539322	0.262681546
May 2018	2.49208511	0.930949209
June 2018	2.375814495	0.628999004
July 2018	1.987862735	-0.288634846
August 2018	1.623166493	-1.125951619
September 2018	1.556011715	-1.237115918
October 2018	1.509561747	-1.360202756
November 2018	1.530670512	-1.366042878
December 2018	1.701459509	-1.136479463
January 2019	1.701192241	-0.194754628
February 2019	1.865188663	0.260357427
March 2019	1.67615979	-0.002017298
April 2019	1.764155295	-0.406618203
May 2019	1.595690847	-0.428711107
June 2019	1.612522563	0.143333702
July 2019	1.57708418	-0.954811243
August 2019	1.626560413	-0.583306109
September 2019	1.587887556	-0.527841773
October 2019	1.483210789	-0.268362815
November 2019	1.399840271	-0.558542661
December 2019	1.477024755	-1.057927576
January 2020	1.568633893	-0.64145069
February 2020	1.716407875	-0.290703389
March 2020	1.396929313	-0.744974113
April 2020	0.438823886	-2.245639798
May 2020	0.534856145	-2.565066138
June 2020	0.401083868	-2.313877961
July 2020	0.790162058	-1.244671196
August 2020	1.055462312	-0.531390021
September 2020	1.533618392	-0.028421491
October 2020	2.342441987	1.3109771
November 2020	2.328237657	2.312801709
December 2020	2.644224357	2.570098425
January 2021	2.578855672	1.988226684
February 2021	2.374360507	0.621709631
March 2021	2.872464291	1.119914708
April 2021	3.981208649	3.584927313
May 2021	4.840390818	5.051223089
June 2021	5.146526841	6.091230826
July 2021	5.375121618	6.113279171
August 2021	5.63523646	7.324798064
September 2021	5.228543869	7.332411609
October 2021	4.960119306	6.860921849
November 2021	5.036758767	6.138286902
December 2021	5.342308734	6.38732926
January 2022	5.437733582	7.709109934
February 2022	5.662979999	7.991156668
March 2022	6.032316496	7.60829813
April 2022	5.737835756	5.847225685
May 2022	5.335042758	5.306112144
June 2022	5.304593671	5.059178068
July 2022	4.788644865	3.34292994
August 2022	5.051019497	3.272325827
September 2022	5.182539405	3.930980709
October 2022	5.182810281	3.533050452
November 2022	5.066601518	2.559688549
December 2022	4.599871285	1.298724047
January 2023	5.101934342	1.970156833
February 2023	4.676229299	1.262764769
March 2023	4.362442786	1.069960739
April 2023	4.375588597	1.477443124
May 2023	4.351639579	2.426317781
June 2023	4.133251521	2.115950342
July 2023	3.449769603	0.405275541
August 2023	2.894429021	-0.128541772
September 2023	2.956344814	-0.565671334
October 2023	2.517437384	-0.718353681
November 2023	2.103961306	-1.942556986
December 2023	1.94959678	-2.158952399
January 2024	2.681370061	-1.418285476
February 2024	2.963351478	-0.684429915
March 2024	3.002884139	-0.50126845
April 2024	3.254002619	-0.363549265
May 2024	3.234139681	-0.022127769
June 2024	3.315903878	0.69450988
July 2024	2.649244151	0.59464961
August 2024	2.499406362	-0.331717517
September 2024	2.319811575	-0.261546142
October 2024	2.40664485	-0.353184364
November 2024	2.444424671	-0.256191578
December 2024	2.415853862	-1.00893898

Note: Core goods is the personal consumption expenditures (PCE) price index for goods excluding food and energy. Core PCE is PCE price deflator that excludes food and energy. Data are monthly. Dashed line represents Core Goods PCE Inflation 2010-2019 Mean at -0.46.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics.

Slide 8: Rotation to Goods

Make Full Screen

Date	Goods to Services Consumption Ratio (6-month percent change)	Core Goods Inflation (percent)
January 2018	0.470596852	-0.616940472
February 2018	0.470773242	-0.214251684
March 2018	0.465473928	0.261133207
April 2018	0.464235821	0.262681546
May 2018	0.468800736	0.930949209
June 2018	0.462307455	0.628999004
July 2018	0.462431629	-0.288634846
August 2018	0.461638893	-1.125951619
September 2018	0.460870448	-1.237115918
October 2018	0.460726915	-1.360202756
November 2018	0.465065849	-1.366042878
December 2018	0.451662145	-1.136479463
January 2019	0.454221843	-0.194754628
February 2019	0.454167922	0.260357427
March 2019	0.458867328	-0.002017298
April 2019	0.459479483	-0.406618203
May 2019	0.462156186	-0.428711107
June 2019	0.461291689	0.143333702
July 2019	0.461042856	-0.954811243
August 2019	0.45920367	-0.583306109
September 2019	0.456476543	-0.527841773
October 2019	0.454240328	-0.268362815
November 2019	0.455441787	-0.558542661
December 2019	0.455214188	-1.057927576
January 2020	0.448414605	-0.64145069
February 2020	0.449481757	-0.290703389
March 2020	0.479112931	-0.744974113
April 2020	0.468584341	-2.245639798
May 2020	0.510026255	-2.565066138
June 2020	0.515631978	-2.313877961
July 2020	0.518172381	-1.244671196
August 2020	0.511702784	-0.531390021
September 2020	0.512214313	-0.028421491
October 2020	0.506478358	1.3109771
November 2020	0.505851868	2.312801709
December 2020	0.511640345	2.570098425
January 2021	0.521035826	1.988226684
February 2021	0.508481205	0.621709631
March 2021	0.543042667	1.119914708
April 2021	0.539931562	3.584927313
May 2021	0.524519873	5.051223089
June 2021	0.523789666	6.091230826
July 2021	0.506301899	6.113279171
August 2021	0.507135541	7.324798064
September 2021	0.506126092	7.332411609
October 2021	0.514032866	6.860921849
November 2021	0.5158225	6.138286902
December 2021	0.511347268	6.38732926
January 2022	0.518241853	7.709109934
February 2022	0.5129401	7.991156668
March 2022	0.516918849	7.60829813
April 2022	0.515195108	5.847225685
May 2022	0.511054	5.306112144
June 2022	0.513672169	5.059178068
July 2022	0.506309416	3.34292994
August 2022	0.501013241	3.272325827
September 2022	0.498132208	3.930980709
October 2022	0.499174329	3.533050452
November 2022	0.491797503	2.559688549
December 2022	0.483218167	1.298724047
January 2023	0.494557931	1.970156833
February 2023	0.492111828	1.262764769
March 2023	0.482986759	1.069960739
April 2023	0.486168615	1.477443124
May 2023	0.483309336	2.426317781
June 2023	0.480383441	2.115950342
July 2023	0.479524647	0.405275541
August 2023	0.481355604	-0.128541772
September 2023	0.482167531	-0.565671334
October 2023	0.477816284	-0.718353681
November 2023	0.473706737	-1.942556986
December 2023	0.47395328	-2.158952399
January 2024	0.463577757	-1.418285476
February 2024	0.461968498	-0.684429915
March 2024	0.463926616	-0.50126845
April 2024	0.461045166	-0.363549265
May 2024	0.461393581	-0.022127769
June 2024	0.458620617	0.69450988
July 2024	0.460858549	0.59464961
August 2024	0.455495619	-0.331717517
September 2024	0.458260568	-0.261546142
October 2024	0.454661046	-0.353184364
November 2024	0.456348123	-0.256191578
December 2024	0.45899941	-1.00893898

Note: Core Goods is personal consumption expenditures price (PCE) deflator for goods. Goods to Services consumption ratio is nominal PCE goods to nominal PCE services consumption ratio. Data are monthly.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics.

