MONEY & MARKETS • PURCHASING POWER & INFLATION
The Fed’s own inflation yardstick — the PCE price index — came in at 3.7% last Wednesday. Nearly double the 2% target. And it hasn’t been at or below that target since February 2021… five and a half years ago. For the first nine years after the Fed adopted 2% as its goal, inflation actually ran too low. They couldn’t get it up to 2%. Now they can’t drag it back down. Your dollar has lost roughly 21 cents of purchasing power since January 2020. And the Fed? J.P. Morgan now expects them to hike rates in September.
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The Fed spent nine years trying to push inflation up to 2% — then blew past it and hasn’t looked back for five and a half years.
