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Presidential inflation beauty contest

Fair or not, U.S. presidents are often judged by the performance of the economy during their tenure—despite the fact that presidential policy, if it does have an impact, may have only a delayed impact. Worse, they may inherit the impact of the previous president’s policies. For example, Carter’s presidency is associated with high inflation even though his policies likely did nothing to instigate accelerating price increases. Similarly, historical views of Reagan’s presidency are no doubt positively affected by the decline in the rate of inflation during his term—even if that decline was caused by monetary rather than fiscal policy. Still, it’s fun to engage in armchair politics to compare economic outcomes across presidencies.

The graph plots the path of the all-items consumer price index for the past 10 presidents, from Kennedy to Obama. We normalize each path so the initial month has a value of 100, which allows us to quickly assess the total amount of inflation that occurred during a given term. Some paths are short, like Ford’s (which starts in August 1977), because only a portion of a single four-year term was served. Others are long, like Clinton’s (which starts in January 1993), because they include two full four-year terms.

The path for prices during Carter’s term is striking. In just one four-year term, prices accelerated 47.2%. In contrast, prices during Reagan’s eight years in office rose a total of 38.4%. The difference in these totals (47.2% and 38.4%) is substantial but not orders of magnitude different. The difference is, of course, the rate at which the increases occurred. During Carter’s term it was fast and furious, averaging 10% per year; during Reagan’s term it was slow and steady, averaging 4% per year.

How this graph was created: Using President Obama as our example, search for “CPI” and select the seasonally adjusted monthly series “Consumer Price Index for All Urban Consumers: All Items.” Change the units from “Index 1982-1984=100” to “Index (Scale value to 100 for chosen period).” Enter a day during the first month of Obama’s presidency (January 2009) as the observation date for which the series will be scaled to 100. Check the box “Display integer periods instead of dates (e.g. …,-1,0,1,…) with the value scaled to 100 at period 0.” Set the integer period range to start at 0 and end at the number of full months Obama has been president minus one (since month 1 of his presidency is represented on the scale as period 0). At this point, the graph will display the CPI during Obama’s time in office scaled to 100 during his first month. To add the remaining nine presidents, start by adding the CPI data series to the graph nine more times. For each of these additional series, adjust the settings as you did for Obama’s CPI but use the specific start dates and durations of each president’s time in office. Be sure to select each president’s first month in office as the data point to be scaled to 100; then set the integer period range to start at 0 and end at the number of full months each president was in office minus one.

Suggested Michael McCracken

View on FRED, series used in this post: CPIAUCSL

Canada votes. What’s up?

Canadians are heading to the polls on Sunday, October 18, 2015, to elect a new parliament and government. Voters often consider the current state of the economy during election season, and FRED can help you track the economic situation for the U.S.’s neighbor to the north. Although data from Statistics Canada aren’t included in FRED, plenty of Canadian data from other sources are available, although sometimes with a delay. At the time of this writing, the tag for Canada has 2226 series listed in FRED.

The graph above shows some of the economic aggregates that are likely to matter the most for Canadians: the unemployment rate, GDP, inflation, and the exchange rate with the U.S. dollar. Canada did relatively well during the previous recession, at least compared with the U.S. Unemployment has remained relatively high, though, and the economy is currently suffering from the massive decrease in several commodity prices, which is readily visible with the weakening of the Canadian dollar. If you are reading this blog post some time after it was published, the graph will have updated automatically with the latest data. And, reader from the future, you will be able to see how the Canadian economy has fared and know whether the conservative government was reelected.

How this graph was created: Search by using the Canada tag, select the four series shown in the graph, and click “Add to Graph.” Three of these series need a little attention: CPI and GDP need to be expressed as growth rates, which is done by opening their respective panels and selecting “Percent Growth Rate from Previous Year” under “Units.” Finally, the axis for the exchange rate needs to be moved to the right because the unit range is so different from the others.

Suggested by Christian Zimmermann.

View on FRED, series used in this post: CANCPIALLQINMEI, EXCAUS, LRUNTTTTCAQ156S, NAEXKP01CAQ189S

Inflation decline opens regional inflation differentials

The annual inflation rate of the U.S. declined to (roughly) zero at the beginning of 2015, and it has remained close by ever since. But is inflation equally low in all regions? To find out, we look at data series in FRED that track overall inflation for the U.S. and inflation for each of the four Census regions: the Northeast, Midwest, South, and West. As the graph shows, all U.S. price growth over the past eight months has come from the West; since January, inflation in the West has been at least a full percentage point above that of the other three regions. If the West were excluded from the picture, then August’s national inflation rate of 0.20% would instead have been –0.19%.

In a recent On the Economy blog post, we showed that the lion’s share of this difference between inflation in the West and inflation in the other three regions is explained by differences in prices for energy and shelter. Energy inflation explains between 42% and 70% of the gap, depending on the region, and shelter inflation explains between 37% and 51% of the gap.

Does it matter that shelter inflation is a key driver of these regional differences? If shelter inflation in the West is driven by low interest rates, then one implication for monetary policy is that normalization (or “liftoff”) could push inflation in the West down to the levels observed in the other three regions.

How this graph was created: Search for “CPI” and select the series “Consumer Price Index for All Urban Consumers: All Items” (monthly, not seasonally adjusted). Change the units from “Index 1982-1984=100” to “Percent Change from Year Ago.” Then add the four regional CPI series to the graph by searching for the following series IDs: CUUR0100SA0, CUUR0200SA0, CUUR0300SA0, and CUUR0400SA0. Also change the units for each of these to “Percent Change from Year Ago.” Finally, restrict the sample to start in January 2014 by using the settings above the graph on the right.

Suggested by Alejandro Badel and Joseph McGillicuddy

View on FRED, series used in this post: CPIAUCNS, CUUR0100SA0, CUUR0200SA0, CUUR0300SA0, CUUR0400SA0

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