For nonfinancial company enterprise sector, utilizing worth per unit actual gross worth added.
Determine 1: Quarter-on-quarter inflation of worth 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 creator’s calculations.
Notice 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 worth of actual gross worth added for nonfinancial company enterprise sector shouldn’t be a sometimes cited deflator. It’s helpful to check in opposition to CPI and PCE deflator.
Determine 2: Quarter-on-quarter inflation of worth 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 creator’s calculations.
What’s the cumulative impression because the onset of the pandemic? That is proven in Determine 3.
Determine 3: Cumulative enhance in worth 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 creator’s calculations.
Notice that labor prices are particularly unit labor prices; therefore they incorporate modifications in productiveness.
The image exhibits that whereas company earnings will not be inconsequential to cost stage enhance, 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).
