The FRED® Blog


Gauging underlying inflation

A measure of trend inflation from the New York Fed

The FRED Blog has discussed why measuring inflation trends is important for policy analysis. In a nutshell: The month-to-month inflation rate changes too often and by too much to reliably inform financial decisions. To address this challenge, researchers use different methods to study the difference between temporary and persistent changes in consumer prices.

The FRED graph above shows consumer price inflation (the black dashed line). It also shows two versions of the underlying inflation gauge (UIG), a recently added data series measuring the trend component—that is, the persistent component—of inflation. The series is produced by economists at the Federal Reserve Bank of New York. They use consumer price index data from the US Bureau of Labor Statistics (BLS) and a dynamic factor model, a technique that helps identify the shared features of large sets of economic data, to construct the two trend estimates:

  • The full data set measure (the blue line) combines many of the BLS price data series with several macroeconomic and financial variables.
  • The prices-only measure (the red line) solely employs BLS price data.

The graph shows the trend estimates are less volatile than the month-to-month inflation rates. Also, the data suggest the June 2022 peak in inflation had a large transitory component and the upward persistent trend reversed course soon afterward.

For more information about various inflation measures, check this short video of Mark Wright or read on about other series in FRED:

  • The Bureau of Labor Statistics reports a consumer price index commonly known as “core CPI” that excludes the prices of two historically volatile prices: food and energy. Learn more about core CPI here.
  • The Federal Reserve Bank of Cleveland reports the trimmed mean of the CPI by excluding the price components that show the most extreme monthly changes. Learn more about trimmed means here.
  • The Federal Reserve Bank of Atlanta reports a sticky price CPI after sorting the components of the CPI into “flexible” or “sticky” (slow to change) categories. Learn more about the sticky CPI here.
  • The Federal Reserve Bank of Dallas reports a trimmed mean personal consumption expenditures (PCE) by excluding the price components that show the most extreme monthly changes from the inflation measure targeted by the Federal Open Market Committee of the Federal Reserve. Learn more about trimmed means here.

How this graph was created: Search FRED for “Underlying Inflation Gauge: Full Data Set Measure.” Next, click the “Edit Graph” button, select the “Add Line,” and search for “Underlying Inflation Gauge: Prices-Only Measure.” Do that again to add the “Consumer Price Index for All Urban Consumers: All Items in U.S. City Average.” Last, select the “Line 3” tab, and use the “Units” dropdown menu to select “Percent Change from Year Ago” to transform the index series into the inflation rate.

Suggested by Diego Mendez-Carbajo.

More workers with a disability have joined the labor force

A positive side effect of wider adoption of remote work?

The labor market has experienced both large and small shocks over the past three years. But in many ways, the employment situation has returned to pre-2020 conditions. Today we discuss one way it has not.

The FRED graph above shows the proportion in the overall labor force of men with a disability (in green) and women with a disability (in purple). At the time of this writing, these BLS data are available between the third quarter of 2008 and the first quarter of 2023. We see a clear, marked increase in the proportion of both men and women with a disability in the labor force after the first quarter of 2021.

Our post connects to a recent post from the US Department of Labor: Authors Joelle Gamble and Megan Dunn-Paul highlight increases in (i) flexibility in work schedules and (ii) opportunities to work remotely as potential explanations for the remarkable change in labor market trends for workers with a disability. You can find the data they used here.

Will this trend persist, increase, reverse? We don’t know that, but we do know FRED will keep updating the data. Check back in July to mark the 33rd anniversary of the signing of the Americans with Disabilities Act (ADA) into law.

How this graph was created: Search FRED for and select “Civilian Labor Force – With a Disability, 16 to 64 Years, Women.” From the “Edit Graph” panel, use the “Edit Line 1” tab to customize the data by searching for and selecting “Civilian Labor Force Level – Women.” Next, create a custom formula to combine the series by typing in a/b*100 and clicking “Apply.” Last, click on “Add Line” and repeat the same steps for men in the civilian labor force.

Suggested by Diego Mendez-Carbajo

Employment growth after the macro disruptions of COVID and World War II

At the start of the pandemic, from February to April 2020, non-agricultural employment in the United States fell by approximately 32 million persons—or 14%. But since then, the US labor market has been experiencing an historic run.

The first FRED graph plots monthly total payroll employment in the nonfarm sector over the past five years, ending in April 2023, the latest data point at the time of this writing. The series is reported as an index, constructed to equal 100 in the “trough” month of April 2020. So, one can read the percentage employment growth from any month relative to the trough directly from the graph. For example, for the three years from April 2020 to April 2023, this employment measure grew by 19.4%, which is a remarkable increase.

One has to go back nearly 80 years to see three-year employment growth of this magnitude. Specifically, the end of World War II in September 1945 brought about the demobilization of over 7 million US troops. According to the National WWII Museum, “the Army had decreased from eight million soldiers in 1945 to 684,000 on July 1, 1947.” Many returned to search for and take up jobs.

The second FRED graph plots the same index, but between September 1943 and September 1948, constructed to equal 100 in the “trough” month of September 1945. After the World War II demobilization, US employment grew 17.6% as servicemembers returned home. This three-year employment growth is nearly as large as the post-COVID increase.

Although driven by very different factors, both can be viewed—in part—as the relenting of contractionary labor market supply shocks.

  • After World War II, servicemembers were no longer sequestered for military duty and thus allowed to return to the labor force.
  • After the initial contractionary impact of COVID, the economy saw gradual reductions in lockdown mandates, lifting of emergency unemployment benefits, and unwinding of voluntary withdrawals from the workforce. Employment growth was likely further fueled by expansive monetary and fiscal policy during much of the period.

How these graphs were created: First, the inspiration for this blog post came from George Hall and Thomas Sargent’s 2021 working paper “Three World Wars: Fiscal-Monetary Consequences.” To create the top graph, seach FRED for “All employees, total nonfarm.” To change the time span, adjust the “year-month-date” dialogue boxes to “2018-04-01” and to “2023-04-01.” Next, click the “EDIT GRAPH” box and change the “Units” option to “Index (Scale value to 100 for chosen date)” and enter the date “2020-04-01” as the date that equals 100 for your custom index. For the bottom graph, use the same series but adjust the start month, end month, and reference index month accordingly.

Suggested by Bill Dupor.

Subscribe to the FRED newsletter

Follow us

Back to Top