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Decomposition of unit price inflation in the non-financial corporate sector as of the third quarter of 2023


For non-financial corporate business units, the price of total actual added value per unit is used.

figure 1: Quarter-over-quarter inflation in gross value added prices (black line), unit labor costs (blue bars), non-labor unit costs (brown) and profits (green). NBER-defined recession dates are shaded gray. Source: BEA 2023Q3 2nd Edition, Table 1.15, NBER and author's calculations.

Note that in some quarters (e.g., Q3 2020, Q1-Q2 2021), profits significantly increased the price level of total value added in an accounting sense, while in other quarters (e.g., Q3 2020 The fourth quarter of the year) is deducted.

What is the cumulative impact since the last NBER-defined peak? as shown in picture 2.

image 3: The cumulative contribution of total value added in price (black line), unit labor costs (blue bars), non-labor unit costs (brown) and profits (green), all relative to the fourth quarter of 2019. NBER-defined recession dates are shaded gray. Source: BEA 2023Q3 2nd Edition, Table 1.15, NBER and author's calculations.

Note that labor costs specifically refer to unit labor costs; therefore they include changes in productivity.

The chart shows that while corporate profits are not insignificant to rising price levels, they actually account for a smaller proportion than labor costs.

Andy Glover point out here FRBKC analysis The profit share contribution to price levels was similar to previous recoveries, at least through the first quarter.



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