Slide 9: Indexes of Shortages

Make Full Screen

Date	Core PCE (annualized quarterly percent change)	Shortage Index
2018:Q1	2.569943758	65.068001
2018:Q2	2.163408416	55.314915
2018:Q3	1.283763023	66.002182
2018:Q4	1.878364677	75.527283
2019:Q1	1.616699646	75.833832
2019:Q2	1.696716237	52.984562
2019:Q3	1.497729744	78.170166
2019:Q4	1.410325303	56.975353
2020:Q1	1.712327933	228.69069
2020:Q2	-0.77790967	100.83101
2020:Q3	3.065684598	91.348045
2020:Q4	1.81489829	109.37588
2021:Q1	3.404637406	124.43465
2021:Q2	5.924176989	286.40005
2021:Q3	4.906288412	342.29248
2021:Q4	5.317468615	464.80219
2022:Q1	6.109312369	352.15045
2022:Q2	4.811207399	360.46561
2022:Q3	5.202435869	337.06348
2022:Q4	4.696697706	267.87549
2023:Q1	4.727424863	196.81624
2023:Q2	3.849802343	168.89951
2023:Q3	2.352262447	166.63478
2023:Q4	2.026172399	159.24947
2024:Q1	3.747552958	146.44902
2024:Q2	2.78849524	122.34549
2024:Q3	2.192855766	99.957985
2024:Q4	2.654504963	101.82162

Note: Shortage index data are expressed in index points and are monthly.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. https://www.matteoiacoviello.com/shortages.html.

Slide 10: Core Services ex Housing Inflation

6-month percent change

Make Full Screen

Date	Core PCE	Core Services Ex. Housing
January 2018	2.003738722	2.627294683
February 2018	2.169090726	2.835512295
March 2018	2.366188277	2.948649458
April 2018	2.233539322	2.71739807
May 2018	2.49208511	2.884597238
June 2018	2.375814495	2.872614573
July 2018	1.987862735	2.595230074
August 2018	1.623166493	2.2575111
September 2018	1.556011715	2.235516648
October 2018	1.509561747	2.230359705
November 2018	1.530670512	2.225378907
December 2018	1.701459509	2.414510675
January 2019	1.701192241	2.035576207
February 2019	1.865188663	2.118145645
March 2019	1.67615979	1.838046187
April 2019	1.764155295	2.123420446
May 2019	1.595690847	1.888080751
June 2019	1.612522563	1.629494443
July 2019	1.57708418	2.034559564
August 2019	1.626560413	1.994721871
September 2019	1.587887556	1.935928705
October 2019	1.483210789	1.742634609
November 2019	1.399840271	1.715665598
December 2019	1.477024755	2.103169941
January 2020	1.568633893	2.044946683
February 2020	1.716407875	2.160088081
March 2020	1.396929313	1.819241314
April 2020	0.438823886	0.762591967
May 2020	0.534856145	1.107602327
June 2020	0.401083868	0.907567309
July 2020	0.790162058	1.170262836
August 2020	1.055462312	1.360064699
September 2020	1.533618392	2.123337087
October 2020	2.342441987	3.009849566
November 2020	2.328237657	2.641481915
December 2020	2.644224357	3.04586337
January 2021	2.578855672	3.242915641
February 2021	2.374360507	3.485731043
March 2021	2.872464291	4.059832689
April 2021	3.981208649	4.807986132
May 2021	4.840390818	5.475602397
June 2021	5.146526841	5.410497061
July 2021	5.375121618	5.710177729
August 2021	5.63523646	5.551374052
September 2021	5.228543869	4.684793257
October 2021	4.960119306	4.331432993
November 2021	5.036758767	4.735646764
December 2021	5.342308734	5.106553744
January 2022	5.437733582	4.553730479
February 2022	5.662979999	4.7026844
March 2022	6.032316496	5.484417814
April 2022	5.737835756	5.725645503
May 2022	5.335042758	5.144367799
June 2022	5.304593671	5.002944343
July 2022	4.788644865	4.76741346
August 2022	5.051019497	5.102761957
September 2022	5.182539405	4.837470639
October 2022	5.182810281	4.931895068
November 2022	5.066601518	5.136080869
December 2022	4.599871285	4.864993721
January 2023	5.101934342	5.435448696
February 2023	4.676229299	5.042428356
March 2023	4.362442786	4.742418022
April 2023	4.375588597	4.620600882
May 2023	4.351639579	4.230218842
June 2023	4.133251521	4.170152699
July 2023	3.449769603	3.858223043
August 2023	2.894429021	3.289019667
September 2023	2.956344814	3.601773569
October 2023	2.517437384	2.984624194
November 2023	2.103961306	2.848551901
December 2023	1.94959678	2.702547339
January 2024	2.681370061	3.619535817
February 2024	2.963351478	3.772035988
March 2024	3.002884139	3.781116803
April 2024	3.254002619	4.170985402
May 2024	3.234139681	4.007727181
June 2024	3.315903878	3.91593622
July 2024	2.649244151	2.874556896
August 2024	2.499406362	3.004152762
September 2024	2.319811575	2.729295903
October 2024	2.40664485	2.93280493
November 2024	2.444424671	3.061796007
December 2024	2.415853862	3.32284045

Note: Core services ex. housing is the personal consumption expenditures (PCE) price index for Core services ex. housing. Core PCE is PCE price deflater that excludes food and energy. Data are monthly. Dashed line represents Core Services ex housing 2010-2019 Mean at 2.16.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics.

Slide 11: Core Services ex. Housing Inflation and Wages

Annualized quarterly percent change

Make Full Screen

Date	ECI Wages Inflation	Core Services Ex. Housing Inflation
2018:Q1	3.409226759	3.125000488
2018:Q2	2.759516086	2.525750656
2018:Q3	3.048562435	2.199244976
2018:Q4	2.719905339	2.381218273
2019:Q1	2.701536557	1.614367216
2019:Q2	2.382620807	2.145945714
2019:Q3	2.967157924	1.831010657
2019:Q4	2.647889205	1.876839531
2020:Q1	3.222005695	2.13926892
2020:Q2	1.734063658	-0.273056709
2020:Q3	2.016501214	3.408188354
2020:Q4	3.457895676	2.39234363
2021:Q1	4.008096565	4.815140616
2021:Q2	2.82269193	5.649583227
2021:Q3	5.953733105	4.977966881
2021:Q4	4.729627073	4.473375005
2022:Q1	5.515964877	5.356288491
2022:Q2	5.996999946	5.222394604
2022:Q3	4.271766741	4.58368726
2022:Q4	4.495173546	5.372742433
2023:Q1	4.711243488	4.772378507
2023:Q2	4.131158074	3.908635035
2023:Q3	3.829764019	3.257517492
2023:Q4	3.793447963	2.433981438
2024:Q1	4.521906474	5.030921551
2024:Q2	3.465026996	3.04125353
2024:Q3	2.939179865	2.697242282
2024:Q4	3.410170349	3.516354718

Note: ECI wages is the employment cost index for private industry. Data are quarterly. Core services ex. housing is the personal consumption expenditures (PCE) price index for Core services ex. housing.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. Bureau of Labor Statistics.

