I think you and I talked about this back in 2020….the idea that many times the paradox of thrift can cause a downturn….but that was not the case in 2020 it wasn’t that people didn’t want to spend money it was that they couldn’t spend money. The question remained what would happen when that pent up demand got released. I guess we are witnessing that first hand
Fascinating charts. Curious how much of the outliers in 2021 (and 2020) are driven by base year effects in the calculation. Do you get a similar story if you compare monthly changes in 2021 to the values in 2019?
A good question. Method of percentage change does matter. I’m using the “change from a year ago” since that is how I see the inflation numbers reported in the press. So, in that respect I believe I’m comparing apples to apples.
By that I mean, if that is the metric we are using to freak out about inflation, then let’s use the same metric to track changes in consumption. But to your point the Hungry Beast is a function of those base effects, just as the inflation numbers are.
Okay, one more: if you look at consumption at a continuously compounded rate of change (so removing those base effects you mentioned), the 2003 to 2009 average is 2.1 while the June '21 to Nov. '21 average is 4.1. So the Beast is still twice as hungry by comparison!
I think you and I talked about this back in 2020….the idea that many times the paradox of thrift can cause a downturn….but that was not the case in 2020 it wasn’t that people didn’t want to spend money it was that they couldn’t spend money. The question remained what would happen when that pent up demand got released. I guess we are witnessing that first hand
Fascinating charts. Curious how much of the outliers in 2021 (and 2020) are driven by base year effects in the calculation. Do you get a similar story if you compare monthly changes in 2021 to the values in 2019?
A good question. Method of percentage change does matter. I’m using the “change from a year ago” since that is how I see the inflation numbers reported in the press. So, in that respect I believe I’m comparing apples to apples.
By that I mean, if that is the metric we are using to freak out about inflation, then let’s use the same metric to track changes in consumption. But to your point the Hungry Beast is a function of those base effects, just as the inflation numbers are.
Okay, one more: if you look at consumption at a continuously compounded rate of change (so removing those base effects you mentioned), the 2003 to 2009 average is 2.1 while the June '21 to Nov. '21 average is 4.1. So the Beast is still twice as hungry by comparison!