Reader Bruce Corridor argues that “Apart from journey associated and luxurious associated gadgets, the month-to-month changes[to the CPI] are typically comparatively minor…”. I urge to vary.
Right here is the CPI seasonal part:
Determine 1: Log ratio nsa CPI all city to sa CPI (blue). NBER outlined peak-to-trough recession dates shaded grey. nsa CPI is FRED sequence CPIAUCNS, sa CPI is FRED sequence CPIAUCSL. Supply: BLS by way of FRED, NBER and writer’s calculations.
In July 2022, the unadjusted CPI seems to be one-third of a share level larger than the adjusted. Is that “minor”? I don’t assume so.
Does changing to development charges sort things? Provided that one does a 12 month distinction (be aware: that gained’t work for Chinese language knowledge, the place the lunar new — tomorrow for 2023 — strikes from January to February and again). Under is the seasonal part within the month-on-month annualized CPI all city inflation.
Determine 2: First distinction of log ratio nsa CPI all city to sa CPI (blue). NBER outlined peak-to-trough recession dates shaded grey. nsa CPI is FRED sequence CPIAUCNS, sa CPI is FRED sequence CPIAUCSL. Supply: BLS by way of FRED, NBER and writer’s calculations.
In April 2022, annualized month-on-month inflation seems to be like 2.7 share factors larger utilizing unadjusted knowledge than what it seems to be like utilizing adjusted knowledge. Is that “minor”? I don’t assume so.
How about Core CPI?
Determine 3: Log ratio nsa core CPI all city to sa core CPI (blue). NBER outlined peak-to-trough recession dates shaded grey. nsa CPI is FRED sequence CPILFENS, sa CPI is FRED sequence CPILFESL. Supply: BLS by way of FRED, NBER and writer’s calculations.
Up till the Nice Recession, seasonals had been a couple of third of a share level. Now they’re round a sixth.
And about nonfarm payroll employment.
Determine 4: Log ratio nsa nonfarm payroll employment to sa employment (blue). NBER outlined peak-to-trough recession dates shaded grey. nsa nonfarm payroll is FRED sequence PAYNSA, sa is FRED sequence PAYEMS. Supply: BLS by way of FRED, NBER and writer’s calculations.
Unadjusted nonfarm payroll is almost a share level larger than adjusted. I feel all of us agree that’s not “minor”.
