Search Results
Briefing
How Persistent Is Inflation?
As inflation has risen during the past year, it is natural to ask: "How long will this period of high inflation last?" This question is important to households and firms forming expectations about the future, as well as policymakers deciding what actions to take against rising prices. In this Economic Brief, we provide a framework for thinking about inflation and conduct an analysis concerning the persistence of contemporaneous shocks that move price levels. In recent decades, the persistence of inflation has been low, especially when compared to the high inflation of the late 1970s and early ...
Briefing
Building A Pipeline Between Producer and Consumer Prices
Do rapidly rising producer prices signal pain ahead for consumers? We take a fresh look at the relationship between producer and consumer price indexes. We document a correlation between upstream producer prices and the Fed's preferred measure of consumer price inflation (the personal consumption expenditure price index). Using a statistical model, we find that that levels and growth rates of producer prices have a statistically significant impact on consumer price inflation. Gaps between the two price indexes tend to normalize over time, which, given recent data, suggests that upward ...
Briefing
How Is Housing Handled in the National Income and Product Accounts?
The National Income and Product Accounts (NIPA) are prepared by the Bureau of Economic Analysis (BEA) to provide a comprehensive picture of the nation's economic performance. Measuring the multitude of economic transactions for a variety of spending categories, sectors and regions is a formidable task that often involves imputing missing data and choosing how to analyze specific statistics. In this article, we focus on how NIPA measures economic activity in a particular sector: the housing sector, as it is highly sensitive to business cycle variations and changes in monetary policy. In ...
Briefing
SOS! Signaling Recessions Earlier
For consumers of economic data navigating an overgrown jungle of economic facts, figures and statistics, leveraging simple statistical regularities can be useful in tracking important changes in the momentum of the economy. For example, many economic analysts interpret two consecutive quarterly declines in gross domestic product (GDP) as an indicator of recession, even though the National Bureau of Economic Research (NBER) uses several other indicators to determine official recession start and end dates. Another very popular recession indicator is the Sahm rule, which signals the start of a ...
Working Paper
An Alternative Measure of Core Inflation: The Trimmed Persistence PCE Price Index
I introduce the "trimmed persistence PCE," a new measure of core inflation in which component prices are weighted according to the time-varying persistence of their price changes. The components of trimmed persistence personal consumption expenditures (PCE) display less tendency to mechanically pass-through the level of the prior period's inflation to the current period; thus, the impact of the current stance of monetary policy and real economic factors are more likely to be visible in recent trimmed persistence inflation compared to headline inflation. Trimmed persistence inflation performs ...