EXCLUSIVE: CPI Increase ‘Just A Hiccup,’ Says Former CME Economist: ‘Inflation Is Well Under Control’ (CORRECTED)

Editor’s note: this story has been corrected to note that Bluford Putnam is a former, not current, chief economist at CME Group.

The Federal Reserve has inflation under control and the U.S. economy is doing just fine, according to a prominent economist.

Speaking on Benzinga‘s “PreMarket Prep” on Thursday, Bluford Putnam, former chief economist at CME Group, said December consumer price inflation (CPI) data was unexpectedly high, but not a problem that would concern equity markets for too long.

“It’s a hot number, but I think this is just a hiccup, Putman said.

He added: “I think a January rate cut is now off the table, but March and May are still on — but probably the market will think more about May than March. But I’m still in the camp that inflation is well under control.”

But markets weren’t convinced. All major indices were lower in morning trade following the data. The SPDR S&P 500 ETF Trust (NYSE:SPY), which tracks the S&P 500 index, was down 0.7% in midday trade.

Also Read: Fed Rate Cuts In March? Keep Dreaming, Economists Say As Inflation Spike Shakes Markets

Inflation Skewed By ‘Imaginary Number’?

Putnam reiterated a point he made when talking to Benzinga in November. That inflation would be at, or below, the Fed’s target rate of 2% if the CPI data were interpreted more accurately.

“The CPI measure of inflation has problems. A quarter of the headline rate comes from owner equivalent rents — which is calculated as if you rent your house to yourself and you collect the money. The statistical people then put that money in your account — even though you don’t have it — and they count it as personal income.

“It’s very much an imaginary number, and if you take it out of the data, headline CPI has been under 2% for four or five months,” he said.

Recession In 2024? Not Likely

And so it looks like the Fed could be keeping interest rates higher for longer. Is this a concern for the economy and, given that many analysts forecast growth to slow further in 2024, could higher rates even prompt a recession? Putnam thinks not.

“We’re going to post gross domestic product growth of 2.5%-3% for 2023. I wouldn’t even call that a soft landing — I would say that is either average or slightly above potential GDP growth,” he said

Much will…