Economic News

How’s dropping prices for everyday folks going? Figure 1: CPI all (black), CPI for food (tan), Everyday Price Index (green), all in logs, 2025M01=0. Source: BLS, AIER, and author’s calculations. Median household income CPI is not available for 2025. However, over 2024, it tracks the CPI overall (both in nsa terms) very closely. Hence, extrapolating forward, the CPI all should proxy fairly well median income CPI. As noted in the last post, data collection has declined over the past few years, due to budget constraints. One might hope to access alternative measures would shed light on whether the reported CPI has experienced degradation in accuracy. However, in some instances, alternatives are merely transformations of BLS reported data. For instance, the AIER’s Everyday Price Index (“EPI”) is a weighted average of a subset of CPI categories.  

The Commerce Department eliminated two advisory committees on economic statistics gathering (see Marketplace). BLS received some additional funds in March as part of a continuing resolution; however the Trump budget proposal includes an 8% reduction in budget in nominal terms. The BLS, tasked with compiling the CPI as well as other labor market indicators (employment, wages) has been already stretched by stagnant funding colliding with escalating costs. Recently, this has affected compilation of the CPI. More and more prices are imputed. Source: Economist. Of course, none of this should come as a surprise. A lot of this was prefigured in the Project 2025 (as I documented here). There’s hardly any money to be saved by slashing in real terms funding for the statistical agencies, so one has to wonder what the underlying philosophy of the Trump administration is. Perhaps, it’s the philosophy of “if a recession occurs, and it’s not measured, will anybody notice?” Perhaps, given Trump’s assault on the Fed’s independence, my guess is that it’s more likely “if inflation accelerates and inflation is not measured, will anybody notice?”. In any event, June’s FT-Booth survey of macroeconomists was interesting insofar as no one thought that the Administration’s measures would improve data quality. Source: FT-Booth June Survey of Macroeconomists. I was in the “very worried” category. Apparently, one macroeconomist would not be worried. I think he/she is in denial.  

Sector faces threat of levies as high as 200% on overseas imports

First statistical rejig in more than a decade makes debt ratios appear healthier

The One Big Beautiful Bill Act loosens fiscal policy; the Fed will need to decide whether to tighten in response

Monthly figures come amid growing expectations of tax increases in Autumn Budget

Energy systems can shape political institutions and make some nations more vulnerable to trade wars than others

While not without costs, such a move solves some deep economic problems

Beijing makes concerted effort to place officials and push its agenda in Geneva, say western diplomats

Company EVP Stella Li pledges to create more than 5,000 jobs in Britain through dealerships by next year