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For nonfinancial company enterprise sector, utilizing value per unit actual gross worth added.
Determine 1: Quarter-on-quarter inflation of value of gross worth added (black line), contribution of unit labor prices (blue bar), of non-labor unit prices (brown), and of earnings (inexperienced). NBER outlined peak-to-trough recession dates shaded grey. Supply: BEA 2023Q1 2nd launch, Desk 1.15, NBER, and writer’s calculations.
Word that earnings have added considerably, an accounting sense, to the value stage of gross worth added, in sure quarters (e.g., 2020Q3, 2021Q1-Q2), and deducted in others (e.g., 2020Q4)
The value of actual gross worth added for nonfinancial company enterprise sector just isn’t a sometimes cited deflator. It’s helpful to match towards CPI and PCE deflator.
Determine 2: Quarter-on-quarter inflation of value of gross worth added (black line), of CPI (blue), of PCE deflator (tan). NBER outlined peak-to-trough recession dates shaded grey. Supply: BEA 2023Q1 2nd launch, Desk 1.15, BLS and BEA by way of FRED, NBER, and writer’s calculations.
What’s the cumulative affect because the onset of the pandemic? That is proven in Determine 3.
Determine 3: Cumulative improve in value of gross worth added (black line), cumulative contribution of unit labor prices (blue bar), of non-labor unit prices (brown), and of earnings (inexperienced), all relative to 2020Q1. NBER outlined peak-to-trough recession dates shaded grey. Supply: BEA 2023Q1 2nd launch, Desk 1.15, NBER, and writer’s calculations.
Word that labor prices are particularly unit labor prices; therefore they incorporate adjustments in productiveness.
The image reveals that whereas company earnings aren’t inconsequential to cost stage improve, they’re truly smaller — in proportion — than labor prices.
Replace, 6/5/2023:
Andy Glover brings my consideration to this FRBKC evaluation which is extra in depth and cautious than mine!
Supply: FRBKC (2023).
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