There it is. Mid-June of this year. I thought it was recent, but not that recent.
Three measures of inflation:
|Graph #1: Three Measures of Inflation: CPI, the GDP Deflator, and the PCE Index|
I knew about the Consumer Price Index and the GDP Deflator for a long time. I still have photocopies of Statistical Abstract tables from the early 1980s. (They cost 25 cents apiece, at the library.) But I never heard of the PCE price index till just a few years ago.
Now the other day, I read Brian Romanchuk's response to Nathan Tankus. Romanchuk writes:
Yes, economists who argue that "inflation" reduces the burden of debt are using consumer price inflation as a proxy for "generalised inflation" (which I describe below). This is technically incorrect. But as the chart below shows, there's a fairly strong correlation between CPI inflation and wage inflation, for very good reasons
What follows is most interesting. "A divergence between the two has implications for the wage and profit shares of national income," he writes. I won't quote any more of that; if you missed it you should definitely go there and read it.
So anyway, Brian Romanchuk's chart compares consumer price inflation to U.S. wage inflation. For wage inflation he uses "average hourly earnings". Something I never thought of, to be sure. But I like it.
So I picked two series out of the 267,000 FRED offers, and managed to satisfy myself that I had duplicated Romanchuk's graph:
|Graph #2 (After Romanchuk) Earnings = FRED AHETPI and CPI = FRED CPILFESL|
Now I have four price series to look at:
|Graph #3: Four Price Series|
By the way -- on that last graph, the green line runs with the low group in the 1980s, then accelerates up to the higher line and even goes above it after 2010. That line shows the fastest increase of any in the last 25 years.
That line is Average Hourly Earnings, the one I got from Romanchuk.
If you happen to be a Nathan Tankus fan (I am not) you might want to follow up on this with Brian Romanchuk. Wages are going up faster than prices? Is that with or without benefits? Either way, how can it be? Why doesn't Romanchuk point it out? and Was there no more realistic series he could have used to shoot holes in Nathan Tankus's post?