It is thought that only 25 basis points have been shaved off the index
thus far. Another 20 or so points will be temporarily shaved off by the
9801 revision, and another 25 in 9901 by the move to Geomeans.
It is not so surprising that wages should begin to rise at this point
with UP at recent record lows in the Nth year of the expansion. What
has been surprising, as we all know, is the fall in wages in the
previous years of the expansion.
If it is necessary to be pessimistic watch for the fall in earnings and
projected earnings over the next quarter or two as the Asia debacle
seeps into the U.S. Also watch Korea, Thailand, and Indonesia become
former tigers under IMF tutelage -- my guess is that their performance
will come more and more to resemble that of Latin America than their
former selves.
Dave
----------
From: Doug Henwood[SMTP:[EMAIL PROTECTED]]
Sent: Thursday, December 18, 1997 12:13 PM
To: [EMAIL PROTECTED]
Subject: Re: BLS Daily Report
Quoth the BLS:
>The string of well-behaved inflation reports continued in November,
with
>the CPI-U edging up 0.1 percent, seasonally adjusted, BLS reports. The
>CPU rose at just 1.8 percent (seasonally adjusted annual rate) in the
>first 11 months of 1997, compared with a 3.3 percent advance for all of
>1996. Not since 1986, during a free fall of oil prices that led to a
>1.1 percent advance, has the CPI increase been lower. Without special
>circumstances, like oil deflation, the CPI-U has not been as placid
>since 1964, when it rose 1 percent, Patrick Jackman, a BLS economist,
>says ....Turning to long-term improvements in the CPI, Jackman said BLS
>will release in February the results of its nearly year-long study of
an
>experimental geometric mean CPI. This will determine how the agency
>will change its method of calculating price changes at the lowest level
>of detail. Earlier, the agency had said it hoped to release the
results
>by the end of 1997. No changes in methodology will be made until early
>1999, Jackman said ....(Daily Labor Report, page D-5)_____CPI stories:
>Washington Post, page C15; New York Times, page D1; Wall Street
Journal,
>page A2.
I'm wondering if the Boskin crowd lost the battle but won the war. The
various adjustments that BLS has made to the CPI over the last year or
so
have knocked more than a few basis points off the CPI, and this
geometric
mean revision will probably knock off a few more. Would US real wages be
rising at a 2% annual rate under the old CPI?
Doug
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