GDP growth is way up: +4.9% in the 3rd quarter. The unemployment rate has stayed low — under 4% — since the beginning of last year. Meanwhile, inflation is down below 3% over the last two quarters: 2.5% in the 2nd quarter, and 2.9% in the 3rd quarter (see the dark blue line on the graphic above). This is the broad PCE price index — supposedly the Fed’s preferred measure — calculated on a sensible quarterly time period at annual rates. Inflation for goods (durable stuff like cars and bicycles and nondurable stuff like groceries and gas) has been between 0% and 1% for the last four quarters (the red line in the graph above). Meanwhile price inflation for services (insurance, your accountant, your doctor etc.) has started moderating too, from a high of about 6 percent in Q4 2022 and Q1 2023 to about 4% over the last 2 quarters (light blue line on the graph).
This is evidence of a stunningly successful economic recovery. It’s really as simple as that. We should be trumpeting this great economic news from the rooftops. The monthly background data on the components of the PCE price index should be released tomorrow. If so, I’ll try to do a followup diary with more item-by-item detail: “core” vs. overall, cars and gas vs. food etc. But in the meantime, please shout this great economic news from those rooftops. We’re losing the battle of perceptions: please read this Guardian article on the mismatch between the dramatically improving economy and voters’ beliefs. The Biden administration’s excellent record of economic progress is being drowned out in a sea of organized media negativity.