Inflation Vanishes, Leaving Fed Room To Cut Rates

Plus, more new, stunningly grim, exclusive data on being Jewish at Harvard

The government this morning released new Personal Consumption Expenditures inflation data for the month of March. They show market-based PCE inflation at negative 0.1 percent for March and both the overall PCE and market-based PCE excluding food and energy at zero. I wrote already back on March 30, 2025, about the risk that “the big worry for the U.S. economy is going to be not inflation but deflation.” Scott Grannis, who has been consistently right and whose charts and commentary are available free on the web without having to pay Goldman Sachs or for a Bloomberg terminal, had it back on March 13: “I detect no reason to worry about inflation.”

A big part of the inflation numbers are housing, both rents and imputed rent of owner-occupied housing. There’s nongovernmental data showing some signs that inflation in that “shelter” category is also cooling, or that supply is increasing in ways that should eventually translate into easing prices. For example, here’s vacancy data for apartments as published by ApartmentList.com:

Here’s “asking rent” data from Redfin.com through March 2025:

The April consumer price index release is scheduled to come May 13, after the Federal Reserve Open Market Committee meeting scheduled for May 6 to 7. The Fed says it pays closer attention to PCE than to CPI.

There’s been a partisan difference in inflation expectations, with Democrats expecting runaway inflation under Trump and Trump partisans expecting inflation to disappear in a Republican administration. The March data tend to support the Republicans, though the tariffs hadn’t yet kicked in. The dollar also has stopped falling against gold; the erosion of the value of the dollar as measured in gold is another way of measuring inflation. It’ll be interesting to see how long Federal Reserve Chairman Powell can maintain his record of “no rate cuts since the Trump inauguration” if the monthly PCE inflation numbers stay at zero. Eventually he may have to dismount his high horse.

Harvard has gotten worse: After yesterday’s post highlighting Harvard’s own research data showing Jewish students there reporting significantly worse experiences than the rest of the student population, I heard from a sophisticated reader of The Editors (possibly redundant, as there are no non-sophisticated readers of The Editors), who flagged a comparison between the October 2024 data (collected after Alan Garber had been president for nine months already, and in this current academic year, not the 2023-2024 academic year that Garber recently apologized for) and responses to the same questions in a similar survey from March 2019. The results show a stunning and rapid deterioration in the self-reported situation of Jewish students at the university.

Here it is in graphic form: