We are not ECONOMISTS!

Because we are not economist, ReVISION Masters wants to help others understand parts of our economy that are as clear as mud, when it comes to news and social media.

First questions! How is INFLATION defined by the Fed?

The Federal Reserve System (the "Fed") measures inflation using several different indicators, including the Consumer Price Index (CPI), the Personal Consumption Expenditures (PCE) Price Index, and the Producer Price Index (PPI).

The CPI is a measure of the price level of a fixed basket of goods and services purchased by households. The Fed uses the CPI to monitor changes in the cost of living for consumers, as well as to set inflation targets. The CPI is calculated and published monthly by the Bureau of Labor Statistics (BLS). (https://www.bls.gov/cpi/)

The PCE Price Index is another measure of inflation that the Fed uses. It measures changes in the prices of goods and services purchased by households and by the government. The PCE Price Index is based on data from the Bureau of Economic Analysis and is calculated and published on a monthly basis. (https://lnkd.in/gDtdksVs)

The PPI is a measure of changes in the prices received by domestic producers of goods and services. The PPI is calculated and published monthly by the BLS and is used by the Fed to

monitor changes in inflation at the producer level, which can ultimately affect consumer prices. (https://www.bls.gov/ppi/)

In addition to these measures of inflation, the Fed also looks at other economic indicators such as employment, gross domestic product (GDP), and financial market conditions to help inform its monetary policy decisions.

Next post will be the Fed vs the Federal Government.

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