Although GDP release Leading the news, on Friday we have a new perspective on economic activity and price pressures (And today’s monthly GDP).
First, according to some key indicators of economic activity that NBER follows:
figure 1: Number of non-agricultural employment released in August (dark blue), Bloomberg 11/1 consensus (blue +), industrial production (red), excluding personal income transferred in 2012 (green), manufacturing and trade in 2012 Sales $ (black), Ch.2012$ consumption (light blue) and Ch.2012$ monthly GDP (pink), all logarithms are normalized to 2020M02=0. The decline date defined by NBER is shaded in gray. Source: BLS, Federal Reserve, BEA, calculated by FRED, IHS Markit (nee Macroeconomic Advisers) (released 11/1/2021), Bloomberg, NBER and the author. [updated 11/1/2021]
Consumption is still at a high level, but personal income excluding transfer payments is actually only at the pre-pandemic level. This emerged against the background of the slowdown in other indicators in September.
Second, inflation in September includes the personal consumption expenditure deflator announced on Friday. These are in line with expectations.
figure 2: CPI from all cities (blue), from personal consumption expenditure (PCE) deflator (black), seasonally adjusted chain CPI (brown), sticky price CPI (green), and 16% average CPI adjusted Month-on-month annualized inflation (red). Chained CPI inflation seasonally adjusted by the author. The decline date defined by NBER is shaded in gray. Source: BLS, Federal Reserve Bank of Atlanta, Federal Reserve Bank of Cleveland, calculations from FRED, NBER and the author.
image 3: From all cities CPI (blue), personal consumption expenditure (PCE) deflator (black), seasonally adjusted chain CPI (brown), and sticky price CPI (green) chain annualized inflation. Chain CPI inflation seasonally adjusted by the author. The decline date defined by NBER is shaded in gray. Source: BLS, Federal Reserve Bank of Atlanta, Federal Reserve Bank of Cleveland, calculations from FRED, NBER and the author.
Interestingly, while the CPI-based inflation indicator is rising rapidly, the PCE deflator index inflation continues to show a downward trend.
this Point out that year-on-year PCE inflation was driven by the development of the index about 4-5 months ago.
