Part 4/12:
Hassett discusses the challenging task of interpreting inflation data. He notes that inflation has been above the Federal Reserve's 2% target—often cited as around 3%—but points out that recent trends show some improvement, with the seven-month average dropping toward 2.5%. However, recent solid GDP growth of around 3.3% for the second quarter complicates the picture, indicating a surprisingly strong economy that could pose inflationary pressures if not carefully managed.