This Year the November CPI-U Inflation is just 1.92% - What Tariff Inflation?
Last year it was 2.19%, Nov, 2017 it was 2.32%
The data that gets some attention during a month is the Consumer Price Index (CPI) Inflation Report. Inflation is important in our daily lives. It is paying more for the same thing that you bought last month or last year. Inflation was supposed to spike due to the Tariffs applied against various imported goods. Guess again.
We have Commodities Deflation and Service Inflation, again. Readers of this column could probably write this article right now. Energy costs are down 0.6% November to November. We have deflation of 1.8% for Education and Communication Commodities and 4.2% for Apparel. Education and Communication Services are up 1.9%, Water, Sewer and Trash Services are up 2.3%, Recreation Services are up 2.4%, Medical Care Services are up 5.1%, Household operations are up 5.4%, and Health Insurance, according to the survey, is up a whopping 20.2%
November Inflation has been declining since November 2017. We have been between 2% and 4% for inflation during November since November 1990. We did spike to 4.62% during November 2007. We did drop to 0.07% during November 2015. This was the first inflationary month of 2015 according to the CPI-U data.
The Phillips Curve is Misleading. The Phillips curve compares inflation against the unemployment rate. The theory is that as unemployment falls inflation rises. Also, as unemployment rises inflation is supposed to fall. We normally have Inflation under 4% and Unemployment under 8%. Right now inflation is 1.92% and unemployment us just 3.31%. This column has written numerous articles regarding how the depressed participation rate is reducing the effective unemployment rate (U-7.) The July 2012 unemployment rate was 8.60% with inflation at 1.29%. November 2012 the unemployment rate was 7.36% and inflation of 1.70%. The participation rate during November 2012 was 63.46% compared to this month's 63.22%. If we use the November 2000 participation and unemployment rates then the 2012 U-7 was 12.09% compared to 8.59% this November. (That 12.09% value would be "off the chart.
Wages rose 1.98% to 6.13% November to November, based on Sectors. The Wages and Workers article examined the hourly wage growth, hours worked, and changes in workers by sectors. Total earnings rose 2.60% to 6.18% depending on sector. Earnings are growing faster than inflation.
The data is the data. We have some inflation and some deflation.
It's the economy.
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