In 2012 the Fed set an "inflation" target of 2%. Only it wasn't really an inflation target. It was a PCE target. The PCE is the Personal Consumption Expenditures Index, which the BEA reports as part of its quarterly GDP reports. There's also an interim monthly update that is not widely followed. The PCE is a weirdly weighted, narrowly defined basket of goods and services used by consumers. It is similar to the CPI, and largely based upon CPI, but the methods used to weight its components cause the index to under represent inflation even more than CPI does.
Fed's Inflation Target and Method Guaranteed It Would Be Behind the Curve
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David Stockman’s Contra Corner isn’t your typical financial tipsheet. Instead it’s an ongoing dialogue about what’s really happening in the markets… the economy… and governments… so you can understand the world around you and make better decisions for yourself.
David believes the world -- certainly the United States -- is at a great inflection point in human history. The massive credit inflation of the last three decades has reached its apogee and is now going to splatter spectacularly.
This will have lasting ramifications on how governments tax and regulate you… the type of work you and your family members will have available and what you get paid… the value of your nest egg… and all other areas comprising your quality of life.