Inflation since 1960

Figure 1: Headline CPI inflation, year-on-year (blue), and Core (brown), both in %. NBER defined recession dates peak-to-trough shaded gray. Source: BLS, NBER.

24 thoughts on “Inflation since 1960

  1. pgl

    I noted earlier that Kevin Drum had an interesting post graphing the recent behavior of inflation adjusted employment cost index (ECI). FRED provides quarterly data since the beginning of 2001 on nominal ECI and the GDP deflator so I used a tool Bruce Hall does not trust called Excel to track this data further back.

    During the 2nd Obama terms, real compensation rose by 3.16%. During Trump’s single term (yes he lost to Biden) real compensation rose by 2.33%.

    Now reality is going to get little Brucie boy all angry that somehow presenting objective data is nit picking his usual dishonesty.

    1. Bruce Hall


      You make an interesting point and it’s not that I can’t use Excel at which I am quite adept.
      During the 2nd Obama terms, real compensation rose by 3.16%. During Trump’s single term (yes he lost to Biden) real compensation rose by 2.33%.

      It is only correct because you ignored the first term which was supposed to be the “recovery” period. From the beginning of Obama’s first term to the end of the second, real compensation change was almost flat.

      But keep trying to find the rose among the thorns.

      1. Pgl

        Still trying date some dude named Lucy? Showing off Excel skills didn’t impress him? Poor lonely little Brucie boy

      2. pgl

        “From the beginning of Obama’s first term to the end of the second, real compensation change was almost flat.”

        Either you flunked Excel skills or you are the most dishonest troll ever. You admit real compensation for by 3.16% in his 2nd term so unless real compensation fell by 3% in his first term – then you are clearly wrong. Guess old incompetent liar – real compensation rose by 1.44% during his first term. Which is pretty good since he inherited the Great Recession from Bush43.

        Look Brucie boy – everyone knows you lie – a lot. And everyone realizes you are incredibly stupid too. Which may be why that dude named Lucy will never go out on a date with you. So stick to what you do best – acting like a dog chasing its tail.

      3. pgl

        The day before you wrote “from the beginning of Obama’s first term to the end of the second, real compensation change was almost flat.”

        Our host had an entire post devoted to your lying that started with:

        “Were wages flat during the Obama administration? Did they rise appreciably faster in the first three years of Trump (as asserted by this commentator)? 30 seconds of data retrieval reveals the answer is “no”.”

        Look Brucie – repeating the same lie a dozen times does not make the lie true. But it does prove the obvious – you are not only a liar but really, really dumb.

    2. AndrewG

      I don’t want to get in the middle of this lover’s spat, but:

      1. During an employment recovery after a really bad employment recession, you’d expect wages to FALL for some period. That’s because lower-earning people, who were most likely to lose their jobs during the recession, got their jobs back. (Note that wages actually ROSE in 2008. Same thing but upside down. It’s a composition effect.) Real compensation (which is wages and more) should reflect this (as benefits and other things usually go up with wages).

      2. Since when is it controversial to note that the recovery in Obama’s first term was slow? It was. We had just had the worst contraction since the Depression and there was tons of bad debt laying around. Arguably there wasn’t enough fiscal support. Monetary policy was almost useless.

      3. Since when does anyone believe that Obama or Trump were responsible in any meaningful way for the economic performance of the US 2012-2019? Congress basically passed nothing in the first half of that period. Post-2016, we had tax reform that was financed by debt and had more than a little whiff of voodoo. Net neutrality was a nothingburger. Putting a few hundred children in cages isn’t really economic policy. Even those dumb trade wars didn’t do much to hurt growth.

      Looking at 2015-2018, do we notice any appreciable change in trends? Trump’s win was a surprise, right? So if he or his platform were so salutary for growth, shouldn’t we see a big change in the public’s behavior in late 2016? IIRC, there was a big jump in stock trading volumes, but that’s all. The job market continued to tighten apace.

      Anyways, carry on.

      1. Vasja

        “Since when does anyone believe that Obama or Trump were responsible in any meaningful way for the economic performance of the US 2012-2019?” It surprises me how doubtlessly commentators link coincident economic performance to the seating president. While he/she does have some command over it, it is very much limited. In the short run… fiscal multipliers, even in recessions, seem to be at most close to 1 (see Ramey’s meta-analysis). So the president doesn’t have much pull here. His actions do affect the stock market, but mainly because it’s forward-looking. Those announced policies are expected to improve/deteriorate long-term performance. What’s left in the short run are job retention schemes and projects. Here, I think, they can do a great job. But, while this will have some effect on the business cycle, I fear it’s of limited impact. Now, in the long run, this is where they can make an awesome&lasting contribution. With policies such as regulation, support for nascent industries&science, administrative support to entrepreneurship, international trade,… However, these policies act with long and variable lags (much more than monetary policy) and their effects will likely be ascribed to future presidents.

        1. AndrewG

          “Now, in the long run, this is where they can make an awesome&lasting contribution.”

          Yes, I agree with you there (and the rest of your comment). Don’t forget infrastructure investment.

