The Mess That Greenspan Made: What was the inflation rate in the second quarter?

What was the inflation rate in the second quarter?

Thursday, July 31, 2008

With today's Commerce Department report on economic growth during the second quarter, two more pieces can be added to the puzzle of the annualized inflation rate from April to June (that is, when the price of oil rose from $100 a barrel to $145 a barrel):

GDP Chain Price Index: 1.1 percent
PCE Price Index: 4.2 percent
Consumer Price Index: 7.8 percent

Aside from declining home prices apparently being included in the first item (a handy thing to help avoid lower GDP numbers) and slightly different weightings, does anyone know how these can be soooo far apart?

1 comments:

Jim Driscoll said...: GDP inflation index is computed by ignoring imports (like oil) and measuring only what locally produced items (like houses) are going for.

So, it's measuring something completely different. Also, something completely meaningless, but that's another story.

Check out Econobrowser's blog comment section for interesting discussion on this.; August 01, 2008 9:57 AM

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