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US Economic Indicators:The Great Inflation
of the 1970sYardeni Research, Inc.
May 23, 2021
Dr. Edward Yardeni516-972-7683
[email protected]
Debbie Johnson480-664-1333
[email protected]
Mali Quintana480-664-1333
[email protected]
Please visit our sites atwww.yardeni.comblog.yardeni.com
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Table Of Contents Table Of ContentsTable Of Contents
May 23, 2021 / The Great Inflation of the 1970s
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Price Inflation 1Gold & the Dollar 2Commodities (Grains)
3Commodities (Oil & Industrials) 4Wage Inflation 5Productivity
6Unit Labor Costs 7-8CPI Components 9-10
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Figure 1.
65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
850
2
4
6
8
10
12
14
16
0
2
4
6
8
10
12
14
16
CONSUMER PRICE INDEX:FOCUS ON THE 1970s
(yearly percent change)
CPICPI Ex Food & Energy
65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
85-5
0
5
10
15
20
25
30
35
40
45
50
55
-5
0
5
10
15
20
25
30
35
40
45
50
55
Energy
65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
85-5
0
5
10
15
20
25
-5
0
5
10
15
20
25
Food
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Source: Bureau of Labor Statistics.
Price Inflation
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68 70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08
10 12 14 16 18 20 22 2430
330
630
930
1230
1530183021302430
30
330
630
930
1230
1530183021302430
Nixon Ford Carter Reagan Bush I Clinton Bush II Obama Trump
GOLD PRICE*(dollars per ounce, ratio scale)
5/21
Source: Haver Analytics.* Cash price, London gold bullion, PM
Fix. Monthly from 1968 through 1974, then daily.
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Figure 2.
50 51 52 53 54 55 56 57 58 59 60 61 62 63 64 65 66 67 68 69 70
71 72 73 74 75 76 77 78 79 80 81 82 83 84 85 86 87 88 89 90 91 92
93 94 95 96 97 98 994.5
3.5
2.5
1.5
.5
4.5
3.5
2.5
1.5
.5
FOCUS ON THE 1970s:FOREIGN EXCHANGE RATES: GERMANY
(Deutsche marks per US dollar)
Source: Haver Analytics.
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Figure 3.
Gold & the Dollar
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70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
12 14 16 18 20 22 24100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
100
150
200
250
300
350
400
450
500
550
600
650
700
750
800
S&P GSCI SOYBEANS INDEX(December 31, 1969=100)
5/21
Source: Standard & Poor’s.
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Figure 4.
70 72 74 76 78 80 82 84 86 88 90 92 94 96 98 00 02 04 06 08 10
12 14 16 18 20 22 2450
100
150
200
250
300
350
400
450
500
550
600
650
700
750
50
100
150
200
250
300
350
400
450
500
550
600
650
700
750
S&P GSCI CORN INDEX(December 31, 1969=100)
5/21
Source: Standard & Poor’s Corporation.
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Figure 5.
Commodities (Grains)
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52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92
94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 2670
170
270
370
470
570
670
70
170
270
370
470
570
670
CRB RAW INDUSTRIALS SPOT PRICE INDEX*(1967=100, ratio scale)
5/21
* Weekly from 1951 to 1981, then daily. Includes copper scrap,
lead scrap, steel scrap, tin, zinc, burlap, cotton, print cloth,
wool tops, hides, rosin,rubber, and tallow.Note: Shaded areas
denote recessions according to the National Bureau of Economic
Research.Source: Commodity Research Bureau.
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Figure 6.
65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
852
12
22
32
42
52
627282
2
12
22
32
42
52
627282
FOCUS ON THE 1970s:WEST TEXAS INTERMEDIATE CRUDE OIL PRICE
(dollars per barrel, ratio scale, monthly)
Source: Haver Analytics.
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Figure 7.
Commodities (Oil & Industrials)
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65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
850
2
4
6
8
10
12
14
16
0
2
4
6
8
10
12
14
16
FOCUS ON THE 1970s:AVERAGE HOURLY EARNINGS &
CONSUMER PRICE INDEX(yearly percent change)
Average Hourly Earnings*CPI
* Production & nonsupervisory workersSource: US Department
of Labor, Bureau of Labor Statistics.
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Figure 8.
48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24-2
0
2
4
6
8
10
12
14
-2
0
2
4
6
8
10
12
14
Apr
COMPENSATION MEASURES(yearly percent change)
Q1
Average Hourly Earnings* (1.2)Hourly Compensation** (5.8)
* Production & nnonsupervisory workers.** Nonfarm business,
includes wages, salaries, and supplements.
