Macro Data's Medieval Times
July real-time CPIs falling fast with gasoline prices
Macro data is stuck at Medieval Times.
Its official collection and production has changed very little since the first consumer price indexes were produced in the early 1900s.
To give one example, the earliest efforts to build price indexes focused on food, at the time a major share of household spending. And in 2022, the most detailed category in official CPIs remains… Food and Beverages, though it only accounts for about 10 percent of household expenditure.
We have extraordinary technology available to us to collect and produce real-time data, but statistical agencies have been slow to embrace it.
Inactions, just as much as actions, have consequences: We believe that a reasonable share of current inflation can be attributed to the Fed, or the Biden administration, not having the opportunity to be nimble because they’re looking at data that is manually collected, sparse, and often not transaction based.
The ongoing debate over domestic versus global causes of current inflation doesn’t let the official data off the hook, as the same issues plague CPIs produced outside the US.
This belief is why we started to build our real-time inflation indexes over a year ago and why we plan to expand our efforts to other macro series and to other sources of real-time data.
Real-time CPI update
Since our last update only five days ago, we’ve seen big movements in our real-time CPIs as gasoline prices continue to fall fast.
The monthly run rate of our real-time Gasoline CPI has fallen from 4.3 percent only five days ago to 1.7 percent as of July 16th, a smidgen of its 9.6 percent June print.
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