Inflation must seem like a mirage to Janet Yellen and The Federal Reserve. And no, it isn’t an oasis either. The US economy can’t seem to find inflation or wage growth despite near full employment (according to the Federal government, that is).
Core CPI YoY less food and energy fell to 1.7%, but it is still higher than core PCE growth YoY of 1.505% (The Fed’s preferred inflation measure).
CPI for shelter YoY fell to 3.26% in July, still 2x core inflation. And 5x hourly wage growth.
US Real Average Hourly Earnings 1982-1984 USD YoY also declined to 0.7% YoY.
Now, if the Federal government included home prices in their inflation calculation, problem solved! Case-Shiller home prices are growing at a steady 5.7% YoY, considerably higher than wage growth.
Here is a breakdown of the headline CPI numbers.
And here is a chart explaining why The Fed keeps saying inflation is around the corner, but never seems to get there.
With emphasis on hot air.