The October Inflation Report Explains That Sinking Feeling | Diving In
Summary
Justin Wolfers analyzes the October CPI report, estimating year-over-year inflation at 4.0% due to missing data from the government shutdown. He highlights that core inflation is running hotter than expected, driven by energy shocks from the Iran war and persistent underlying price pressures. Wolfers notes that real wages have fallen over the past year and argues that markets now view a December Fed rate hike as certain, with a 15% chance of a larger half-point increase.
Topics discussed
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Episode intro and missing data context
Estimating year-over-year inflation at 4%
Headline and core CPI monthly breakdown
CPI vs PCE and the Fed's 2% target
Core inflation momentum and 3-month average
Reasons to worry: tariffs and supply shocks
Energy prices: oil, diesel, and Iran war impact
Outlook for energy relief and heating costs
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Wages vs prices: real wage decline analysis
Fed rate hike expectations and Waller's speech
Kevin Walsh's control over the Fed
Cost of Thanksgiving: travel and food prices
Upcoming reports and episode conclusion
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