Slide 12: Housing Services Inflation

6-month percent change

Make Full Screen

Date	Core PCE	Housing Inflation
January 2018	2.003738722	3.699433061
February 2018	2.169090726	3.38470618
March 2018	2.366188277	3.450338222
April 2018	2.233539322	3.461677341
May 2018	2.49208511	3.430167525
June 2018	2.375814495	3.200179317
July 2018	1.987862735	3.233002785
August 2018	1.623166493	3.455875381
September 2018	1.556011715	3.284604539
October 2018	1.509561747	3.210819038
November 2018	1.530670512	3.354562415
December 2018	1.701459509	3.362424384
January 2019	1.701192241	3.275790279
February 2019	1.865188663	3.281654682
March 2019	1.67615979	3.50901672
April 2019	1.764155295	3.641464869
May 2019	1.595690847	3.495425828
June 2019	1.612522563	3.663564836
July 2019	1.57708418	3.67156819
August 2019	1.626560413	3.569800406
September 2019	1.587887556	3.498479224
October 2019	1.483210789	3.176303549
November 2019	1.399840271	3.194893148
December 2019	1.477024755	3.059190929
January 2020	1.568633893	3.182036945
February 2020	1.716407875	3.160762985
March 2020	1.396929313	3.093020949
April 2020	0.438823886	3.119122125
May 2020	0.534856145	3.078964377
June 2020	0.401083868	2.745663877
July 2020	0.790162058	2.526465459
August 2020	1.055462312	2.334788531
September 2020	1.533618392	1.960890796
October 2020	2.342441987	1.934803058
November 2020	2.328237657	1.540751631
December 2020	2.644224357	1.625514457
January 2021	2.578855672	1.484868891
February 2021	2.374360507	1.659873732
March 2021	2.872464291	1.96196878
April 2021	3.981208649	2.053185299
May 2021	4.840390818	2.558392469
June 2021	5.146526841	2.896978516
July 2021	5.375121618	3.194626658
August 2021	5.63523646	3.335099201
September 2021	5.228543869	3.679748469
October 2021	4.960119306	4.088740105
November 2021	5.036758767	4.357004624
December 2021	5.342308734	4.538443317
January 2022	5.437733582	4.904655841
February 2022	5.662979999	5.28493931
March 2022	6.032316496	5.446671463
April 2022	5.737835756	5.622951694
May 2022	5.335042758	6.011959115
June 2022	5.304593671	6.699047754
July 2022	4.788644865	7.135029417
August 2022	5.051019497	7.677016213
September 2022	5.182539405	8.287562206
October 2022	5.182810281	8.562284124
November 2022	5.066601518	8.69307028
December 2022	4.599871285	8.78155166
January 2023	5.101934342	8.777911004
February 2023	4.676229299	8.693299931
March 2023	4.362442786	8.139564939
April 2023	4.375588597	7.979302252
May 2023	4.351639579	7.666601415
June 2023	4.133251521	7.061317662
July 2023	3.449769603	6.68546405
August 2023	2.894429021	6.127366542
September 2023	2.956344814	6.111358039
October 2023	2.517437384	5.811854195
November 2023	2.103961306	5.706862367
December 2023	1.94959678	5.599745494
January 2024	2.681370061	5.651916715
February 2024	2.963351478	5.67006997
March 2024	3.002884139	5.548816923
April 2024	3.254002619	5.504484448
May 2024	3.234139681	5.388807976
June 2024	3.315903878	5.084179125
July 2024	2.649244151	4.827213323
August 2024	2.499406362	4.875001928
September 2024	2.319811575	4.642270246
October 2024	2.40664485	4.600436429
November 2024	2.444424671	4.246975905
December 2024	2.415853862	4.326152233

Note: Housing inflation is the personal consumption expenditures (PCE) price index for housing services. Core PCE is PCE price deflator that excludes food and energy. Data are monthly. Dashed line represents Housing Inflation 2010-2019 Mean at 2.60.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics.

Slide 13: Housing Services Inflation and New Rents

6-month percent change

Make Full Screen

Date	CoreLogic New Rent Index	Housing Inflation
January 2018	3.140617093	3.699433061
February 2018	3.268860901	3.38470618
March 2018	3.397467425	3.450338222
April 2018	3.67599676	3.461677341
May 2018	3.799729654	3.430167525
June 2018	4.217869579	3.200179317
July 2018	4.039686745	3.233002785
August 2018	3.962078963	3.455875381
September 2018	3.656262013	3.284604539
October 2018	3.112011714	3.210819038
November 2018	2.94340355	3.354562415
December 2018	2.838584737	3.362424384
January 2019	2.979035587	3.275790279
February 2019	3.073155439	3.281654682
March 2019	3.347227194	3.50901672
April 2019	3.656717466	3.641464869
May 2019	3.759123085	3.495425828
June 2019	3.68953675	3.663564836
July 2019	3.583152103	3.67156819
August 2019	3.299327293	3.569800406
September 2019	3.082055674	3.498479224
October 2019	2.523138901	3.176303549
November 2019	2.474142044	3.194893148
December 2019	2.499646359	3.059190929
January 2020	2.518962896	3.182036945
February 2020	2.975784053	3.160762985
March 2020	3.212185455	3.093020949
April 2020	2.727890516	3.119122125
May 2020	1.676431414	3.078964377
June 2020	1.576991329	2.745663877
July 2020	2.73850151	2.526465459
August 2020	3.704003788	2.334788531
September 2020	4.901897021	1.960890796
October 2020	7.583632855	1.934803058
November 2020	10.52964919	1.540751631
December 2020	12.08433112	1.625514457
January 2021	11.46974741	1.484868891
February 2021	11.23959948	1.659873732
March 2021	11.22118815	1.96196878
April 2021	10.77416675	2.053185299
May 2021	10.47963279	2.558392469
June 2021	11.14337659	2.896978516
July 2021	12.76698598	3.194626658
August 2021	13.99579865	3.335099201
September 2021	14.87400317	3.679748469
October 2021	15.84800323	4.088740105
November 2021	16.17156364	4.357004624
December 2021	15.72513269	4.538443317
January 2022	14.84385435	4.904655841
February 2022	13.9893586	5.28493931
March 2022	13.01423902	5.446671463
April 2022	11.84316507	5.622951694
May 2022	10.72756571	6.011959115
June 2022	9.492172782	6.699047754
July 2022	8.254751582	7.135029417
August 2022	6.500808159	7.677016213
September 2022	4.948211516	8.287562206
October 2022	3.183367752	8.562284124
November 2022	2.158521101	8.69307028
December 2022	1.370748888	8.78155166
January 2023	0.838656708	8.777911004
February 2023	0.940299601	8.693299931
March 2023	1.408188392	8.139564939
April 2023	2.108594367	7.979302252
May 2023	2.362795445	7.666601415
June 2023	2.746765404	7.061317662
July 2023	2.923442261	6.68546405
August 2023	2.784838358	6.127366542
September 2023	2.212128136	6.111358039
October 2023	1.879248487	5.811854195
November 2023	1.894405062	5.706862367
December 2023	2.206519918	5.599745494
January 2024	2.857707144	5.651916715
February 2024	3.567494797	5.67006997
March 2024	4.079665351	5.548816923
April 2024	4.34692233	5.504484448
May 2024	4.06897417	5.388807976
June 2024	3.353091947	5.084179125
July 2024	2.443146345	4.827213323
August 2024	1.646291392	4.875001928
September 2024	1.366815205	4.642270246
October 2024	1.02765963	4.600436429
November 2024	0.71056224	4.246975905
December 2024	0.155756166	4.326152233

Note: Housing inflation is the personal consumption expenditures (PCE) price index for housing services. New rent index is single family detached rent index from Corelogic.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. CoreLogic.

Slide 14: The Phillips Curve(s)

How to think of inflation and its relationship with the rest of the economy?

Slide 15: Wage Phillips Curve

Wage Phillips curve: workers bargain over expected real wage growth

$w_t-p_t^e=w_{t-1}-p_{t-1}+\Delta prod_t+a-bU_t$

The expected real wage is the past real wage with two updates.

An update that factors in improvements in productivity
- Since workers would expect to earn more if they are more productive
An update related to current labor market conditions, summarized by the unemployment rate or other proxies for labor mkt tightness.
- If the unemployment rate is high, there will be a lot of competition for a job and workers expect slower salary growth; conversely, if the unemployment rate is very low, the labor market will be 'tight' and workers can bargain for higher wages.

Slide 16: Expectations Augmented Phillips Curve

Firms charge a mark-up μ over wages, net of productivity
- $p_t=\mu_{t}+w_t-prod_t$
Substituting mark-up equation in wage Phillips curve, you get the expectation augmented Phillips curve
- $\pi_t=\pi_t^e+b\left(U_t-{U_t}^\ast\right)$
Under assumption of simplest adaptive expectations, expected inflation is lagged inflation
- $\pi_t^e=\pi_{t-1}$
Plug in expectations augmented Phillips curve and assume that Δμt=0 to get the "accelerationist" Phillips curve
- $\pi_t=\pi_{t-1}+b\left(U_t-{U_t}^\ast\right)$

Slide 17: Some Empirical Results

Which Phillips curve better captures inflation dynamics?

