Washington Post Columnist Gets the Story Wrong In Saying the Fed's Model is Wrong

Zachary Karabell, the head of global strategies at Envestnet, got the story badly wrong in a Post Outlook section piece arguing that the Fed's model of inflation is wrong. The piece highlights the relatively rapid growth in the last two quarters and argues that this should be leading to inflation. That is not what the Fed's model would predict.

In the Fed's model, the change in the rate of inflation is tied to the level of unemployment. While the unemployment rate is at a level where the mode...