Bruce Hall seems to think calculating 18 month inflation rates (either annualized or not) is just fine. It is just fine. As long as you don’t do it using not-seasonally-adjusted data. If you do that, you really should be clear. Illustrative example for CPI below.
Suppose you wanted to detect anomalies in nonfarm payroll employment (NFP). Would you want to apply a filter that relied on trend stationarity of NFP (like reader CoRev does in his “anomaly analysis”)? My short answer is “no”…
From 2019, pay special attention to CoRev’s statistical analysis (at the end):
Usually, summing up chained quantities yields relatively small errors. However, when relative prices change a lot, then the differences can be large. That’s the case with relative prices of consumption since the pandemic. Hence, the sum of the components does not equal the total for consumption.
In assessing market views on future lumber prices, reader JohnH writes: Futures markets aren’t foreseeing a decline in lumber prices any time soon. https://www.barchart.com/futures/quotes/LS*0/futures-prices
Justin Fox has a excellent discussion on the problems in conveying trends in real activity in relative terms when the real magnitudes are expressed in chain weighted terms.
I start teaching a couple classes tomorrow; here are some cautionary notes.
Reader Bruce Hall argues that “With the exception of travel related and luxury related items, the monthly adjustments[to the CPI] tend to be relatively minor…”. I beg to differ.
Victor Davis Hanson, writing in a data-free commentary published by the Independent Institute : NOTE as of 7/26, the Independent Institute’s version of the article has disappeared; I add here another copy of the article, at some site called “American Greatness“. 10/26/2021, MDC.
At the risk of excessive navel-gazing, a commentary on what responsibilities Asian-Americans have in calling out China. An Econbrowser reader writes: [D]o I think Menzie is a China apologist? No. Do I think Menzie is thoroughly intimidated by China? Absolutely. But he is hardly alone in this. Nevertheless, there is a bigger picture. If China […]