Looks like some correlation between inflation & %yoy number of employed. More workers, more new demand. (link to data)
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11/06/2017
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Data as of 3rdQ-2018
Effective Demand = $18.433 trillion
Real GDP = $18.671 trillion
Productive Capacity = $24.872 trillion
UT index is at effective demand limit = -0.92%
Effective demand limit = 74.1%
TFUR = 75.1%
ED Fed rate rule = 4.0%
Estimated Natural Real Interest rate = 2.3%
Short-term real interest rate = 2.8%
There is no recession for 3rdQ-2018. Chance of recession is growing as economy has now reached 2nd effective demand limit in this business cycle. I am forecasting that economic conditions will begin to contract in the second half of 2018.
Click on Graphs below to see updated data at FRED.
Effective Demand = $18.433 trillion
Real GDP = $18.671 trillion
Productive Capacity = $24.872 trillion
UT index is at effective demand limit = -0.92%
Effective demand limit = 74.1%
TFUR = 75.1%
ED Fed rate rule = 4.0%
Estimated Natural Real Interest rate = 2.3%
Short-term real interest rate = 2.8%
There is no recession for 3rdQ-2018. Chance of recession is growing as economy has now reached 2nd effective demand limit in this business cycle. I am forecasting that economic conditions will begin to contract in the second half of 2018.
Click on Graphs below to see updated data at FRED.
UT Index (measure of slack):
z-vertical:
z derivatives in terms of labor & capital:
Effective Demand, real GDP & Potential GDP:
ED Output Gap:
Corporate profit rate over real cost of money:
Exponential decay of Inflation:
Measures of Inflation:
YoY Employment change:
Speed of consuming slack: yoy monthly:
Speed of consuming slack: quarterly:
Real consumption per Employee:
Will real wages ever rise faster than productivity?:
Productivity:
Productivity against Effective Demand limit:
Bottom of Initial Claims?:
Tracking inflation expectations:
M2 velocity still falling:
All in one:
Double checking labor share with unit labor costs & inflation:
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Edward Lambert: Independent Researcher on Effective Demand. Graduate of Atlantic International University where independent research was developed.
Some links for economic analysis
Fed Views - San Francisco Fed, around 10th of each month. Well's Fargo monthly - around 10th of each month Well's Fargo weekly Well's Fargo Interest rate report Well's Fargo Economic indicators T. Rowe Price weekly market wrap-up
Fed Views - San Francisco Fed, around 10th of each month. Well's Fargo monthly - around 10th of each month Well's Fargo weekly Well's Fargo Interest rate report Well's Fargo Economic indicators T. Rowe Price weekly market wrap-up
Recent Posts
- Capital Income Consumption is Finally Falling
- Inflation & changes in the # of employed
- Currently at Inflection Point of Unemployment
- Approaching Effective Demand Limit Again
- Capital is Optimizing again
- Projecting the Effective Demand Limit
- Effective Demand Model did very well
- Watching the Craziness
- Inflation as a Mouse not being Chased
- Projecting a Fed Rate Path
Very interesting. Following up on your intro line, since 1990, changes in the CPI seem to lag changes in employment by, say, 9 months to a year, more or less, but the relationship is less clear in the preceding period (including, obviously, the 1970s, where negative correlation seems simultaneous). How might you explain that -- if I am reading this correctly?
Posted by: Canuck Civil Servant | 11/07/2017 at 09:25 AM
Hello Canuck,
There really shouldn't be this close of a correlation between the two factors. If money supply times velocity matches growth in employment, there would be no inflation. But it seems that M*V not only matches growth in employed but doubles it.
The only answer I can think of is that M*V is measured upon number of employed, and capacity building.
Labor wages are stagnant. Supply-side is optimized and maximized. Inflation is muted to the point that it equals increases in employed people.
Before 1980's, there was surging demand from boomers and labor power. This was happening upon big increases in the number of employed. Labor had a lot of power back then. But now less people are building the employed numbers, they have less power.
Demand is muted.
The fact that less people are increasing the employed numbers may explain part of why velocity of money keeps falling, which keeps inflation in line with growth in employed.
Edward
Posted by: Edward Lambert | 11/08/2017 at 05:01 AM