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LAST UPDATE:1/12/2019
CQM 20190111 CQM 20190111

Since the government has been partially shut down, this week’s CQM updated only the December consumption price index. Real GDP forecasts by CQM and PCA were revised upward a bit for 2018Q4. Since real personal consumption expenditure is strong, about 4%, the economy looks to be as solid as Fed Chairman Powell thinks. However, since net exports are very weak, economic growth will be about 2% in 2018Q4, which is “moderate growth” not “solid growth.”  It is apparent that inflation has been slowing down. Fed Chairman Powell said, “Muted inflation will give the central bank the ability to be patient in raising its benchmark short-term rate this year.” Instead of being patient the Fed economists must scrutinize whether a 2% inflation target is correct as price stability.

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