Conflicting Data, Conflicting Results

Inflation, employment, and the Federal Reserve's policy decisions

Published on Feb. 22, 2026

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This article examines the recent conflicting economic data, including the CPI, PCE, and employment numbers, and the challenges facing the Federal Reserve in making policy decisions. It discusses differing views from economists on whether the Fed should cut rates, and the potential implications of the Fed losing its ability to fine-tune the economy as it has in the past.

Why it matters

The conflicting economic data and the Fed's policy decisions have significant implications for the broader economy and financial markets. If the Fed loses its ability to effectively manage inflation and employment, it could lead to increased volatility and uncertainty, making it more difficult for businesses and consumers to plan for the future.

The details

The article analyzes the recent CPI and PCE data, noting that while the CPI number was 'tame', the PCE number came in much higher than expected. It also examines the significant revisions to employment data, with the Bureau of Economic Analysis overestimating job growth by over 1 million in 2025. This has led to concerns about the accuracy of other economic indicators like gross domestic income, personal savings, and personal income. The article also discusses differing views from economists like Lacy Hunt and Ed Yardeni on whether the Fed should cut rates, and the potential disinflationary and deflationary forces at play in the economy.

  • The Bureau of Economic Analysis overestimated the number of jobs in 2025 by 1,029,000.
  • The revisions follow downward adjustments of 818,000 jobs in 2024 and 306,000 in 2023.
  • Over the past three years, 2,153,000 jobs have been erased from earlier reports.

The players

Lacy Hunt

An economist who believes the Fed should be cutting rates, despite his long-standing reputation as being in the disinflation camp.

Ed Yardeni

An economist who argues that the Fed has achieved its dual mandate and should leave interest rates alone, as the economy has reached 'Nirvana' conditions.

David Bahnsen

An economist who believes the disinflation thesis may be more accurate than expected, due to potential headwinds in the labor market and the impact of tax refunds on consumer spending.

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What they’re saying

“The simple fact is that we have gone from over 80% of companies reporting in the first months to around 60%. Government analysis is forced to make assumptions on just over half the data. The surprise would be if there were no revisions.”

— Lacy Hunt, Economist (Hoisington)

“The Fed achieved its congressional dual mandate in January. The unemployment rate fell to 4.3%, and the CPI inflation rate was down to 2.4% y/y. Those round down to what we call 'Nirvana' readings, i.e., the low unemployment level of 4.0% and the Fed's inflation target of 2.0%.”

— Ed Yardeni, Economist (N/A)

“What is most relevant to investors right now is not the thesis I have laid out above - that the reported inflation number will be ticking down in 2026 due to the impact of declining rent growth, even as other elements of the elevated price level remain sticky.”

— David Bahnsen, Economist (Dividend Café)

What’s next

The judge in the case will decide on Tuesday whether or not to allow Walker Reed Quinn out on bail.

The takeaway

This case highlights growing concerns in the community about repeat offenders released on bail, raising questions about bail reform, public safety on SF streets, and if any special laws to govern autonomous vehicles in residential and commercial areas.