Slide 18: The Accelerationist Phillips Curve over 1960-1986

Make Full Screen

Date	CBO Unemployment Gap	Change in Core PCE Inflation
1960:Q1	-0.086212005	-1.091562331
1960:Q2	-0.021040844	0.276744679
1960:Q3	0.305093459	0.070559951
1960:Q4	0.984221327	-0.284919442
1961:Q1	1.47323254	-0.633238676
1961:Q2	1.705164728	0.651937748
1961:Q3	1.482209947	0.422905663
1961:Q4	0.872079176	-0.782408116
1962:Q1	0.308587086	0.520751912
1962:Q2	0.177080775	0.044214278
1962:Q3	0.231925662	-0.203933969
1962:Q4	0.166255176	-0.5703784
1963:Q1	0.416712303	0.563459415
1963:Q2	0.337047354	0.192030382
1963:Q3	0.147149319	0.043242251
1963:Q4	0.192206844	0.384704356
1964:Q1	0.052511866	-0.228252042
1964:Q2	-0.170435275	-0.514445327
1964:Q3	-0.410629361	-0.099679479
1964:Q4	-0.466129605	-0.074842749
1965:Q1	-0.570744766	0.499665696
1965:Q2	-0.768457024	-0.291945631
1965:Q3	-1.074872462	0.019960389
1965:Q4	-1.353369534	0.090828926
1966:Q1	-1.626076909	0.682042768
1966:Q2	-1.656008456	1.247069467
1966:Q3	-1.712149854	0.068014485
1966:Q4	-1.817057653	0.160085761
1967:Q1	-1.709686095	-1.281740488
1967:Q2	-1.709164638	0.493360096
1967:Q3	-1.729138318	0.968588385
1967:Q4	-1.637730032	0.423584488
1968:Q1	-1.84142456	0.525950876
1968:Q2	-2.020474485	0.104512798
1968:Q3	-2.046627562	-0.188798958
1968:Q4	-2.198586733	0.190793386
1969:Q1	-2.231939755	-0.294444265
1969:Q2	-2.180361769	0.424278236
1969:Q3	-2.018147069	-0.164842299
1969:Q4	-2.060329577	0.071486078
1970:Q1	-1.503657676	-0.326120426
1970:Q2	-0.916835997	0.135760433
1970:Q3	-0.503143368	-0.051915652
1970:Q4	0.102231774	1.219055334
1971:Q1	0.189771387	-0.599342865
1971:Q2	0.18754347	-0.516102769
1971:Q3	0.259437922	-0.80503829
1971:Q4	0.195122103	-1.532627312
1972:Q1	-0.027155242	1.607119736
1972:Q2	-0.1294127	-1.177711462
1972:Q3	-0.199545216	0.314645906
1972:Q4	-0.51566595	-0.500184442
1973:Q1	-0.897089797	0.275571597
1973:Q2	-0.950704699	2.743304737
1973:Q3	-1.047120607	-0.130867975
1973:Q4	-1.099053272	0.251081923
1974:Q1	-0.791562674	1.365672544
1974:Q2	-0.712292984	3.264449006
1974:Q3	-0.287237477	1.614725696
1974:Q4	0.653333668	-1.787186503
1975:Q1	2.291257561	-2.086980123
1975:Q2	2.907171886	-1.824296622
1975:Q3	2.550921036	-0.079746192
1975:Q4	2.319004602	0.525604885
1976:Q1	1.773635463	-0.444313402
1976:Q2	1.586958588	-1.346966236
1976:Q3	1.771572831	1.53242056
1976:Q4	1.772973103	-0.013691121
1977:Q1	1.528177409	0.503334255
1977:Q2	1.15962897	-0.640170513
1977:Q3	0.935727892	0.557774851
1977:Q4	0.66025371	-0.880251773
1978:Q1	0.370093046	0.451571539
1978:Q2	0.062682339	0.684643857
1978:Q3	0.101338188	-0.031209352
1978:Q4	-0.059422331	0.329708474
1979:Q1	-0.069064985	-1.798021883
1979:Q2	-0.208090617	3.503116284
1979:Q3	-0.038644906	-1.483710428
1979:Q4	0.014543303	1.00685385
1980:Q1	0.363626216	1.550910294
1980:Q2	1.40302994	-0.905453123
1980:Q3	1.771357672	-0.03803597
1980:Q4	1.508572274	0.899256384
1981:Q1	1.519574446	-0.947144293
1981:Q2	1.499436522	-1.380276058
1981:Q3	1.514044372	-0.210496579
1981:Q4	2.342082099	-0.272349821
1982:Q1	2.945702547	-1.308914915
1982:Q2	3.498647105	-0.466600298
1982:Q3	4.014324353	1.036956961
1982:Q4	4.793622593	-0.870618605
1983:Q1	4.503505772	-0.330182998
1983:Q2	4.219867666	-2.265382443
1983:Q3	3.465441147	3.118063039
1983:Q4	2.676157015	-2.977157309
1984:Q1	2.024972908	0.867618926
1984:Q2	1.641837168	0.664696542
1984:Q3	1.604923118	-0.960221665
1984:Q4	1.450292822	-0.933985963
1985:Q1	1.419570392	2.697252482
1985:Q2	1.446021581	-2.06025092
1985:Q3	1.39372381	0.663128708
1985:Q4	1.240845452	-1.274613512
1986:Q1	1.181304481	1.486548397
1986:Q2	1.37221341	-1.618178452
1986:Q3	1.200342706	0.012627901
1986:Q4	1.057352626	0.516263192

Note: Change in core PCE inflation is first difference of personal consumption expenditures price deflator that excludes food and energy. CBO unemployment gap is the unemployment gap from the Congressional Budget Office (CBO). Orange line is fit from regression of variable on y-axis to variable on x-axis. Quarterly data from 1960:Q1to 1986:Q4.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. Congressional Budget Office. FRB staff calculations.

Slide 19: Baseline Model

The accelerationist Phillips curve
- $\pi_t=\pi_{t-1}-b\left(U_t-{U_t}^\ast\right)$
Implies that inflation will continue falling when $U_t>{U_t}^\ast$
Those dynamics do not capture well the Great Moderation, in which inflation has been very flat and mean reverting to its long-run trend.
A more general, better-fitting Phillips curve for my baseline model is
- $\pi_t=a\pi_{t−1}+(1−a)\pi_t^{lre}−b\left(U_t-{U_t}^\ast\right)$
Where $\pi_t^{lre}$ are long-run inflation expectations

