Another Reason Not to Fear Inflation

The Fed shouldn’t worry too much about the recent surge in consumer prices. It’s most likely a catch-up after a tough winter.
U.S. inflation has been accelerating in recent months, presenting the Federal Reserve with a tricky question as it decides how quickly to remove stimulus from the U.S. economy: Is the rise in prices a precursor of things to come or simply a “catching up” phase as people begin to spend again after a brutal winter?

Now HERE’S Some Government Manipulated Economic Data

A recent tweet by Jack Welch alleging that Friday’s jobs report was manipulated has sparked a ton of interest government data, and whether or not it is manipulated, or can be.
In a recent Fiscal Times piece (via Reuters), economist Mark Thoma makes a good defense of US data quality, while noting at the end that there are countries where manipulation does in fact happen.

Central bankers’ window to go for broke

Falling price pressures around the world will allow central banks to increase their use of monetary stimulus to boost growth, according to MIT economics professor, Albert Cavallo.
In an interview with Business Spectator, Cavallo said the world was now witnessing global disinflation. Indeed, there are now only three countries where inflation is not on a downward trajectory – Russia, South Africa and Brazil.

Billion Price Update

For some reason I seem to be seeing a resurgence of inflation scare stories, despite the fact that — gas prices aside — inflation remains quiescent. And along with the scare stories come assertions that the inflation numbers are faked, that the government is hiding the true rate.

Don’t lie to me, Argentina

IMAGINE a world without statistics. Governments would fumble in the dark, investors would waste money and electorates would struggle to hold their political leaders to account. This is why The Economist publishes more than 1,000 figures each week, on matters such as output, prices and jobs, from a host of countries.

Price in a trice

Online retailers offer an immediate measure of inflation
IF THE inflationistas are right, where should they look for signs of accelerating price growth? Many are suspicious of official numbers: John Williams, the boss of an inflation-statistics website called, claims American inflation has been underestimated for decades because the Bureau of Labour Statistics (BLS) regularly changes its basket of goods on the ground that consumers shy away from expensive items. And official data are slow to come out.

Inflation and the Billion Prices Project

When it comes to planning for your financial future, inflation is a huge issue. In fact, given the historic annual inflation rate of 3.75% a million dollars today will be worth just over $190k in 50 years. Moreover, using that historic rate along with the rule of 72, we can further conclude that prices will double every 19.2 years.


Between official government statistics, industry surveys, and Wall Street forecasts, it often seems like we’re drowning in data, often of uncertain value. But consider the alternative. In the early years of the Great Depression, it was clear that things were awful, but the government had few good figures to go on; there was no official G.D.P. number, and no solid information about unemployment.

The Prices Are Right

Even in the information age, the U.S. Bureau of Labor Statistics still gathers much of its data the old-fashioned way. Workers make phone calls to find out what dentists charge for pulling teeth, and they visit stores to write down the prices of CDs and Russet potatoes. In the end, the data are accurate but take a month or so to compile and analyze.

Billion Price Preview

One indicator I’ve been tracking lately is the MIT Billion Price Index; it basically tracks the goods component of the CPI, but of course has higher frequency, so it’s kind of an early warning indicator.
And the BPI has, of course, showed a bump in short-term inflation lately. My prediction was that this bump would prove largely temporary, just as previous blips — both positive and negative — have.

Mil millones de precios y el sueño de un INDEC virtual

A mediados de 2009, los economistas Vernon Henderson, Adam Storeygard y David Weil sorprendieron al ambiente académico con una idea disparatada y original: las fotos de la superficie terrestre tomadas por satélites desde el espacio exterior podían aportar un muy buen “proxi” para medir los incrementos de PBI en los países, prestando atención a las imágenes nocturnas de zonas iluminadas con luz artificial.

New indications of inflation

Where are the inflationary pressures?
The BLS reported on Thursday that the inflation rate as measured by the headline CPI has been 1.6% over the last year. Excluding food and energy, the inflation rate would be 1.0%.
The MIT Billion Prices Project is recording a slightly higher inflation rate for the U.S. of about 2.5%.

The Billion Price Index

Some commenters have been claiming that the MIT Billion Price Index is telling a very different story from the official Consumer Price Index. So I guess it’s worth pointing out that it really matches pretty well.
What you need to realize is that the Billion Price Index, inevitably, only covers goods — not services. So it’s got a narrower focus than the CPI.

Innovator: Alberto Cavallo

To track inflation, each month the Bureau of Labor Statistics canvasses businesses and records the price of, say, a 4.4-pound bag of golden delicious apples, among hundreds of other items. The agency dials land lines to survey how consumers spend their money. It’s essentially the same process the BLS has used for half a century.

The price is right

How a new online tool can help measure inflation as accurately as — and more quickly than — traditional methods.
Inflation is a crucial economic indicator, since rising prices can hurt consumers and trigger political discontent. It is also hard to measure. In the United States, Bureau of Labor Statistics employees track over 20,000 prices in person or via phone, which are then aggregated into the Consumer Price Index, a monthly gauge of price levels.

10th Annual Year in Ideas – “The Real-Time Inflation Calculator

Measuring inflation is a time-consuming business: at the beginning of each month, government researchers across the country amass troves of data on prices for everything from shoes to milk to phones. Two weeks after the end of the month, the government releases gauges of inflation like the Consumer Price Index. But inflation hunters may now get an advance glimpse of the data, thanks to a real-time inflation calculator devised by two economists at M.I.T., Alberto Cavallo and Roberto Rigobon.

Billion prices project

Justin Lahart is among those calling attention to the Billion Prices Project of MIT Professors Roberto Rigobon and Alberto Cavallo.
The basic idea of the Billion Prices Project is to automate search of websites around the world that report prices at which various vendors are offering to sell specific items.

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