Source: Bureau of Labor Statistics.
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Figure 9.
Wage Inflation
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47 49 51 53 55 57 59 61 63 65 67 69 71 73 75 77 79 81 83 85 87
89 91 93 95 97 99 01 03 05 07 09 11 13 15 17 19 21 23 25-3
-2
-1
0
1
2
3
4
5
6
7
8
9
-3
-2
-1
0
1
2
3
4
5
6
7
8
9
PRODUCTIVITY*(yearly percent change)
Q1
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Latest (4.1)
* Nonfarm business.Note: Shaded areas are recessions according
to the National Bureau of Economic Research.Source: Federal Reserve
Board.
Figure 10.
52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88 90 92
94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 240
1
2
3
4
5
6
0
1
2
3
4
5
6
PRODUCTIVITY*(20-quarter percent change, annual rate)
Q1
Latest (1.9)
* Nonfarm business.Note: Shaded areas are recessions according
to the National Bureau of Economic Research.Source: Bureau of Labor
Statistics.
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Figure 11.
Productivity
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48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 26-4
-2
0
2
4
6
8
10
12
14
-4
-2
0
2
4
6
8
10
12
14
UNIT LABOR COSTS: PRODUCTIVITY & HOURLY COMPENSATION(yearly
percent change)
Q1
Q1
Productivity* (4.1)Hourly Compensation** (5.8)
* Nonfarm business.** Nonfarm business, includes wages,
salaries, and supplements.
Source: Bureau of Labor Statistics.
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Figure 12.
59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99
01 03 05 07 09 11 13 15 17 19 21 23 25-5
0
5
10
15
-5
0
5
10
15
UNIT LABOR COSTS*(yearly percent change)
Q1
Latest (1.6)
* Nonfarm business.Note: Shaded areas are recessions according
to the National Bureau of Economic Research.Source: US Department
of Labor, Bureau of Labor Statistics.
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Figure 13.
Unit Labor Costs
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48 50 52 54 56 58 60 62 64 66 68 70 72 74 76 78 80 82 84 86 88
90 92 94 96 98 00 02 04 06 08 10 12 14 16 18 20 22 24 260
2
4
6
8
10
12
14
0
2
4
6
8
10
12
14
FOCUS ON THE 1970s:UNIT LABOR COSTS: PRODUCTIVITY & HOURLY
COMPENSATION
(20-quarter percent change, annual rate)
Q1
Q1
Unit Labor CostsProductivity* (1.9)Hourly Compensation**
(4.3)
* Nonfarm business.** Nonfarm business, includes wages,
salaries, and supplements.
Source: Bureau of Labor Statistics.
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Figure 14.
59 61 63 65 67 69 71 73 75 77 79 81 83 85 87 89 91 93 95 97 99
01 03 05 07 09 11 13 15 17 19 21 23 25-2
0
2
4
6
8
10
12
14
-2
0
2
4
6
8
10
12
14
UNIT LABOR COSTS* & PERSONAL CONSUMPTION DEFLATOR(20-quarter
percent change, annual rate)
Q1Mar
Unit Labor Costs*(20-quarter percent change, annual rate)
(2.2)Personal Consumption DeflatorEx Food & Energy(yearly
percent change) (1.8)
* Nonfarm business.Source: Bureau of Labor Statistics.
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Figure 15.
Unit Labor Costs
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65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
850
5
10
15
20
0
5
10
15
20
CONSUMER PRICE INDEX: SERVICES LESS ENERGY SERVICESFOCUS ON THE
1970s
(yearly percent change)
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Source: Bureau of Labor Statistics.
Figure 16.
65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
852
4
6
8
10
12
14
16
18
2
4
6
8
10
12
14
16
18
CONSUMER PRICE INDEX: MEDICAL CARE SERVICESFOCUS ON THE
1970s
(yearly percent change)
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Source: Bureau of Labor Statistics.
Figure 17.
CPI Components
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65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
850
5
10
15
20
25
0
5
10
15
20
25
CONSUMER PRICE INDEX: TRANSPORTATIONFOCUS ON THE 1970s
(yearly percent change)
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Source: Bureau of Labor Statistics.
Figure 18.
65 66 67 68 69 70 71 72 73 74 75 76 77 78 79 80 81 82 83 84
85-5
0
5
10
15
-5
0
5
10
15
CONSUMER PRICE INDEX: NEW CARSFOCUS ON THE 1970s
(yearly percent change)
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Source: Bureau of Labor Statistics.
Figure 19.
CPI Components
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