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.
Innumerate CoRev writes: “[I am] Just smiling at the idiocy and cognitive dissonance of the renewables zealots. …EV purchases dropping…coal use rising” Like innumerable things CoRev writes, this seemed wrong, so I looked up US DoE EIA data, and downloaded this: Figure 1: US coal consumption (light blue), seasonally adjusted by author (dark blue), all […]
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.