A Long Ways Away from 2%
The U.S. won’t see CPI at 2% without a deep recession. The current Core CPI (3.8% y-o-y) is almost double where the Fed wishes it to be. February’s monthly rate of increase (0.4%) was flat with January.
One could argue that CPI indicators lag, therefore CPI is actually lower than what is reported by the BLS.
One could also argue that CPI is understated because the measure does not compare like-for-like items and often prefers surveys to real world pricing data.
The incentive for understating CPI is that Social Security and related payments are pegged to CPI, therefore the associated expense to Treasury is less when understated. Further, understated CPI provides the sitting Administration and the Fed with air cover.
I do believe that the economy is softening.
