U.S. Inflation and Unemployment
January 16, 2013
U.S. inflation is significantly under long-term norms. Consumer prices rose 1.7% between the end of 2011 and end-2012. By comparison, the CPI rose 3.0% in the previous twelve months. Over the five years to December 2012, CPI inflation averaged 1.8% per year compared to average inflation of 3.0% during the past 30 years and 3.6% per annum over the last 65 years.
U.S. unemployment is even more disconnected from long-term norms than inflation. The average jobless rate over the past five years was 8.3% versus a mean unemployment of 5.2% during the five years through December 2007. Unemployment has averaged 6.3% since end-1982 and 5.8% over the last 65 years.
U.S. monetary officials are currently committed to the 0-0.25% federal funds target so long as they see unemployment above 6.5% and the personal spending price deflator no higher than 2.5%.
Copyright 2013, Larry Greenberg. All rights reserved. No secondary distribution without express permission.
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