Michigan Survey Implies a Catastrophic Collapse of Fed Inflation Credibility

NY Fed survey doesn’t. Figure 1: Bordo-Siklos measure of central bank credibility, using 5 year Michigan expectations (blue). Assumes 2.45% CPI inflation is consistent with 2% PCE deflator inflation. NBER defined peak-to-trough recession dates shaded gray. Light orange denotes Trump administration. Source: BLS, NBER, and author’s calculations.