Bruce Hall Seems to think that calculating 18-month inflation (whether annualized or not) is fine.it yes Just right. As long as you don’t do it with non-seasonally adjusted data. If you do, you should really be clear. Below is an example of CPI.
figure 1: 18-month annualized inflation rate for seasonally adjusted urban all consumer CPI (blue) and nonseasonally adjusted urban all consumer CPI (tan), calculated using log difference. Dates of peak-to-trough recessions as defined by NBER are shaded in gray. Source: BLS via FRED, NBER and author’s calculations.
My vision the last time I recalled the numbers was 20-400 (not 20-20) uncorrected, but even I can see a big difference between the two series at different times.
in case Readers CoRev will accuse me of manipulating data, Note that I use the FRED series CPIAUCSL for seasonally adjusted CPI and CPIAUCNS for non-seasonally adjusted CPI.Look at the formulas in the legend box, all other calculations are very simple – unless you are unfamiliar with the use of natural logarithms, or don’t trust them. (this is Jim Hamilton’s post on usage logs and log differencesif you don’t trust Menzie Chinn because of his name or worldview.
I must say, the 18-month option is a bit odd. 1 month, 3 months, 12 months, 2 years, 5 years, okay. 1.5 years, well, there should be a reason.
