Matthew C. Klein

For decades, Australians spent more than they generated in income, raising finance from abroad to make up the difference. That has reversed dramatically since the end of 2017. But will it last?

"Immaculate disinflation" works best if consumer spending rises less than incomes. That may finally be happening.

We should be cautious about overemphasizing the data from May and June

The latest numbers on growth, inflation, and incomes suggest that the American economy is easing into a steady state growth regime with inflation still slightly faster than the Fed's 2% goal.

The most recent data are likely overstating the extent of disinflation, especially given what seems to be happening with goods supply and demand.

It has been over a year-and-half since the end of "Covid Zero" restrictions, but domestic demand is still so weak that production is only holding up thanks to exports (dumping?)

The shortfall in household spending since 2019 is massive no matter how you count it.

The goal should be getting to "neutral" as quickly as possible. Since no one knows where that is, optimal policy should consist of moving down quickly while preserving the option to correct later.

That is not a problem, but it has implications for inflation and interest rates. Plus: inside the September 2024 NIPA revisions.

A few lines from his most recent speech and subsequent Q&A that caught my attention.