The Fed Cares About Inflation 10 Times More Than It Cares About Unemployment


Ryan Avent, having exhausted his conventional analysis of the Fed’s 2008 transcripts, turns today to a more analytical approach: counting words. I think others have already made this point without numbers, but Avent’s most powerful finding is that the Fed cares way more about inflation than it does about unemployment:

There is only one winner in the dual mandate. The word “inflation” (or variants thereof, such as “inflationary”) was mentioned a cool 2,664 times in 2008; “unemployment” pops up just 275 times.

I’m assuming he played fair and also looked for variants of “unemployment,” like “employment” or “jobs.” In any case, I don’t think this comes as much of a surprise to anyone, since it’s been obvious for decades that the Fed not only doesn’t care about unemployment, but gets positively worried when too many people have jobs. That would mean the labor market is tight and workers might get paid more, you see, and that could be inflationary. Still, it’s nice to see this verified quantitatively.

Avent also found that there were fewer mentions of “recession” as the year went on, which seems odd but might not be. Early on, when it was still unclear if the economy was in recession, I suppose they argued about this a lot. By June, when there was no longer any question about it, they all took it for granted and no longer even needed to mention it.

As for the finding that laughter increased later in the year, I guess I can’t blame them. There’s only so much globe-destroying financial panic you can take without cracking a few jokes.

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