Price Inflation Has Been above the Two-Percent Target for 65 Months in a Row

The Fed’s preferred inflation gauge, PCE, has now come in above its 2 percent target for 65 consecutive months, with core PCE running at 3.3 percent year over year in July and CPI up 3.4 percent through August. The dollar has lost 28 percent of its purchasing power since January 2020, and with wages falling behind inflation again in recent months, long-term Treasury yields are climbing toward levels not seen since before the 2008 financial crisis as bond markets lose confidence in the central bank’s ability to bring prices under control.

The following article was originally published by the Mises Institute. The opinions expressed do not necessarily reflect those of Peter Schiff or SchiffGold.

The last time the Federal Reserve managed to hit its two-percent price-inflation target was March of 2021. At the time, Fed Chairman Jerome Powell was telling everyone that price inflation was “transitory.” By the end of that year, however, price inflation was near 40-year highs. But he had to insist that it was all no big deal. After all, the central bank and its allies—including countless hack economists—had assured everyone that the massive monetary inflation of the Covid Panic period, when the central bank essentially printed $5 trillion, would have no significant effects on price inflation. The multi-decades high in inflation proved them wrong, of course, but you won’t hear many apologies from the economists who were so very, very wrong. Meanwhile, the dollar lost a quarter of its purchasing power in just a few years, and home prices have soared to historic levels of unaffordability. 

The latest reminder of this record of failure, which now extends longer than five years, comes with the most recent inflation measure showing that PCE, the Fed’s preferred measure of price-inflation, was 3.7 percent, year over year, in July. Meanwhile, core PCE, for the same period, was 3.3 percent. This means the PCE measure (both core and non-core) has now been above the 2-percent target for 65 months. …