Slide 20: The Accelerationist Phillips Curve over 1987-2019

Make Full Screen

Date	CBO Unemployment Gap	Change in Core PCE Inflation
1987:Q1	0.839735754	-0.744931906
1987:Q2	0.525004051	1.390838143
1987:Q3	0.280963602	-0.308982391
1987:Q4	0.154871623	0.496179046
1988:Q1	0.014547612	-0.224490789
1988:Q2	-0.197406038	1.033594601
1988:Q3	-0.171560552	-0.247110859
1988:Q4	-0.313305294	-0.150327559
1989:Q1	-0.409346829	-0.102025434
1989:Q2	-0.364203655	-0.75339703
1989:Q3	-0.329120677	-0.671709492
1989:Q4	-0.229727055	0.695309378
1990:Q1	-0.37054915	0.976209656
1990:Q2	-0.313692067	-0.144692726
1990:Q3	0.043287545	-0.435438672
1990:Q4	0.473320782	-0.705075588
1991:Q1	0.939549452	0.192442978
1991:Q2	1.21458794	-0.469892481
1991:Q3	1.272649022	0.522389389
1991:Q4	1.524271148	-0.457256535
1992:Q1	1.805493877	-0.096324736
1992:Q2	2.054577012	-0.235171019
1992:Q3	2.116768664	-0.470847618
1992:Q4	1.909980356	0.579134403
1993:Q1	1.662235517	-0.178689023
1993:Q2	1.609640331	0.286191557
1993:Q3	1.376252928	-0.820003148
1993:Q4	1.223089955	-0.177820696
1994:Q1	1.040952008	-0.247743401
1994:Q2	0.656821528	0.88924962
1994:Q3	0.581168054	-0.464788526
1994:Q4	0.223748948	-0.204133844
1995:Q1	0.108513095	0.066945527
1995:Q2	0.310775675	0.279372707
1995:Q3	0.329188174	-0.473603821
1995:Q4	0.249570675	0.102037514
1996:Q1	0.242661883	-0.44062554
1996:Q2	0.182624562	0.329694245
1996:Q3	2.86636E-05	-0.072561204
1996:Q4	0.067824789	0.457478625
1997:Q1	-0.016445205	-0.715895221
1997:Q2	-0.247664997	0.522710837
1997:Q3	-0.341552048	-1.168093149
1997:Q4	-0.500404577	0.340285143
1998:Q1	-0.558518078	-0.093679438
1998:Q2	-0.764898384	0.046775309
1998:Q3	-0.642493635	0.202410838
1998:Q4	-0.724275869	-0.155044754
1999:Q1	-0.866349791	-0.263841098
1999:Q2	-0.885597256	0.383556605
1999:Q3	-0.88634764	0.083246716
1999:Q4	-1.038161822	0.417761085
2000:Q1	-1.065648718	0.215858671
2000:Q2	-1.140778232	-0.713447449
2000:Q3	-1.053386239	0.548218373
2000:Q4	-1.156413537	0.044646539
2001:Q1	-0.83503647	0.637529871
2001:Q2	-0.646284103	-1.10871364
2001:Q3	-0.242219383	-0.488013725
2001:Q4	0.492299916	0.913245538
2002:Q1	0.660287843	-0.710681263
2002:Q2	0.813081138	0.985431417
2002:Q3	0.70461195	-0.075267812
2002:Q4	0.829248109	-0.71446659
2003:Q1	0.859651665	-0.191290096
2003:Q2	1.141775242	0.285005553
2003:Q3	1.095294553	0.318643643
2003:Q4	0.808283441	-0.039245992
2004:Q1	0.67743119	0.411380559
2004:Q2	0.588463256	0.094834283
2004:Q3	0.43913914	-0.872372875
2004:Q4	0.393891795	0.749863423
2005:Q1	0.284075262	0.687633845
2005:Q2	0.1162898	-0.879391947
2005:Q3	-0.029883108	-0.430251716
2005:Q4	-0.040389387	1.134761331
2006:Q1	-0.277574661	-0.362493337
2006:Q2	-0.339084774	0.888171724
2006:Q3	-0.345422339	-1.055903829
2006:Q4	-0.550128886	-0.434715462
2007:Q1	-0.474103725	1.052666929
2007:Q2	-0.504394724	-1.11478536
2007:Q3	-0.336915348	0.305166662
2007:Q4	-0.196887076	0.812510098
2008:Q1	-0.005814045	-0.653267988
2008:Q2	0.333879416	-0.44867985
2008:Q3	1.026409219	0.368048502
2008:Q4	1.875421221	-2.375141104
2009:Q1	3.29665793	0.317730245
2009:Q2	4.2954485	1.573728279
2009:Q3	4.630458178	-0.148180439
2009:Q4	4.944066554	1.089737383
2010:Q1	4.851748771	-1.139905897
2010:Q2	4.686980639	-0.28898173
2010:Q3	4.511530864	-0.474112302
2010:Q4	4.570530818	0.658150714
2011:Q1	4.078596922	0.498701189
2011:Q2	4.122865698	0.593457117
2011:Q3	4.077330628	-0.526978346
2011:Q4	3.730556166	-0.402341014
2012:Q1	3.336276703	1.113737811
2012:Q2	3.265288257	-0.882560477
2012:Q3	3.119745683	-0.503700844
2012:Q4	2.931942533	0.622657908
2013:Q1	2.88639676	-0.215976964
2013:Q2	2.695412256	-0.432558328
2013:Q3	2.434860444	0.447830561
2013:Q4	2.153233659	0.156718708
2014:Q1	1.84791467	-0.472402724
2014:Q2	1.456529161	0.49346699
2014:Q3	1.354940671	-0.253462988
2014:Q4	0.990678727	-0.418314404
2015:Q1	0.828812204	-0.417414211
2015:Q2	0.755628866	1.121903343
2015:Q3	0.461338308	-0.497225702
2015:Q4	0.395318446	-0.295092208
2016:Q1	0.282395858	0.682491038
2016:Q2	0.323969654	0.52863197
2016:Q3	0.307981522	-0.462431329
2016:Q4	0.222437716	-0.368463891
2017:Q1	0.029036952	0.489937728
2017:Q2	-0.161187174	-0.525454995
2017:Q3	-0.193404052	-0.12992278
2017:Q4	-0.321336276	0.574031607
2018:Q1	-0.452884011	0.780242985
2018:Q2	-0.544317493	-0.406535342
2018:Q3	-0.669573517	-0.879645393
2018:Q4	-0.612238865	0.594601655
2019:Q1	-0.58415667	-0.261665031
2019:Q2	-0.775201645	0.08001659
2019:Q3	-0.805844349	-0.198986492
2019:Q4	-0.847393689	-0.087404441

Note: Change in core PCE inflation is first difference of personal consumption expenditures price deflator that excludes food and energy. CBO unemployment gap is the unemployment gap from the Congressional Budget Office (CBO). Orange line is fit from regression of variable on y-ax is to variable on x-axis. Quarterly data from 1987:Q1 to 2019:Q4.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. Congressional Budget Office. FRB staff calculations.

