Great Graphic: Disinflation or Deflation in Europe?

This Great Graphic appeared was posted by Alen Mattich at the Wall Street Journal.    The red bar shows the average CPI in the 2000-08 period.  The blue bar shows the latest inflation. That was before today’s reports.  These include France, where the year-over-year rate in June slipped to 0.6% from 0.8% and the Netherlands, where the year-over-year rate ticked […]

Yellen vs. Bullard on Wages and Inflation: Who Is Right?

Wage growth is “not a threat to inflation,” Fed Chair Janet Yellen said on June 18.  “[With] our 2 percent inflation objective, we could see wages growing at a more rapid rate” before having to worry. “When unemployment goes into the five range, that is going to below the natural rate,” St. Louis Fed President James Bullard […]

When Will the Economy Recover? What does “Economic Recovery” Mean, Anyway? Public and Professional Views

According to the latest public opinion poll from CNNMoney, 61 percent of Americans think it will take three more years for the U.S. economy to recover fully from the Great Recession. Only 3 percent think that it has already recovered, while 16 percent think it will never recover. And that was before last week’s news […]

Imminent Wage Increases in Sight for U.S. Workers?

How tight is the labor market? A recent article summarizes the argument that wage pressures are building. From K. Madigan in WSJ Real Time Economics: Economists now are debating whether the Fed has set its Nairu sights too low. And they point to two reports out Tuesday as proof. The first report was the small business survey done […]

Fed Watch: Inflation Hysteria

It appears that a case of inflation hysteria is gripping Wall Street. Joe Weisenthal at Business Insidersums up the current state of play: Here’s what’s on Wall Street’s mind right now: Inflation is finally happening, and the Fed will end up being behind the curve. …there were two big moments this week. 1) There was the […]

The ECB’s Daunting Task

Mario Draghi, head of the European Central Bank, and the members of the ECB’s Governing Council are receiving praise for the initiatives they announced last week to avoid deflation (see here and here). The immediate impact of the announcement was a rise in European stock prices. But the approval of the financial sector does not mean that the ECB […]

Tinkering on the Margins: ECB Edition

Has the ECB finally ended its hard-money ways? You know the kind that raises interest rates twice during the crisis,allows aggregate demand in the periphery to stall, and fosters below-trend growth in money supply and money velocity. On Thursday, the ECB said it would be taking bold steps to stabilize the economy. It would start charging banks for the privilege […]