  2. macroduck

    The “Great Moderation” commenced with the decline of inflation below around 4% and persisted until lax regulation of finance betrayed the world into recession.

    The process of disinflation underway since Volcker, exacerbated by the Great Recession, left monetary policy weakened. Massive addition of liquidity was the central bank tool of choice under those conditions.

    Now, two massive supply shocks in quick succession have combined with central bank liquidity provisions to induce an inflation regime change, takin inflation back above 4%.

    Bullard says respond to inflation regime change. Dudley says rely on Philips Curve analysis. In the near term, those amount to the same thing – withdraw stimulus. In the medium term, however, Bullard says be guided by the persistence of inflation, while Dudley argues for being guided by the persistence of wage gains. The Fed’s operational regime of making up for inflation under and overshoot looks, on the surface, more like Bullard, but FOMC members vote their own views. The choice between Bullard and Dudley could be a big deal once inflation turns the corner.

    1. Pgl

      Princeton Chicken Little… the world is coming to an end. Your hyperbole is quite boring

    2. baffling

      i don’t think inflation directly is going to cause a recession. it will have more to do with what is happening in ukraine, and if that story spreads to other parts of europe. inflation does not really cause the recession, it is the fed raising rates. i am not sure they will raise rates enough for that to happen. especially in the geopolitical environment we are currently in.

  3. rsm

    Noise based on arbitrary, capricious trader overreaction to random news, no? If incomes were indexed (easy to do with CBDC), would anyone even care about this fickle noise?

    1. macroduck

      No – actual price changes, based on input costs and profit margins. But no matter how many times it’s explained to you, you can’t seem to grasp this simple reality.

      If incomes were indexed, everybody would care about inflation figures, because indexation would be based on inflation figures. Also, fixed-rate borrowing would become a thing of the past, transferring rate risk from (sophisticated, well capitalized) lenders to (unsophisticated, poorly capitalized) borrowers. Broad income indexation is the stupidest idea since whatever it was that lost you all that money in the market.

      Now go ahead, throw another tantrum.

    2. Barkley Rosser


      It is a historical fact that when nations index fully for inflation more often than not the result is that inflation further accelerates. Such indexation has often been a key step on the way to having full-blown hyperinflation. And guess what? As the inflation rate hyper accelerates, the price changes move ahead of the indexing wage and benefit changes, meaning that in fact the indexation fails to keep up and keep people from losing due to the inflation. It has generally been a failure on a massive scale, which is widely known and why almost nobody except for an occasional ignorant crackpot like you suggests it anymore.

  4. Bruce Hall

    Most people point to supply constraints as the culprit for US inflation. I tend to accept that is a considerable part of the phenomenon of the inflation being experienced now. However, other people point to another significant factor.

    And, Lucy, before you go off on another ad hominem rant about the source, just know that I ignore them because you are trying to shoot the messenger rather than debate the message.

    Short version here:

    Okay, got to rest up. Brother’s b-day tomorrow along with the Final Four. Sunday with the grandkids. Monday with the b-ball finals. Later fellas.

    1. Pgl

      Someone from George Mason admitted Trump left Biden with a huge output gap? Progress. Of course her estimate is generally considered conservative. You would know that if you actually read the Posts here. But do continue watching Fox and Friends living in your serial stupidity

    2. pgl

      “Today, several new studies confirm that this bout of inflation is rooted in demand, not supply.”

      REALLY? Which studies did she mention? Oh – none. And she finds THREE nations where inflation is less than 4%. She does not mention inflation in most EU nations is also rising?

      George Mason quality research. But Bruce Hall does not want us to consider the source. Is he really THAT STUPID?

      1. Barkley Rosser

        Eurozone inflation rate 2 percent less than US rate. That might be a decent measure of difference in demand side policies, with them having a 6.8 percent unemployment rare compared to US 3.6 percent. Yeah, Phillips curve may be back. Biden’s new budget cuts budget deficit to about what it is in Eurozone in terms of percent of GDP. e shall see.

        1. pgl

          That is correct. Now Brucie boy wants us to believe Eurozone inflation is less than 4% so simple arithmetic would say US inflation is less than 6%.

          Now we know the US inflation rate is closer to 8% right now but in Brucie’s little mind 8 minus 2 equals 4. Yes – he is THAT dumb.

        2. T. Shaw

          Has anybody done a review of the 2020-2021 EU vs. USA fiscal and monetary COVID stimulus numbers?

          I remember reading later in 2020 that the US had appropriated and distributed approximately two-times the amounts of the EU.

    3. AndrewG

      It’s hard to imagine that demand isn’t a factor in our current inflation bout, because it always is – mechanically. The Fed has significant control over aggregate demand, so saying it’s all about supply is kind of a cop-out even if it’s true. The Fed thought the supply issues were easing faster than they did, and they were wrong.

      That being said, I think overly-large fiscal stimulus when there’s a lot of uncertainty about what the near-term holds (due to Covid) is justified. It’s better to go too large than too small. Same with 2008. The catch is you need a Fed to be on the ball, and arguably they were too dovish this time. And it turns out, people hate inflation more than just about anything.

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