Last edited Wed Jul 31, 2024, 03:48 PM - Edit history (1)
The inflation situation as of the release of the PCE on 7/26/24. Here is a summary table followed by the graphs.
I annualize them all to be easy to compare to each other, and to compare to the FED's 2% goal. I use the actual index values rather than the one-digit changes that are commonly reported in the media. Links to the data are with the graphs.
ALL the numbers are the seasonally adjusted ones
The "1 month" number is the change from April to May expressed as an annualized number.
The "3 month" number is the growth over the last 3 months (and then annualized). It is calculated based on the change in the index number between the latest one and the one 3 months previous. e.g. if the latest index value is 304 and the one 3 months previous is 300, then the 3 month increase is 1.333333%
. . . (304/300 = 1.01333333 => [subtract 1 and multiply by 100%] => 1.333333%)
Annualized, it is 5.4%
. . . (1.01333333^4 = 1.0544095 => [subtract 1 and multiply by 100%] => 5.44095% => 5.4%).
. . . Most people just multiply the 3 month increase by 4 to annualize it: 1.333333%*4 = 5.333333% => 5.3% which isn''t technically correct (it leaves out compounding) but it is close for small percentage changes.
"Regular" is the "headline" number that has "everything"
"Core" is the regular with food and energy removed (The Fed prefers this as a basis for projecting FUTURE inflation)
Finally, the main summary table
All are seasonally adjusted and ANNUALIZED
PCE-Personal Consumption Expenditures Price Index (Fed's favorite inflation measure)
CPI-Consumer Price Index (retail)
PPI-Producer Price Index (Wholesale prices)
Links to the data are with the graphs below
Average real (i.e. inflation-adjusted) hourly earnings are up over the past 2 years and are above the pre-pandemic level:
. . . # Real average hourly earnings of production and non-supervisory workers: https://data.bls.gov/timeseries/CES0500000032
. . . # Real average hourly earnings of private sector workers: https://data.bls.gov/timeseries/CES0500000013
And now the graphs, in the following order:
* Core PCE and Regular PCE (Core PCE is the Fed's favorite for projecting FUTURE inflation)
* Core CPI and Regular CPI
* Wholesale inflation - Core PPI and Regular PPI (so to see the 7/12 update, page down to the last graphs)
CORE PCE through JUNE that came out 7/26/24 (PCE=Personal Consumption Expenditures price index)
CORE PCE (seasonally adjusted): https://fred.stlouisfed.org/series/PCEPILFE
BEA.gov News release: https://www.bea.gov/ and click on "Personal Income and Outlays" or "Personal Income"
This is the one that the Fed weighs most heavily. The Fed weigh the PCE more heavily than the CPI. And in both cases, they weigh the CORE measures higher than the regular headline measures for projecting FUTURE inflation
I usually don't include the 6-month rolling average, but I had it handy, and it is fascinating how it gives such a different picture than the rolling 3 month average. The big reason for the difference is the huge January month-over-month increase (6.2% annualized), which is in the 6 month window, but not in the 3 month window. When January drops out of the 6 month window next month, it should look a lot different (i.e. it will show a downturn barring a shocker in next month's report)
Regular PCE through JUNE that came out 7/26/24
Regular PCE (seasonally adjusted): https://fred.stlouisfed.org/series/PCEPI
BEA.gov News release: https://www.bea.gov/ and click on "Personal Income and Outlays" or "Personal Income"
CORE CPI through June that came out 7/11/24
CORE CPI (seasonally adjusted) http://data.bls.gov/timeseries/CUSR0000SA0L1E
BLS CPI news release: https://www.bls.gov/news.release/cpi.nr0.htm
The Regular aka Headline CPI through June that came out 7/11/24 (CPI=Consumer Price Index)
Regular CPI (seasonally adjusted) https://data.bls.gov/timeseries/CUSR0000SA0
BLS CPI news release: https://www.bls.gov/news.release/cpi.nr0.htm
Some Additional CPI Series of Interest
Shelter, which is pretty much all rent -- either regular rent or "owners' equivalent rent", has been a problematic issue -- because changes in new rents take several months before they appreciably move the CPI (because of the inertia of 11 months of older rents). It is the largest component of the Core CPI and one of the largest of the regular CPI. Through May, shelter remained elevated at 0.4% month over month for several months. Fortunately, in June it fell to a 0.2% increase. Year-over-year, shelter is up 5.1%
Shelter: https://data.bls.gov/timeseries/CUSR0000SAH1
Core Inflation less Shelter: https://data.bls.gov/timeseries/CUSR0000SA0L12E
^--This is up 0.0% for a 2nd month in a row, and a 3 month annualized average of +0.8% (compare to core of +2.1%)
Click on "More Formatting Options" on the upper right hand of screen, and on the page that appears, choose some or all of: "1-Month Percent Change", "3-Month Percent Change" and "12-Month Percent Change".
Headline CPI and Fed Rate Action
November 2019 - June 2024
The first tentative little quarter point rate increase was March 17, 2022, 12 months after year-over-year inflation went north of 2% in March 2021, and had reached 8.5%.
I'm fond of the 3 month averages as they are an average of 3 data points (so can't be easily dismissed as a "one off", unlike a single month-over-month figure), and they have much more recency than 12 month averages (yoy). I think of them as kinda a smoothed version of month-to-month.
FedFunds Target Rate (I used the upper end of the 0.25% width bracket): https://www.federalreserve.gov/monetarypolicy/openmarket.htm
WHOLESALE INFLATION (PPI - the Producer Price Index)
https://www.bls.gov/news.release/ppi.nr0.htm
As for which core PPI measure, since the BLS highlights the one below in its reporting (as opposed to the one without food and energy), then I guess I should do likewise.
CORE PPI (excluding food, energy, trade services) through June that came out 7/12/24:
CORE PPI (seasonally adjusted) http://data.bls.gov/timeseries/WPSFD49116
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Regular PPI through June that came out 7/12/24 ( includes "everything" ):
Regular PPI (seasonally adjusted) http://data.bls.gov/timeseries/WPSFD4
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