Tornado Alley (PROG)

[StephanieVanbryce]

Disinflation Confirmed

December 5, 2010, 11:46 am

One of the things you often hear is the claim that statistics showing falling inflation are just about housing. Via Mark Thoma, the San Francisco Fed has done the homework: the same downward trend is there if you purge housing from the core index:



Also, you can look at wages*: the same pattern is visible:



In both cases, you don’t want to make too much of short-term wiggles; the big point is the downward sweep since the slump began. Disinflation is underway, with deflation a real eventual possibility.

*The St. Louis Fed index is the old BLS number; the new one, available here, shows a smoother downward trend.

http://krugman.blogs.nytimes.com/2010/12/05/disinflation-confirmed/