Using 5 year ahead inflation expectations from the Michigan Survey, not so much erosion in Trump 1.0. Trump 2.0 so far is another story.
Figure 1: Bordo-Siklos Measure of Inflation Credibility (Blue). Higher values indicate less credibility; Assumes CPI Target Consistent with 2% PCE Deflator Target is 2.45%. Light Orange Highlight Indicates Trump Administrations. Source: Michigan Survey and Author’s Calculations.
In a previous post, I used the ny fed’s measurement to calculate the Bordo cyclos index; At the moment only the January observation is available for that dataset.
And as an indicator of the tails, here’s the 75 percentage expectation, minus 2.45 percentage points.
Figure 2: 75% ile of expected 5 year inflation minus 2.45% (Blue). Higher values indicate less credibility; Assumes CPI Target Consistent with 2% PCE Deflator Target is 2.45%. Light Orange Highlight Indicates Trump Administrations. Source: Michigan Survey and Author’s Calculations.