U.S. core consumer price index’s increase since the latest recession ended in June 2009

Click to enlarge
Source: Bloomberg

The amount of inflation since the end of the recession in June 2009 is the smallest for any multiyear recovery since the 1970s. The gauge of prices excluding food and energy rose 6.3% through April. Core consumer prices were 7% higher at the same point in the previous recovery, which started in December 2001, as the chart shows.

The biggest increase in the inflation gauge was 29%, posted in a recovery that began in April 1975.

The Federal Reserve may be able to take its time in adopting a more restrictive monetary policy because inflation is relatively tame.



Dormant Inflation Seen Giving Fed Time to Wait
David Wilson
Bloomberg, June 13, 2013

Category: Federal Reserve, Inflation

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

12 Responses to “Dormant Inflation Seen Giving Fed Time to Wait”

  1. Petey Wheatstraw says:

    For anyone who has ever been hospitalized, or who has spent much time with a friend or loved-one who has, this phenomenon reminds me of the measurements they do of IV fluids/in vs. urine/out.

    If those two volumes are off by much, something is very wrong. Most likely, the patients kidneys are failing.

    We keep juicing the money supply, yet there is no appreciable increase in output, other than a rising Stock Market (and a rather schizo dollar, brimming corporate coffers, and the housing “recovery,” such as it is).

    Regardless of the noise surrounding our situation, the input/output ratios seem to be way off of a typical recovery. Even with all of the contrary “evidence,” (which seems to amount to “don’t worry, be happy), I can’t shake the feeling that something is terribly wrong with our present course.

    Aside: Food and energy are very expensive, in relative terms. Increasingly more so to our middle and lower classes with their flatlining/sinking incomes.

    • DeDude says:

      The money supply is not of any consequence in itself. If they printed 1 billion $1000 bill and stuck them all into a sealed room, then they would have increased money by 1 trillion and it would have absolutely no effect on anything. The issue is monetary momentum (base x velocity). The reason there has been so little effects of increased money supply is that it has basically been done only to the extend that it counter the falling velocity of money (as people pay down debt rather than spend).

  2. [...] No inflation to see here.  (Big Picture) [...]

  3. Willy2 says:

    O.M.G. The chart is – IMO – a complete fraud. Up to 1980 there was an honest price calculation. After 1979 the US government started to tinker with the CPI rate. The CPI rate is used for the (upward) adjustment of Social Security and military/government pensions. The government has a good reason why it’s understating (CPI) inflation. If the CPI calculation had been an honest one then expenses today for all those entitlements/pensions would have – at least – doubled in the timeframe 1980 -2013.

    Does David Wilson REALLY believe/buy into the myth that inflation is the driver behind rising interest rates ? Or has the FED information that shows that demand for T-bonds is dwindling (relative to the supply of T-bonds) and hired Wilson to reassure the (fearful) public/bond market ?

    The US has a VERY good reason to fear the bond vigilantes because after 2008 the math has turned its back on the US. Especially now with the budget deficit remaining high (> $ 1 trillion) in combination with a shrinking trade deficit.

    • Willy2 says:

      Ooops, I made a mistake.

      I should have written: “If the CPI calculation (since 1979) had been an honest one then expenses today for all those entitlements/pensions would have been about 100% higher than what they are today.”

      Guess what that would mean for the budget deficit !!

    • You are conflating two different issues:

      1) Is there inflation?
      2) Does the BLS do a good job of reporting it?

      Sont let your disdain for #2 impact your objectivity regarding #1

  4. Internet Tourettes says:

    Every time I see these charts comparing the recoveries from past recessions, I am amazed that there is a distinct trend of weaker and weaker recoveries. I wonder how long it will take to recover from the next dip in the business cycle……

  5. MayorQuimby says:

    While I think the Fed is fighting a losing battle and should not be leaned upon to prop up the world’s largest economy over a prolonged period of time (which it has been doing for a couple of decades now – I still believe we are larger than China btw)….I give Bernanke credit for maintaining price stability. How ironic – everyone knows the Fed left liquidity out there too long (to help fund Bush deficits?) but they have been excellent at keeping prices stable. We have it better in the USA right now than in a long time – and few people appreciate it! If we could just get some manufacturing jobs going and pay down some debts, cut social programs a tiny bit we could be rockin’…easier than it sounds I know.

  6. patslatt says:

    Low priced exports from China have contributed to low global and US inflation. If the Chinese succeed in rebalancing their export oriented economy towards domestic services in coming years,that will tend to increase global inflation.

  7. Willy2 says:

    Don’t believe one word of this. The only reliable price index I watch is the CRB index and even that index is not too accurate.

    Is this chart with or without hedonic price adjustments ?
    Watch this video: http://www.youtube.com/watch?v=zPkTItOXuN0