Previous posts have summarized the correlations for U.S. federal government deficit spending with inflation1 and deflation2 over the years from 1914-2022. In this article, the correlations of deficit spending with inflation are determined for the years not part of significant inflation surges (up or down).
From a photo by Haran Amorim on Unsplash
After failing to find systematic relationships between consumer inflation and federal deficit spending, this is the start of looking at each period of significant inflation and disinflation individually.
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Note: This article was originally posted on May 7, 2023. The Analysis and Conclusion sections were completed on May 8. The final additions to the Appendix were made on May 9.
Previously,1 encouraging results were obtained when correlation analysis was restricted to periods of significant inflation or disinflation. In this post, we examine what can be learned about the correlation between deficit spending and inflation when timeline adjustment of the data is implemented.
Credit: Image by Gerd Altmann from Pixabay
Previous work has shown that the correlation between US federal government deficit spending and CPI inflation fluctuates widely and wildly over time. Results vary depending on data sample selection. That leads to the present decision to look specifically at each instance of inflation, disinflation, and deflation.
This week we examine take a deep dive into what can be learned from examining the unsmoothed data for correlation of deficit spending and CPI inflation. As before, we are looking at the years 2014-2022.
Credit: From a photo by Carlos Muza on Unsplash.1
Note: This was posted at 4:24 pm on March 26 with some incomplete sections. Updating in was completed at 2:52 am March 28.
In previous parts of this discussion, we have made some qualitative observations about relationships involving the correlations between U.S. federal government spending and inflation in the U.S. economy. For the first time in this series, we will move into the arena of quantitative measurements of government spending and inflation correlations.
Credit: Photo by Mahdi Soheili on Unsplash
We have previously1 used the CPI data available since 1913 to create annualized inflation data aligned with the federal fiscal years from 1914 to 2022. In this post, we use the timeline-matched data to examine leads or lags that may exist between the two variables – government spending and inflation.
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