Slide 21: Inflation and Long-Run Inflation Expectations

Annualized quarterly percent change

Make Full Screen

Date	Core PCE	Long-Run Inflation Expectations
1964:Q1	1.714263937	1.6827
1964:Q2	1.19981861	1.6827
1964:Q3	1.100139131	1.6827
1964:Q4	1.025296382	1.6827
1965:Q1	1.524962078	1.6827
1965:Q2	1.233016448	1.6827
1965:Q3	1.252976837	1.6827
1965:Q4	1.343805763	1.6827
1966:Q1	2.025848531	1.6827
1966:Q2	3.272917999	1.6827
1966:Q3	3.340932484	1.6827
1966:Q4	3.501018245	1.6827
1967:Q1	2.219277757	1.6827
1967:Q2	2.712637853	1.6827
1967:Q3	3.681226237	1.6827
1967:Q4	4.104810726	1.6827
1968:Q1	4.630761602	1.6827
1968:Q2	4.7352744	1.6827
1968:Q3	4.546475441	2.5154
1968:Q4	4.737268827	2.5154
1969:Q1	4.442824563	2.5154
1969:Q2	4.867102799	2.6198
1969:Q3	4.7022605	2.6787
1969:Q4	4.773746578	2.6787
1970:Q1	4.447626152	2.6787
1970:Q2	4.583386586	2.6787
1970:Q3	4.531470934	2.8353
1970:Q4	5.750526267	3.0976
1971:Q1	5.151183402	3.0976
1971:Q2	4.635080634	3.0976
1971:Q3	3.830042344	3.0976
1971:Q4	2.297415032	3.4937
1972:Q1	3.904534768	3.4937
1972:Q2	2.726823306	3.4937
1972:Q3	3.041469212	3.4937
1972:Q4	2.54128477	3.9173
1973:Q1	2.816856366	3.9173
1973:Q2	5.560161104	3.9173
1973:Q3	5.429293129	3.9173
1973:Q4	5.680375052	3.9173
1974:Q1	7.046047595	4.211033333
1974:Q2	10.3104966	4.889733333
1974:Q3	11.9252223	5.0722
1974:Q4	10.13803579	5.0722
1975:Q1	8.051055671	5.0722
1975:Q2	6.226759049	5.095066667
1975:Q3	6.147012857	5.1408
1975:Q4	6.672617742	5.1408
1976:Q1	6.228304341	4.878833333
1976:Q2	4.881338105	4.402866667
1976:Q3	6.413758665	4.4988
1976:Q4	6.400067544	4.4988
1977:Q1	6.9034018	4.4988
1977:Q2	6.263231287	4.616
1977:Q3	6.821006138	4.8504
1977:Q4	5.940754365	4.8504
1978:Q1	6.392325905	5.038633333
1978:Q2	7.076969762	5.4151
1978:Q3	7.04576041	5.4151
1978:Q4	7.375468883	5.659166667
1979:Q1	5.577447	6.1473
1979:Q2	9.080563284	6.1473
1979:Q3	7.596852856	6.7167
1979:Q4	8.603706706	6.7167
1980:Q1	10.154617	6.7167
1980:Q2	9.249163877	6.7167
1980:Q3	9.211127907	6.7167
1980:Q4	10.11038429	7.0525
1981:Q1	9.163239998	7.7241
1981:Q2	7.78296394	7.47
1981:Q3	7.572467361	7.22
1981:Q4	7.30011754	7.33
1982:Q1	5.991202624	6.76
1982:Q2	5.524602326	6.359999
1982:Q3	6.561559287	6.365573262
1982:Q4	5.690940682	6.199999
1983:Q1	5.360757684	5.92
1983:Q2	3.095375241	6.18
1983:Q3	6.21343828	6.229999
1983:Q4	3.236280971	6.25
1984:Q1	4.103899896	6.18
1984:Q2	4.768596438	6.102458508
1984:Q3	3.808374774	5.649999
1984:Q4	2.874388811	5.3
1985:Q1	5.571641293	4.953389831
1985:Q2	3.511390373	5.0749995
1985:Q3	4.174519082	5.295
1985:Q4	2.89990557	5.211310475
1986:Q1	4.386453967	4.877118119
1986:Q2	2.768275515	4.851427912
1986:Q3	2.780903416	4.718851951
1986:Q4	3.297166608	4.705217054
1987:Q1	2.552234702	4.787056519
1987:Q2	3.943072845	4.75794101
1987:Q3	3.634090454	4.897214013
1987:Q4	4.1302695	4.425498473
1988:Q1	3.905778711	4.495973711
1988:Q2	4.939373312	4.274189404
1988:Q3	4.692262452	4.062006894
1988:Q4	4.541934893	3.859194536
1989:Q1	4.439909459	3.789050139
1989:Q2	3.686512429	3.821073499
1989:Q3	3.014802936	3.694628168
1989:Q4	3.710112314	3.517779181
1990:Q1	4.68632197	3.279327479
1990:Q2	4.541629244	3.512456519
1990:Q3	4.106190571	3.581193055
1990:Q4	3.401114983	3.434054192
1991:Q1	3.593557961	3.361726322
1991:Q2	3.123665479	3.297190518
1991:Q3	3.646054869	2.982126757
1991:Q4	3.188798334	2.922493422
1992:Q1	3.092473598	2.762887269
1992:Q2	2.857302579	2.989335412
1992:Q3	2.386454961	2.862022083
1992:Q4	2.965589364	2.784157744
1993:Q1	2.786900341	2.527833992
1993:Q2	3.073091898	2.876717143
1993:Q3	2.25308875	2.684699476
1993:Q4	2.075268054	2.627008498
1994:Q1	1.827524653	2.655894537
1994:Q2	2.716774272	2.644814242
1994:Q3	2.251985746	2.550150606
1994:Q4	2.047851902	2.553848297
1995:Q1	2.114797429	2.383380827
1995:Q2	2.394170137	2.451141451
1995:Q3	1.920566316	2.431848085
1995:Q4	2.022603829	2.313144707
1996:Q1	1.581978289	2.381056515
1996:Q2	1.911672534	2.404772666
1996:Q3	1.83911133	2.379355164
1996:Q4	2.296589955	2.394841783
1997:Q1	1.580694734	2.39637807
1997:Q2	2.103405571	2.313871154
1997:Q3	0.935312423	2.528481151
1997:Q4	1.275597566	2.129008536
1998:Q1	1.181918128	2.208132986
1998:Q2	1.228693438	1.988053821
1998:Q3	1.431104276	1.921756337
1998:Q4	1.276059522	1.97889558
1999:Q1	1.012218424	1.772882261
1999:Q2	1.395775028	2.052225561
1999:Q3	1.479021745	2.125539596
1999:Q4	1.89678283	2.200172949
2000:Q1	2.112641502	2.210014916
2000:Q2	1.399194053	2.15771936
2000:Q3	1.947412426	2.190856831
2000:Q4	1.992058965	2.133368323
2001:Q1	2.629588836	2.12394678
2001:Q2	1.520875196	2.161539985
2001:Q3	1.032861471	2.144666736
2001:Q4	1.946107009	2.2
2002:Q1	1.235425746	2.15
2002:Q2	2.220857163	2.15
2002:Q3	2.145589351	2.15
2002:Q4	1.43112276	2.1
2003:Q1	1.239832665	2.15
2003:Q2	1.524838218	2.15
2003:Q3	1.843481861	2.15
2003:Q4	1.804235869	2.15
2004:Q1	2.215616427	2.15
2004:Q2	2.310450711	2.15
2004:Q3	1.438077836	2.15
2004:Q4	2.187941259	2.15
2005:Q1	2.875575103	2.1
2005:Q2	1.996183156	2.15
2005:Q3	1.56593144	2.15
2005:Q4	2.700692771	2.15
2006:Q1	2.338199434	2.15
2006:Q2	3.226371158	2.15
2006:Q3	2.170467328	2.15
2006:Q4	1.735751867	2.15
2007:Q1	2.788418795	2
2007:Q2	1.673633435	2
2007:Q3	1.978800097	2.1
2007:Q4	2.791310195	2.1
2008:Q1	2.138042207	2.2
2008:Q2	1.689362356	2.2
2008:Q3	2.057410859	2.2
2008:Q4	-0.317730245	2.2
2009:Q1	0	2.2
2009:Q2	1.573728279	2.27
2009:Q3	1.42554784	2.15
2009:Q4	2.515285223	2.1
2010:Q1	1.375379326	2.1
2010:Q2	1.086397596	2.15
2010:Q3	0.612285294	2.1
2010:Q4	1.270436009	2
2011:Q1	1.769137197	2.1
2011:Q2	2.362594315	2.27
2011:Q3	1.835615969	2.25
2011:Q4	1.433274954	2.15
2012:Q1	2.547012766	2.15
2012:Q2	1.664452288	2.2
2012:Q3	1.160751444	2.2
2012:Q4	1.783409352	2.1
2013:Q1	1.567432387	2
2013:Q2	1.134874059	2
2013:Q3	1.58270462	2
2013:Q4	1.739423329	2
2014:Q1	1.267020605	2
2014:Q2	1.760487594	2
2014:Q3	1.507024607	2
2014:Q4	1.088710203	2
2015:Q1	0.671295992	2
2015:Q2	1.793199335	1.98
2015:Q3	1.295973633	2
2015:Q4	1.000881425	1.9
2016:Q1	1.683372463	1.97
2016:Q2	2.212004433	2
2016:Q3	1.749573104	2
2016:Q4	1.381109213	2
2017:Q1	1.871046941	2.1
2017:Q2	1.345591946	2.09
2017:Q3	1.215669166	2
2017:Q4	1.789700773	2
2018:Q1	2.569943758	2
2018:Q2	2.163408416	2
2018:Q3	1.283763023	2
2018:Q4	1.878364677	2
2019:Q1	1.616699646	2
2019:Q2	1.696716237	2
2019:Q3	1.497729744	2
2019:Q4	1.410325303	2
2020:Q1	1.712327933	2
2020:Q2	-0.77790967	1.86
2020:Q3	3.065684598	1.85
2020:Q4	1.81489829	1.9
2021:Q1	3.404637406	2.03
2021:Q2	5.924176989	2.1
2021:Q3	4.906288412	2.2
2021:Q4	5.317468615	2.3
2022:Q1	6.109312369	2.2
2022:Q2	4.811207399	2.4
2022:Q3	5.202435869	2.45
2022:Q4	4.696697706	2.58
2023:Q1	4.727424863	2.15
2023:Q2	3.849802343	2.2
2023:Q3	2.352262447	2.2
2023:Q4	2.026172399	2.22
2024:Q1	3.747552958	2
2024:Q2	2.78849524	2.1
2024:Q3	2.192855766	2.1
2024:Q4	2.654504963	2.1

Note: Core PCE is PCE price deflator that excludes food and energy. Long-run inflation expectations derived from FRB calculations, a survey conducted by Richard Hoey and from the Survey of Professional Forecasters, conducted by the Federal Reserve Bank of Philadelphia.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. Federal Reserve Bank of Philadelphia and FRB staff calculations.

