The Federal Reserve is data driven. Officials rely on the numbers to make policy decisions.
But sometimes there isn't a reliable number.
In those cases, Fed economists create data.
One example is the Global Supply Chain Pressure Index (GSCPI), which is shown as the blue line in the chart below. This index was created when supply issues pushed inflation up in early 2022.
While it's trended lower over the past year, officials were concerned it didn’t match other data. They removed some adjustments from the formula and found supply chain pressures are below average because demand has collapsed.
This is shown as the Net GSCPI (red line) in the chart. You can see how much lower it is after adjusting the dataset.
Bottom line: We finally have a datapoint the Fed can use to justify slowing the pace of interest rate hikes. Pay attention to if officials mention this data next month as a counterweight to high inflation.
Privacy Policy The Money & Markets, P.O. Box 8378, Delray Beach, FL 33482.
To ensure that you receive future issues of Money & Markets, please add info@mb.moneyandmarkets.com to your address book or whitelist within your spam settings. For customer service questions or issues, please contact us for assistance.
The mailbox associated with this email address is not monitored, so please do not reply. Your feedback is very important to us so if you would like to contact us with a question or comment, please click here: https://moneyandmarkets.com/contact-us/
Legal Notice: This work is based on what we've learned as financial journalists. It may contain errors and you should not base investment decisions solely on what you read here. It's your money and your responsibility. Nothing herein should be considered personalized investment advice. Although our employees may answer general customer service questions, they are not licensed to address your particular investment situation. Our track record is based on hypothetical results and may not reflect the same results as actual trades. Likewise, past performance is no guarantee of future returns. Certain investments carry large potential rewards but also large potential risk. Don't trade in these markets with money you can't afford to lose. Money & Markets permits editors of a publication to recommend a security to subscribers that they own themselves. However, in no circumstance may an editor sell a security before our subscribers have a fair opportunity to exit. Any exit after a buy recommendation is made and prior to issuing a sell notification is forbidden. The length of time an editor must wait after subscribers have been advised to exit a play depends on the type of publication.
(c) 2023 Money & Markets, LLC. All Rights Reserved. Protected by copyright laws of the United States and treaties. This Newsletter may only be used pursuant to the subscription agreement. Any reproduction, copying, or redistribution, (electronic or otherwise) in whole or in part, is strictly prohibited without the express written permission of Money & Markets. P.O. Box 8378, Delray Beach, FL 33482. (TEL: 800-684-8471)
Post a Comment
Post a Comment