WASHINGTON — At 6:02 a.m., the Cleveland Fed’s model said headline inflation had crept up to 3.6 percent. At 6:40, a cable chyron said something about it. At 7:15, three separate morning shows had three separate adjectives. At 8:30, the government releases the actual number, and the country will learn which adjective was correct.
This is how inflation day works now, and the markets have adapted beautifully.
By 9 a.m. on Tuesday, traders had already positioned themselves for the report — the last inflation print before the Federal Reserve meets October 27 and 28 — which means the report itself will mostly confirm or disappoint a feeling that has been trading since Sunday. Core inflation, which strips out food and energy, is expected near 2.4 percent. Headline is expected higher, because energy exists. Both numbers will be true at the same time, and the difference between them, roughly 1.2 points, is the most argued-over gap in American life.
At 10:12, a portfolio manager at a mid-size firm in Charlotte, who asked to be identified as Gerald, explained his process for inflation morning. “I decide how I feel about it on Monday,” Gerald said. “Wednesday is verification. Sometimes the number surprises you and I’ll adjust by lunch. Mostly it doesn’t.”
Gerald’s firm manages $4.2 billion. The Bureau of Labor Statistics, which employs roughly 2,700 people to measure the prices of 94,000 goods and services, will publish its findings at 8:30 a.m. Eastern. Gerald’s feeling will be on Bloomberg by 8:31.
Consumer expectations for inflation over the next year have climbed to 3.9 percent, which economists describe as “embedded,” a word that sounds like a problem and functions like one, because a price expectation that everyone shares becomes the wage demand that becomes the price. The Fed’s job on October 28 is to decide whether the feeling is the fact.
At 8:29 a.m., Gerald was still right about how he felt. The number itself, technically, had not yet been printed.