Will the Federal Reserve engineer a soft landing?

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resolved Jul 26

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This market will settle to YES if the June 2024 readings of Core PCE Inflation and Unemployment (defined by the BLS) read as the following:

PCE Inflation excluding Food and Energy is below 2% YoY
Unemployment is below 5.5% (2% above the recent low of 3.5%)

This market will also resolve to NO if at any time between Nov 2022 and June 2024 the Unemployment level reads above 5.5%.

Creator policy: I won't bet.

This question is managed and resolved by Manifold.

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New market!!

2.6%

I regret not adding a margin of error. But the market resolves to NO.

The issue was more that the market ran out of time. Even with a margin of error, I wouldn't call 2.6% "landed" yet. But it does seem to be heading that way, even if a bit more slowly.

Thanks for running this market!

It's nearly impossible to compose exactly the right wording in hindsight for a claim like this. Thanks for the market

This market resolves June 28th

As of this morning, Core PCE index for April is 121.909. June 2023 was 119.189, which means we are at 2.28%. Unless we see radical deflation in the next month, this is over.

bought Ṁ1,000 NO

Looking at https://fred.stlouisfed.org/series/PCEPILFE:
June 2023 was 119.189. So the target is 121.572 (maybe 121.512, to round to to 1.9% instead of 2.0%
Feb 2024 was 121.165

121.572/121.165 = 1.0034, so we have 0.34% remaining for 4 months. Seems quite unlikely given current rates.

bought Ṁ50 NO

0.4% for January https://www.bea.gov/news/2024/personal-income-and-outlays-january-2024

predictedNO

The quarterly number for Core PCE came at 2.4% for the Q3'23. This means annualized quarterly core PCE inflation can average at most 1.8% for the next 3 quarters.

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Core Inflation progress so far (0.16% to achieve 2% after 12 months)

Jul23: 0.218%

Ago23: 0.144%

Sep23 (Cleveland Fed forecast): 0.29%

Total: 0.65% (0.49% per quartee to achieve 2%)

This market seems cheap

predictedNO

Trailing two months inflation is still well over 2% annualized

Unemployment at 3.8%

Unemployment back to 3.5%, lol

It'll be a matter of the Core PCE

Core PCE at 4.61%, there's one last print before we start the comps that will ultimately adjudicate this market.

What happens to this market if it expires before inflation gets below 2% and before unemployment gets above 5.5%?

@JonathanRay this market resolves to NO

The bond market moved 70bps and this market didn't move

actually for January it went up to 4.7% YoY change. Market is currently at 30%. Might be a bit high.

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This market skepticism is beyond me.

@MP core PCE below 2% is what gets me. 2% is the target, so if they are on target, there's only a roughly 50% chance it'll be below 2%.

@chrisjbillington yeah if they had allowed up to 3% it would have been reasonable to bet yes

@MP %2 yoy is the sticking point. It's entirely possible the Fed will consider it undesirable to move below the %2 target.

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