Author: Dr. Thomas D. Simpson

Worries about a looming recession have been ebbing and flowing over recent weeks. Real gross domestic product (GDP) contracted 1-1/2 percent at an annual rate in the first quarter of this year, and estimates for the second quarter suggest another decline. One widely followed estimate comes from the Federal Reserve Bank of Atlanta and utilizes … Continue reading The Coming Recession

On June 15, the Fed stepped up its anti-inflation effort, raising the target for the federal funds by 75 basis points for the first time in nearly three decades. Larger than expected increases in consumer prices and higher expectations of inflation by consumers were given as reasons for the unusual policy action by the Fed. … Continue reading What’s Ahead for the Fed’s Inflation Fight?

If there was any doubt about inflation becoming entrenched, the CPI for May should have dispelled that doubt. Shown below is the twelve-month percent change in the headline CPI and the core CPI which removes food and energy prices. Headline prices rose 8.6 percent and core prices rose 6 percent, the difference reflecting the recent … Continue reading The Economy: More Hard Times Ahead

The Federal Reserve (Fed) in recent statements has been emphasizing the need to bring inflation down. The Fed has said that it will continue to raise its target for the policy interest rate—the overnight federal funds rate—until it restores price stability. The Fed has not explicitly acknowledged that it is behind the curve in achieving … Continue reading A Guide to Forthcoming Fed Actions

Contributed by Dr. Thomas D. Simpson, Executive in Residence at the UNCW Cameron School of Business. Dr. Simpson joined the Department of Economics & Finance after his retirement from the Board of Governors of the Federal Reserve System in Washington, DC. Written for Wilmington Business Journal - Link. According to public opinion polls, after a … Continue reading Economics: The Inflation Surge

Inflation continues to dominate the news and has become firmly lodged as the number one concern faced by the public. The chart below illustrates that headline inflation continued to increase through March to a new forty-year high. Meanwhile, output (GDP after removing the effects of inflation) declined 1-1/2 percent (at an annual rate) in the … Continue reading Has Stagflation Arrived?

The inflation news has gotten worse. As shown by the blue line below, headline inflation rose further in March - to 8.5 percent. This increase was paced by a 32 percent surge in energy prices. Even after removing energy and food prices (so-called core inflation), prices rose 6.5 percent, the red line. Both measures of … Continue reading Inflation Storm Clouds

Just as trees don’t grow to the sky, the rate of inflation will stop rising. The question is when? The chart below shows twelve-month percent changes in the Fed’s preferred measure of consumer price inflation—the Personal Consumption Expenditures (PCE) index. The headline index in blue rose 6.4 percent in February, the largest twelve-month increase in … Continue reading Inflation: When Will it Slow?

The latest news on the inflation front has not gotten any better. The Consumer Price Index (CPI) rose 7.9 percent over the twelve months ending in February, the blue line in the chart below, and, even after removing escalating food and energy prices, the CPI rose 6.4 percent, the red line. These measures are up … Continue reading What Will it Take to Subdue Inflation?