Tag Archives: BLS

Inflation, CPI and Hedonic Adjustments

Are US prices rising more rapidly than the federal government statistics indicate?

Here is Peter Schiff’s take in “Inflation Propaganda Exposed”.

Compare this against an establishment Republican’s take on AEI’s website with “Is the US government wildly understating the inflation rate? No, it isn’t“.

Why not also take a look at Google Trends data comparing relative search patterns on “expensive” v “inflation”?

To summarize my opinion, I agree with Hazlitt who argued against the utility of price indexes for economic intervention on the grounds that it is only relative changes between individual prices that communicate meaningful information about monetary stability. The logic behind hedonic adjustments is flawed because people don’t derive utility from “quality improvements” alone; there is also disutility from obsolescence and “relative deprivation“.

Additional Resources:

Bureau of Labor Statistics: Hedonic Quality Adjustment in the CPI
Macrotrends: Dow to Gold Ratio
Wikipedia: Network effect
Shadowstats: Alternate Inflation Charts

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Filed under Consumer, Economics, Politics

Skills Gap, Education Debt, and Unemployment

What follows is an update to my Feb 14, 2011 post Unemployment Duration and the Labor Market. Back then, Average Weeks Unemployed had just leveled off at a blissful ≈35 weeks. Now at over 40 weeks, businesses have open positions but unemployment is still over 16%, and growth in student loan debt shows no sign of abating.

However, I’m not advocating for student loan forgiveness. I have made significant sacrifices to live well below my means and it would be a travesty to see my selfish and profligate peers rewarded for not taking the same measures.

No, the real problem is real prices; to be addressed at length in the future.

WSJ: Why Companies Aren’t Getting the Employees They Need (Oct 24, 2011)

Some of the complaints about skill shortages boil down to the fact that employers can’t get candidates to accept jobs at the wages offered. That’s an affordability problem, not a skill shortage. A real shortage means not being able to find appropriate candidates at market-clearing wages.

Forbes: The American Nightmare: Student Debt Will Be A Long-Term Drag On The Economy (Oct 22, 2011)

Over the next decade the Bureau of Labor Statistics projects that the greatest number of employment gains will be made in low-wage industries not requiring a college degree. Nasser believes that education debt will place an additional drag on America’s low-wage, low-purchasing power future. For many, the debt will delay or put entirely out of reach things like owning a home or a car.

The Atlantic: Chart of the Day: Student Loans Have Grown 511% Since 1999 (Aug 18, 2011)

BLS: Average Weeks Unemployed

BLS: Total unemployed, plus all marginally attached workers plus total employed part time for economic reasons

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Filed under Consumer, Economics, Politics, Rant, Zeitgeist

Unemployment Duration and the Labor Market

While the headlines often report on the “official unemployment rate*” (U-3 Total unemployed, as a percent of the civilian labor force, seasonally adjusted), the average duration of unemployment tells us much more about the seriousness of conditions in the labor market. From January 2001 through December 2007, the mean Average Weeks Unemployed is 17.2 weeks; and on the graph below, one can clearly see how far we have departed from that benchmark.

Average Weeks Unemployed (blue line, left axis) and Percent Change Year-Over-Year** (red line, right axis)

Data provided by the Bureau of Labor Statistics (BLS)

Series Id: LNU03008275
Not Seasonally Adjusted
Series title:  (Unadj) Average Weeks Unemployed
Labor force status: Unemployed
Type of data: Number of weeks
Age: 16 years and over

For the current release only (which contains 5 months SA and 3 months NSA), visit Table A-12. Unemployed persons by duration of unemployment

*For alternative measures of labor underutilization, visit BLS Table A-15
**I initially looked at percent change month-over-month, but it seems more intuitive to compare year-over-year due to seasonality.

In the news:

‘Normal’ Unemployment Rate May Be 6.7%, Fed Paper Says, Bloomberg, February 14th, 2011.
Fed officials not attached to dual mandate, Reuters, January 9th, 2011

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Filed under Economics, Zeitgeist