CPI - year over year; not looking pretty

The latest Bureau of Labor Statistics (BLS) CPI numbers are out this morning and they don't look pretty.

BLS August 2011 CPI news release

UPDATE 19 September 2011

With the benefit of the context we established in Providing some Context for looking at CPI charts  we can now revisit  this month's collection of CPI charts and see what stories they might have to tell.  We can see there are some striking changes underway the past 9 months for both the headline CPI figure (blue line) and the Core CPI (red line).  

But with such a short window, it's really hard to interpret what this chart is trying to tell us.  Is this a significant inflation trend taking off and something of real concern, or is it more a matter of these metrics undergoing reversion to their mean values.  We will be posting comments in chronological sequence for our other recent CPI posts that include charts over the next few days and perhaps we can better understand what this chart means once we have looked at the others.

We will be color coding our updates to distinguish them from the original post. 

End Update

The all items index has increased by more than 3x over the past year
Excluding food and energy, the increase is more than 2x.

While this is a nice crisp clean easily understood chart, this view shows only the past 12 months and is way too short a window all by itself.  Longer views would help put the latest numbers in better context and allow the development of a supportable storyline.  But the BLS tradition is to go with their template approach using short 1 month and 1 year durations for most of their findings.  For example, see the story lines shown below in the lead paragraph (emphasis added showing the small number of instances of longer views)

CONSUMER PRICE INDEX – AUGUST 2011

The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.4 percent in August on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today.

Over the last 12 months, the all items index increased 3.8 percent before seasonal adjustment.

The seasonally adjusted increase in the all items index was broad-based, with continuing increases in the indexes for gasoline, food, shelter, and apparel.

The gasoline index rose for the 12th time in the last 14 months and led to a 1.2 percent increase in the energy index, while the food index rose 0.5 percent, its largest increase since March.

The index for all items less food and energy increased 0.2 percent in August, the same increase as the previous month. Shelter and apparel were the biggest contributors, though the indexes for most of its major components posted increases, including used cars and trucks, medical care, household furnishings and operations, recreation, tobacco, and personal care. The new vehicles index, unchanged for the second month in a row, was an exception.

The 12-month change in the all items index edged up to 3.8 percent after holding at 3.6 percent for three months, while the 12-month change for all items less food and energy reached 2.0 percent for the first time since November 2008. The energy index has risen 18.4 percent over the last year, while the food index has increased 4.6 percent. 

We'll keep our eye out for other postings this morning with longer time line views which should help clarify the picture and help us evaluate just how serious the most recent 12 month behavior of CPI is likely to be.

Ten Trend Charts from the DoD Quarterly Report

The Dept of Defense has just published its mandated quarterly report to Congress on the situation in Iraq - Measuring Stability and Security in Iraq, June 2007 (51 pages). As they state in the Executive Summary, the "report includes specific performance indicators and measures of progress toward political, economic, and security stability in Iraq"

Included as part of the report are 10 static trend graphs which I have reproduced in this post. You can click on each for a full size image. If you would like all 10 JPG images so you can look at full size with your favorite slide viewer, you can download this zip file.

Most of the important performance indicators mentioned in the report did not rate their own static trend graph chart. As we did with the UN document and our scan of recent news articles, we plan to comb through the document and come up with a list of indicators that complement the ones we have already highlighted so as to get a sense of the breadth of important indicators that are already on our radar screen.

Chart 01 - Oil Production - too short a time span. Also missing data for May 2007.


Chart 02 Electricity - Missing data for April and May 2007.



Chart 03 - Sectarian Murders and Incidents . Missing data from May 2007. Weekly data might be important to look at.


Chart 04 - Weapons Caches Found - This is looking promising. Access to weekly and daily data could be even more revealing of ongoing trends. Missing data for May 2007.



Chart 05 - Average Weekly Attacks - Missing last 5 weeks of data. This is the source for the charts that appeared in WaPo and NYT as reported earlier today.

Chart 06 - Average Daily Casualties - Missing last 5 weeks. Bar chart format with three trends makes reading trends for Iraqi Security Forces and Coalition more difficult.


Chart 07 - Hotline Tips - Interesting new performance metric. Looks positive. Missing past month of data. Weekly or daily data reporting could be even more revealing.


Chart 08 - Confidence in Iraqi Government to Improve the Situation. This looks surprisingly to me for its stability over time. I will need to read the text about this in detail. Missing most recent month's data.


Chart 09 - Assessed Capabilities of Police - Difficult to interpret trends when only two data points per item. Stacked bars make interpretation more difficult and time consuming. This is an interesting new metric and it could benefit from higher resolution, near real time reporting.


Chart 10 - Ministry of Defense Forces Assessed Capabilities. This chart also presents some important data but suffers from same failings as previous chart - only 2 data points per indicator, stacked bars are hard to read.


