Economists Skeptical of Latest Inflation Numbers Due to Data Issues

Skepticism Around Inflation Data

• 📉 Cooler than expected inflation data was released this morning, causing stocks to rise.
• 🧐 However, economists and the bond market are highly skeptical of the report's accuracy.
• ⚠️ Many experts believe changes to the data gathering process, particularly mid-month data collection, distorted the numbers.

Housing Inflation Debate

• 🏠 A significant point of contention is the reported monthly change in housing inflation, which rose to 0.13% from 0.03%.
• 📊 This figure contrasts with real-world observations of lower rents reported by entities like Blackstone.
• 🗣️ Some analysts suggest that shelter price data in the CPI often lags behind actual market changes.

Impact on Federal Reserve Policy

• 🏦 The bond market and Fed funds market show little change in rate cut probabilities following the report.
• 📈 Probabilities for rate cuts in January, March, April, and June remain largely unchanged, indicating the report did not significantly sway market expectations.
• ❓ The Federal Reserve will be cautious about potential technical issues with the print, but it may provide some ammunition for the doves.

Data Collection Challenges

• ❓ The report is described as noisy and complicated, making it difficult to draw strong conclusions.
• ⏳ Data collection issues mean the true trend will likely only become clear in the December report.
• 🚧 The Bureau of Labor Statistics (BLS) faced challenges due to a government shutdown, which ended mid-month, impacting their ability to gather complete data.