Slide 22: Baseline Phillips Curve over 1960-1986

Make Full Screen

Date	CBO Unemployment Gap	Core PCE Inflation minus LR Infl. Expect.
1960:Q1	-0.086212005	N/A
1960:Q2	-0.021040844	-0.159111374
1960:Q3	0.305093459	-0.088551423
1960:Q4	0.984221327	-0.373470865
1961:Q1	1.47323254	-1.006709541
1961:Q2	1.705164728	-0.354771793
1961:Q3	1.482209947	0.06813387
1961:Q4	0.872079176	-0.714274247
1962:Q1	0.308587086	-0.193522334
1962:Q2	0.177080775	-0.149308057
1962:Q3	0.231925662	-0.353242026
1962:Q4	0.166255176	-0.923620425
1963:Q1	0.416712303	-0.360161011
1963:Q2	0.337047354	-0.168130629
1963:Q3	0.147149319	-0.124888378
1963:Q4	0.192206844	0.259815978
1964:Q1	0.052511866	0.031563937
1964:Q2	-0.170435275	-0.48288139
1964:Q3	-0.410629361	-0.582560869
1964:Q4	-0.466129605	-0.657403618
1965:Q1	-0.570744766	-0.157737922
1965:Q2	-0.768457024	-0.449683552
1965:Q3	-1.074872462	-0.429723163
1965:Q4	-1.353369534	-0.338894237
1966:Q1	-1.626076909	0.343148531
1966:Q2	-1.656008456	1.590217999
1966:Q3	-1.712149854	1.658232484
1966:Q4	-1.817057653	1.818318245
1967:Q1	-1.709686095	0.536577757
1967:Q2	-1.709164638	1.029937853
1967:Q3	-1.729138318	1.998526237
1967:Q4	-1.637730032	2.422110726
1968:Q1	-1.84142456	2.948061602
1968:Q2	-2.020474485	3.0525744
1968:Q3	-2.046627562	2.863775441
1968:Q4	-2.198586733	2.221868827
1969:Q1	-2.231939755	1.927424563
1969:Q2	-2.180361769	2.351702799
1969:Q3	-2.018147069	2.0824605
1969:Q4	-2.060329577	2.095046578
1970:Q1	-1.503657676	1.768926152
1970:Q2	-0.916835997	1.904686586
1970:Q3	-0.503143368	1.852770934
1970:Q4	0.102231774	2.915226267
1971:Q1	0.189771387	2.053583402
1971:Q2	0.18754347	1.537480634
1971:Q3	0.259437922	0.732442344
1971:Q4	0.195122103	-0.800184968
1972:Q1	-0.027155242	0.410834768
1972:Q2	-0.1294127	-0.766876694
1972:Q3	-0.199545216	-0.452230788
1972:Q4	-0.51566595	-0.95241523
1973:Q1	-0.897089797	-1.100443634
1973:Q2	-0.950704699	1.642861104
1973:Q3	-1.047120607	1.511993129
1973:Q4	-1.099053272	1.763075052
1974:Q1	-0.791562674	3.128747595
1974:Q2	-0.712292984	6.099463268
1974:Q3	-0.287237477	7.035488964
1974:Q4	0.653333668	5.065835794
1975:Q1	2.291257561	2.978855671
1975:Q2	2.907171886	1.154559049
1975:Q3	2.550921036	1.051946191
1975:Q4	2.319004602	1.531817742
1976:Q1	1.773635463	1.087504341
1976:Q2	1.586958588	0.002504772
1976:Q3	1.771572831	2.010891999
1976:Q4	1.772973103	1.901267544
1977:Q1	1.528177409	2.4046018
1977:Q2	1.15962897	1.764431287
1977:Q3	0.935727892	2.205006138
1977:Q4	0.66025371	1.090354365
1978:Q1	0.370093046	1.541925905
1978:Q2	0.062682339	2.038336428
1978:Q3	0.101338188	1.63066041
1978:Q4	-0.059422331	1.960368883
1979:Q1	-0.069064985	-0.081719667
1979:Q2	-0.208090617	2.933263284
1979:Q3	-0.038644906	1.449552856
1979:Q4	0.014543303	1.887006706
1980:Q1	0.363626216	3.437917
1980:Q2	1.40302994	2.532463877
1980:Q3	1.771357672	2.494427907
1980:Q4	1.508572274	3.393684291
1981:Q1	1.519574446	2.110739998
1981:Q2	1.499436522	0.05886394
1981:Q3	1.514044372	0.102467361
1981:Q4	2.342082099	0.08011754
1982:Q1	2.945702547	-1.338797376
1982:Q2	3.498647105	-1.235397674
1982:Q3	4.014324353	0.201560287
1982:Q4	4.793622593	-0.67463258
1983:Q1	4.503505772	-0.839241316
1983:Q2	4.219867666	-2.824624759
1983:Q3	3.465441147	0.03343828
1983:Q4	2.676157015	-2.993718029
1984:Q1	2.024972908	-2.146100104
1984:Q2	1.641837168	-1.411403562
1984:Q3	1.604923118	-2.294083735
1984:Q4	1.450292822	-2.775610189
1985:Q1	1.419570392	0.271641293
1985:Q2	1.446021581	-1.441999457
1985:Q3	1.39372381	-0.900480418
1985:Q4	1.240845452	-2.39509443
1986:Q1	1.181304481	-0.824856508
1986:Q2	1.37221341	-2.108842603
1986:Q3	1.200342706	-2.070524496
1986:Q4	1.057352626	-1.421685343
1986:Q4	1.057352626	-1.421685343

Note: Core PCE inflation minus LR infl. expect. is difference of personal consumption expenditures price deflater minus long run inflation expectations. CBO unemployment gap is the unemployment gap from the Congressional Budget Office (CBO). Long-run inflation expectations derived from FRB calculations, a survey conducted by Richard Hoey and from the Survey of Professional Forecasters, conducted by the Federal Reserve Bank of Philadelphia. Orange line is fit from regression of variable on y-axis to variable on x-axis. Quarterly data from 1960:Q1 to 1986:Q4.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. Congressional Budget Office. FRB staff calculations.

