Understanding Inflation via Developments in Market and Nonmarket Inflation Rates
Year: 2025
Type: article
Abstract: This Economic Commentary examines the recent behavior and the longer-term properties of market-based and non-market-based inflation series, including their cyclical properties, historical revisions, and predictive power in explaining future PCE inflation. The examination reveals a statistically significant association between market-based PCE inflation and estimates of labor market slack, and a strong positive association between movements in the stock market and in some of the financial services components of non-market-based PCE inflation. Disinflation in overall PCE inflation over the course of 2023 and 2024 was largely driven by disinflation in the market-based components, coinciding with a gradual loosening in labor market conditions.
Authors: Randal J. Verbrugge, Saeed Zaman
Institution: Federal Reserve Bank of Cleveland
Language: English
Domain: Social Sciences
Open Access status: diamond
OpenAlex ID: W4414403554