PERC Blog


Authored by PERC staff, the PERC Blog focuses on policy issues including economic trends, fiscal policy, Social Security and Medicare entitlement programs, income inequality and Federal Reserve policy.

Inflation, Rising Wages, and Declining Real Wages: The Situation through April

Posted: May 11, 2022 by Dennis W. Jansen
The Bureau of Labor Statistics (BLS) just released the Consumer Price Index for April 2022 and the price level has now increased 10.1% from January 2021 to April 2022 and 8.2% from April of last year.  This year-over-year inflation rate in April was slightly lower than the March year-over-year inflation rate of 8.6%.  For all of 2021, ...
Tags: Economic Trends, Federal Reserve

A Tale of Seven Inflation Measures

Posted: April 29, 2022 by Dennis W. Jansen
We have many measures of inflation rates as they impact consumers and households.  The Bureau of Labor Statistics (BLS) produces several versions of the Consumer Price Index.  Perhaps the most widely cited is the Consumer Price Index for All Urban Consumers (CPI-U).  For Treasury Inflation Protected Securities, the inflation prote...
Tags: Economic Trends, Federal Reserve

The Federal Reserve System: Failing on Forecasting and Failing on Policy

Posted: April 22, 2022 by Dennis W. Jansen
The U.S. Treasury sells bonds, lots of bonds, to finance a large national debt.  These bonds pay interest, and the vast majority are traditional bonds paying explicit or implicit interest.  Economists say these bonds pay a ‘nominal’ interest rate.  It is called nominal because it embodies both a return to cover inflati...
Tags: Federal Reserve

Prices are Rising at Historic Rates, and Rising Much Faster than Wages

Posted: April 12, 2022 by Dennis W. Jansen
The Bureau of Labor Statistics (BLS) just released the Consumer Price Index for March 2022 and the price level has now increased 9.7% from January 2021 to March 2022 and 8.5% from March of last year.  Moreover, the increase in prices has been accelerating.  From the first three months of 2022, prices have risen at an annualized rate of...
Tags: Economic Trends, Federal Reserve

How Transitory is Transitory Inflation?

Posted: December 03, 2021 by Dennis W. Jansen, Andrew J. Rettenmaier
‘Transitory’ is the adjective used by the Federal Reserve System to describe the recent rise in inflation. Regardless of the inflation measure, since May, inflation has been higher than it has been since 2010, as seen in Figure 1. The consumer price index (CPI) rose 6.2% between October 2020 and October 2021 and the index that exclud...
Tags: Economic Trends, Federal Reserve

A January FOMC Post-Mortem

Posted: January 29, 2020 by Dennis W. Jansen, Thomas R. Saving
Media coverage the day following the Federal Reserve Open Market Committee’s (FOMC) action on January 29, 2020 widely applauded the Fed’s decision to maintain its target for the Fed Funds rate.  But the most important aspect of the December meeting was the decision to increase the interest paid on bank reserves, the IOER, from 1...
Tags: Federal Reserve, FOMC, Interest Rates

Interest Rates and Fed Policy in 2019

Posted: January 27, 2020 by Dennis W. Jansen, Thomas R. Saving
The year 2019 was a year of declining market interest rates. In fact, 10-year Treasuries fell from 2.8% in January to a low of 1.47 in early September, during the period of the interest rate inversion. At that point, 3-month Treasuries were yielding almost 2%. The inversion ended in early October but the 3-month, 1-year and 10-year rates were al...
Tags: Federal Reserve, Interest Rates

The Fed and Interest Rates: Where to Now?

Posted: October 25, 2019 by Dennis W. Jansen, Thomas R. Saving
Since September, when the Federal Reserve reduced the top of the target range for the Fed Funds rate from 2.25% to 2.00%, a reduction 25 basis points, and reduced the interest rate paid on bank reserve balances from 2.1% to 1.8%, a cut of 30 basis points, market interest rates have continued to fall. As a result, the interest rate paid to banks ...
Tags: Federal Reserve, FOMC, Interest Rates

A September FOMC Post-Mortem

Posted: September 20, 2019 by Dennis W. Jansen, Thomas R. Saving
Media coverage on the day following the Federal Reserve Open Market Committee’s (FOMC) action, as announced on September 18, widely applauded the Fed’s lowering of its target for the Fed Funds Rate.  The most important change in the September meeting was reducing the interest paid on bank reserves, the IOER, by 30 basis points. ...
Tags: Federal Reserve, FOMC, Interest Rates

The Fed and Interest Rates: Where Do We Go From Here?

Posted: September 13, 2019 by Dennis W. Jansen, Thomas R. Saving
As market interest rates continue their downward slide, the press is awash with predictions of how much the Fed will reduce interest rates at its September 17 and 18 meeting. The very fact that market interest rates are changing without Fed action begs the question of whether the Fed can even influence the direction of change in market interest ...
Tags: Federal Reserve, Interest Rates

FOMC July 31: A Post-Mortem

Posted: August 05, 2019 by Dennis W. Jansen, Thomas R. Saving
On July 31 the Fed announced a 25 basis point cut in both its target band for the federal funds rate and in its rate of interest on excess reserves (IOER).  The new IOER would be 2.15%.  Media coverage widely parroted the statement that the Fed had lowered interest rates for the first time since the onset of the Great Recession.  ...
Tags: Federal Reserve, FOMC, Interest Rates

FOMC July 30-31: Ten Reasons to Cut Rates

Posted: July 29, 2019 by Dennis W. Jansen, Thomas R. Saving
Speculation is running high regarding whether the Federal Open Market Committee (FOMC) will cut interest rates – either the Federal Funds Rate upper bound or more importantly, the interest rate on reserves– at its next meeting scheduled for July 30 and 31.  Opinions are split on what the FOMC should do, and what they will do.&nb...
Tags: Federal Reserve, FOMC, Interest Rates

FOMC June 18: A Post-Mortem

Posted: June 25, 2019 by Dennis W. Jansen, Thomas R. Saving
Media coverage of the Federal Reserve Open Market Committee’s action on June 18 reported that the Fed left interest rates unchanged, with the Federal Funds Rate range holding steady at 2.25% -2.5%.  Unremarked upon by the financial media, and unmentioned in the lead section of the Fed's statement, was the fact that the Fed’s...
Tags: Federal Reserve, FOMC, Interest Rates

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