Stephen Miran

To use backward-looking data that just ignores that shock on the upside and the downside, which was of monumental historical significance to the US economy, I think is deeply misguided.

I think it's imperative to use forward-looking forecasts that incorporate something like that.

Well, we can do that.

Well, you know, I think what you're asking sort of invites a previous question, which is what did Congress assign the Fed to do?

And Congress assigned the Fed to pursue stable prices.

Now, historically, the Fed has had lots of leeway in how to interpret that, and it's chosen to interpret that as 2% growth and measured personal consumption expenditure inflation.

Right?

The way that you calculate inflation is sort of, you know, it's a very complex thing and there's lots of methodological choices that get made when you're sort of deciding how the sausage gets made.

And it can really affect how things are measured, right?

And so when you say, do households have faith that the Fed is pursuing and achieving its inflation mandate?

I think that, you know, sort of,

small changes in measured inflation are difficult for households to detect because they can be, you know, because the way that measured inflation is measured is there's lots of noise in it.

And I think that small changes in measured inflation are usually dominated by the noise relative to what households are experiencing.

But nevertheless, when you look at inflation expectations, I think that they remain reasonably well anchored, which indicates that households and firms in the United States have faith in the Fed's ability and willingness and future of hitting its inflation target.

Yeah, so that's a great point.

Financial conditions are the channel through which monetary policy works.

And so they matter when you're thinking about where monetary policy should be set.

Now, as we were saying a moment ago, my view is that last year, neutral was much higher because immigration was much higher, because fiscal deficits were much higher than I expect them to be going forward.

If you look at fiscal deficits this year, in February through August, which are the data that we have available and that encompass after the policy space changed,

in the previous fiscal year, right?