week 24/97/2023

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Changing the CPI methodology

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Changing the CPI methodology Changing the CPI methodology   might sound like a dramatic move . But this isn't the first time we've seen this happen. In fact, the last change was in 2002... Back then, George W. Bush was the sitting president. And he was the one dealing with a struggling economy and upcoming elections. So, the 2002 White House needed to change how voters saw the economy .  It needed inflation growth to stay low so the Fed wouldn't raise interest rates . The BLS changed its CPI methodology that year. It adjusted the index weightings from a 10-year spending average to a two-year average. It said it wanted to reflect consumers' spending habits more accurately. The outcome was a slowdown in inflation growth... In the 10 years before the change, the average CPI increase was 2.7%. Heading into the 2002 midterms, though, the rate had dropped to 2.2%. Consumer sentiment, as measured by the University of Michigan, tanked from 2002 into early 2003... But by the tim
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Fed PIVOT

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  “The Fed keeping rates high to fight inflation is one side of the battle. On the other side, we've got Wall Street traders who are looking further into the future. “Wall Street expects the U.S. economy to enter a recession soon.” Conventional wisdom reasons “the Fed will flinch (you've probably heard about the Fed's ‘pivot’) and allow interest rates to move lower.
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