Weighted median inflation reveals new insights into economic stability post-recession.
The behavior of U.S. inflation after the 2008-2009 recession has puzzled economists, leading some to believe the traditional relationship between inflation and unemployment has broken down. By looking at core inflation divided into different components, it was found that using the weighted median of industry inflation rates provides a clearer picture. This method filters out extreme price changes in all industries, making it less volatile than the usual measure of core inflation. A study of inflation from 2017 to early 2018 showed the effectiveness of this approach. Additionally, data from 1985 to 2017 revealed a clear relationship between the weighted median of inflation and unemployment, with no breakdown observed in 2008.