Slide 23: Baseline Phillips Curve over 1987-2019

Make Full Screen

Date	CBO Unemployment Gap	Core PCE Inflation minus LR Infl. Expect.
1987:Q1	0.839735754	-2.152982353
1987:Q2	0.525004051	-0.843983674
1987:Q3	0.280963602	-1.123850556
1987:Q4	0.154871623	-0.766944513
1988:Q1	0.014547612	-0.519719762
1988:Q2	-0.197406038	0.443399601
1988:Q3	-0.171560552	0.418073048
1988:Q4	-0.313305294	0.479928
1989:Q1	-0.409346829	0.580714923
1989:Q2	-0.364203655	-0.10253771
1989:Q3	-0.329120677	-0.806270563
1989:Q4	-0.229727055	0.015484146
1990:Q1	-0.37054915	1.168542789
1990:Q2	-0.313692067	1.262301765
1990:Q3	0.043287545	0.593734052
1990:Q4	0.473320782	-0.180078072
1991:Q1	0.939549452	0.159503769
1991:Q2	1.21458794	-0.238060842
1991:Q3	1.272649022	0.34886435
1991:Q4	1.524271148	0.206671577
1992:Q1	1.805493877	0.169980176
1992:Q2	2.054577012	0.09441531
1992:Q3	2.116768664	-0.60288045
1992:Q4	1.909980356	0.103567281
1993:Q1	1.662235517	0.002742597
1993:Q2	1.609640331	0.545257906
1993:Q3	1.376252928	-0.623628393
1993:Q4	1.223089955	-0.609431422
1994:Q1	1.040952008	-0.799483846
1994:Q2	0.656821528	0.060879735
1994:Q3	0.581168054	-0.392828496
1994:Q4	0.223748948	-0.502298703
1995:Q1	0.108513095	-0.439050867
1995:Q2	0.310775675	0.010789309
1995:Q3	0.329188174	-0.530575135
1995:Q4	0.249570675	-0.409244256
1996:Q1	0.242661883	-0.731166418
1996:Q2	0.182624562	-0.46938398
1996:Q3	2.86636E-05	-0.565661336
1996:Q4	0.067824789	-0.082765209
1997:Q1	-0.016445205	-0.814147048
1997:Q2	-0.247664997	-0.292972498
1997:Q3	-0.341552048	-1.378558731
1997:Q4	-0.500404577	-1.252883585
1998:Q1	-0.558518078	-0.947090407
1998:Q2	-0.764898384	-0.979439548
1998:Q3	-0.642493635	-0.556949545
1998:Q4	-0.724275869	-0.645696815
1999:Q1	-0.866349791	-0.966677156
1999:Q2	-0.885597256	-0.377107232
1999:Q3	-0.88634764	-0.573203816
1999:Q4	-1.038161822	-0.228756766
2000:Q1	-1.065648718	-0.087531447
2000:Q2	-1.140778232	-0.810820864
2000:Q3	-1.053386239	-0.210306934
2000:Q4	-1.156413537	-0.198797866
2001:Q1	-0.83503647	0.496220513
2001:Q2	-0.646284103	-0.603071584
2001:Q3	-0.242219383	-1.128678514
2001:Q4	0.492299916	-0.198559727
2002:Q1	0.660287843	-0.964574254
2002:Q2	0.813081138	0.070857163
2002:Q3	0.70461195	-0.004410649
2002:Q4	0.829248109	-0.71887724
2003:Q1	0.859651665	-0.860167335
2003:Q2	1.141775242	-0.625161782
2003:Q3	1.095294553	-0.306518139
2003:Q4	0.808283441	-0.345764131
2004:Q1	0.67743119	0.065616427
2004:Q2	0.588463256	0.160450711
2004:Q3	0.43913914	-0.711922164
2004:Q4	0.393891795	0.037941259
2005:Q1	0.284075262	0.725575103
2005:Q2	0.1162898	-0.103816844
2005:Q3	-0.029883108	-0.58406856
2005:Q4	-0.040389387	0.550692771
2006:Q1	-0.277574661	0.188199434
2006:Q2	-0.339084774	1.076371158
2006:Q3	-0.345422339	0.020467328
2006:Q4	-0.550128886	-0.414248133
2007:Q1	-0.474103725	0.638418795
2007:Q2	-0.504394724	-0.326366565
2007:Q3	-0.336915348	-0.021199903
2007:Q4	-0.196887076	0.691310195
2008:Q1	-0.005814045	0.038042207
2008:Q2	0.333879416	-0.510637644
2008:Q3	1.026409219	-0.142589141
2008:Q4	1.875421221	-2.517730245
2009:Q1	3.29665793	-2.2
2009:Q2	4.2954485	-0.626271721
2009:Q3	4.630458178	-0.84445216
2009:Q4	4.944066554	0.365285223
2010:Q1	4.851748771	-0.724620674
2010:Q2	4.686980639	-1.013602404
2010:Q3	4.511530864	-1.537714706
2010:Q4	4.570530818	-0.829563991
2011:Q1	4.078596922	-0.230862803
2011:Q2	4.122865698	0.262594315
2011:Q3	4.077330628	-0.434384031
2011:Q4	3.730556166	-0.816725046
2012:Q1	3.336276703	0.397012766
2012:Q2	3.265288257	-0.485547712
2012:Q3	3.119745683	-1.039248556
2012:Q4	2.931942533	-0.416590648
2013:Q1	2.88639676	-0.532567613
2013:Q2	2.695412256	-0.865125941
2013:Q3	2.434860444	-0.41729538
2013:Q4	2.153233659	-0.260576671
2014:Q1	1.84791467	-0.732979395
2014:Q2	1.456529161	-0.239512406
2014:Q3	1.354940671	-0.492975393
2014:Q4	0.990678727	-0.911289797
2015:Q1	0.828812204	-1.328704008
2015:Q2	0.755628866	-0.206800665
2015:Q3	0.461338308	-0.684026367
2015:Q4	0.395318446	-0.999118575
2016:Q1	0.282395858	-0.216627537
2016:Q2	0.323969654	0.242004433
2016:Q3	0.307981522	-0.250426896
2016:Q4	0.222437716	-0.618890787
2017:Q1	0.029036952	-0.128953059
2017:Q2	-0.161187174	-0.754408054
2017:Q3	-0.193404052	-0.874330834
2017:Q4	-0.321336276	-0.210299227
2018:Q1	-0.452884011	0.569943758
2018:Q2	-0.544317493	0.163408416
2018:Q3	-0.669573517	-0.716236977
2018:Q4	-0.612238865	-0.121635323
2019:Q1	-0.58415667	-0.383300354
2019:Q2	-0.775201645	-0.303283763
2019:Q3	-0.805844349	-0.502270256
2019:Q4	-0.847393689	-0.589674697

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. Congressional Budget Office. FRB staff calculations.

Slide 24: Update of Baseline Model

In recent inflationary experience job openings climbed to more than 2 per unemployed workers, so alternative to unemployment rate for capturing tightness in labor markets is the V/U ratio

$\pi_t=a\pi_{t−1}+(1−a)\pi_t^{lre}−(V_t/U_t)$

In addition, supply snarls also reportedly affected tightness in labor and product markets

$\pi_t=a\pi_{t−1}+(1−)\pi_t^{}−b\left(U_t-{U_t}^\ast\right)+ Shortage_t$

Slide 25: Additional Empirical Results

What have we learned from the recent run-up in inflation?

Slide 26: Dynamic Sim: Baseline Model

Annual Percent

Make Full Screen

Date	Core PCE infl.	Contr. of LRC Inflaction Except.	Contr. of CBO Unempl. Gap	Contr. of Core Import Prices	Unexplained Residual
2018	1.973869968	N/A	N/A	N/A	0
2019	1.555367733	N/A	N/A	N/A	0
2020	1.453750288	N/A	N/A	N/A	0
2021	4.888142855	2.36012252	-0.21391226	0.22487249	2.517060365
2022	5.204913336	2.665214884	-0.004424317	-0.053456817	2.597579403
2023	3.238915513	2.791626007	0.176743121	-0.857872129	1.128418642
2024	2.845852232	2.767159357	0.183444322	-0.679654178	0.57490266

Note: Core PCE is the personal consumption expenditure price index excluding food and energy. Data are annual. Model esitmated with data from 1960 to 2019.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. Congressional Budget Office. FRB staff calculations.

Slide 27: Dynamic Sim: V/U Model

Annual Percent

Make Full Screen

Date	Core PCE infl.	Contr. of LRC Inflaction Except.	Contr. of V/U Ratio	Contr. of Core Import Prices	Unexplained Residual
2018	1.973869968	N/A	N/A	N/A	0
2019	1.555367733	N/A	N/A	N/A	0
2020	1.453750288	N/A	N/A	N/A	0
2021	4.888142855	2.337000148	0.406577301	0.227073051	1.917492304
2022	5.204913336	2.617801368	1.853865441	-0.060324559	0.793571145
2023	3.238915513	2.725797653	2.383192799	-0.868241451	-1.001833286
2024	2.845852232	2.688238623	1.995091063	-0.671960437	-1.165517081

Note: Core PCE is the personal consumption expenditure price index excluding food and energy. Data are annual. Model estimated with data from 1960 to 2019.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. Congressional Budget Office. FRB staff calculations.

Slide 28: Dynamic Sim: Shortage Model

Annual Percent

Make Full Screen

Date	Core PCE infl.	Contr. of LRC Inflaction Except.	Contr. of Core Import Prices	Contr. of Shortage Index	Unexplained Residual
2018	1.973869968	N/A	N/A	N/A	0
2019	1.555367733	N/A	N/A	N/A	0
2020	1.453750288	N/A	N/A	N/A	0
2021	4.888142855	2.2537127	0.178561433	0.636976683	2.015535672
2022	5.204913336	2.47953728	-0.055468593	1.492905907	1.281686429
2023	3.238915513	2.550656221	-0.684849907	1.288741343	-0.08228133
2024	2.845852232	2.488553144	-0.508196048	0.898936452	-0.19563097

Note: Core PCE is the personal consumption expenditure price index excluding food and energy. Data are annual. Model esitmated with data from 1960 to 2019.

Sources: U.S. Bureau of Economic Analysis. Haver Analytics. Congressional Budget Office. FRB staff calculations.

Last Update: April 07, 2025