Economics glossary

B

• Breakeven Inflation RateThe gap between a regular Treasury yield and a TIPS yield of the same maturity; the bond market’s implied inflation forecast.Inflation Expectations (10-Year): 2.35%

C

• Consumer Price Index (CPI)A monthly index of the prices US households pay for a fixed basket of goods and services; its 12-month change is the headline inflation rate.US Inflation Rate: 3.7%
• Core InflationInflation excluding food and energy prices, the two most volatile categories; used to judge the underlying trend.Core Inflation Rate: 2.6%

F

• Federal Funds RateThe overnight interest rate at which banks lend reserves to each other; the Federal Reserve’s main policy rate.Federal Funds Rate: 3.88%

M

• M2 Money SupplyA broad measure of the money held by the public: cash, checking and savings deposits, small CDs and retail money-market funds.M2 Money Supply: $23.41T
• Misery IndexThe unemployment rate plus the inflation rate; a rough gauge of economic pain for ordinary households.Misery Index: 7.9%

N

• Nonfarm PayrollsThe number of paid jobs at US businesses and government agencies, excluding farm work; its monthly change is the headline of the jobs report.US Job Growth: +29K

P

• PCE Price IndexThe Personal Consumption Expenditures price index, the inflation measure behind the Federal Reserve’s 2% target.PCE Inflation Rate: 3.6%
• Personal Saving RateThe share of after-tax income that US households do not spend; personal saving divided by disposable personal income.Personal Saving Rate: 3.8%
• Prime RateThe base lending rate of large US banks, equal to the top of the Fed’s target range plus 3 percentage points; used to price credit cards and home equity lines.Prime Rate: 7.00%

R

• Real GDP and GDP GrowthThe value of all goods and services produced in the US, adjusted for inflation; its quarterly change is the economy’s growth rate.US GDP Growth: 3.4%
• Real Interest RateAn interest rate after subtracting inflation; it shows how much purchasing power a lender actually gains.Real Interest Rate (10-Year TIPS): 2.78%

T

• Treasury YieldThe annual return an investor earns on US government debt bought at today’s market price and held to maturity.10-Year Treasury Yield: 5.13%

U

• Unemployment Rate (U-3)The share of the labor force – people working or actively looking – that has no job but is available and searching for one.US Unemployment Rate: 4.2%

Y

• Yield Curve and Yield Curve InversionWhen short-term Treasury yields rise above long-term yields; historically one of the most reliable warning signs of a US recession.Yield Curve (10Y − 2Y): 0.39%

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