Summary. 10 Static charts covering a range of important indicators is more than almost anyone else except Michael O'Hanlon produces when it comes to highlighting the important trends evolving in Iraq.

So that's definite plus. Someone who spends a few minutes can examine all 10 of these (especially if they can scroll in slide show mode on full size images using this zip file).

On the minus side, the missing last month or last 5 weeks of data is a serious drawback. Many of the charts can be improved on and made more readily useful to ordinary viewers by applying some trend chart best practices principles. These include

• use of full time range
• use of near real time reporting for the most recent interval
  
• selection of best resolution or choice of several different reporting intervals (day, week, month)
• displaying each important indicator separately with appropriate Y axis scale
• having sufficient data points for trends to be discernible - 2 is way too few
  

And worst of all, most of the important indicators have no charts at all and are only discussed in text or in tables showing the current values.

The indicators in this report are important, but this method of presentation falls short of ideal and short of what is needed and what indeed is possible. With the high number of factors discussed in this report, the only method that will actually make this kind of trend data usable to its intended primary audience (Congress) and to the secondary audiences including the media and ordinary interested citizens would be to deliver this data via a 21st century Trend Visualization Appliance.

Iraq Weekly Status Report May 30, 2007

Here are some charts taken from the Department of State's May 30th, 2007 Iraq Weekly Status Report.

This first chart covers from January 2004. It appears as if demand is rising while production is falling and cannot seem to crack the 100,000 mark.

Also notice the sharp downward spikes for the light blue daily supply data. This tells me that it would be worthwhile to be able to zoom in on the supply factor and look at how supply is changing over time but using a much higher resolution than daily. An hourly trend chart for month's worth of data, or a daily chart using a 1 minute resolution would surely reveal some insights not currently available.

Similarly, when an aggregate trend factor show such sharp variation, it is frequently the case that creating additional trend charts that dis-aggregate the data can prove most helpful in understanding more fully what is happening.


This second chart makes it clear that the Iraqi currency has strengthened relative to the dollar over the past 12 months.


This third chart clearly shows the rising trend in Iraqi Commercial Bond interest rates over the past year.

This fourth chart suffers from showing far too brief a time period of only the most recent 10 weeks. Contrast this to the Oil Production chart in the previous post that showed the past 4 years and also provide useful trend data for production from the North and from the South.


This chart also has a much short sweep of time than needed for understanding the underlying trends. The related chart in the previous post showed refinery trends going back 4 years. This chart does have the positive feature that it groups all the bars for a given type of refined product together which is an improvement over the way the bars were used in the previous post from the Reconstruction report to Congress.


It's curious to note that there are no trend charts in this report from the State Department that show trends related to the first two "key areas identified as pillars of US government policy for victory in Iraq." Namely,

1. "Defeat the terrorists and neutralize the insurgents"
2. "Transition Iraq to security self reliance."
   

The trends in these areas are however dealt with in Michael O'Hanlon's weekly report from the Brookings Institution. We will be commenting on the May 30th version of that excellent report in our next post.

WSJ Housing Inventory Trends

Check out this Wall Street Journal Interactive graphic showing changes in housing inventory in the past two years. It has some useful and novel features that make exploring the 18 different cities and 3 different regions easier over the past 20 months.

Here's one of the more interesting charts that I created in just a few minutes of exploration.


For the six cities shown (Miami, Orlando, Chicago, Las Vegas, Los Angeles and Phoenix) the upward trends since October 2005 are plain to see.

Try it out yourself and see what you can discover.

Here are my thoughts on the pluses and minuses of these interactive chart features

On the plus side

1. A single click selects a new factor to add to the mix of factors already selected for the chart

2. When adding a new factor into the mix, it highlights that new factor on the chart and reduces the intensity of the other factors on the chart until you move the mouse over the chart again when all factors selected come into full view. This helps you lock in on the colors for the new factor before they become blended with the other factors.

3. When you move the mouse over the check box for a factor that has already been selected, that factor is highlighted against the other factors currently selected with a little pop up text box that tells you the current inventory value exactly.

4. A single click as all that's required to de-select a factor.

5. A single click for one of the three areas (East, Central, West) selects all the factors for that area. And once a whole area has been selected, a single click de-selects all factors currently checked.

6. All of the above pluses add to ease of use and time saving when exploring this data set for the most interesting and telling patterns.

On the minus side

A. Way too short a time range. To make full sense of these trends and put the recent behavior in perspective needs at least 5 years and preferably 10 to 25 years of history.

B. Some major cities that are in the top 10 in population are missing - New York, Philadelphia, and San Antonio.

C. No way to adjust Y axis scaling. This is a serious drawback. The scale runs from zero to 110 thousand which is fine for viewing the trend for Los Angeles which has a range between 45, 000 and 103,000, but it makes it difficult to grasp the trends for such cities as Minneapolis which varies from 25,000 to 31,000 or Baltimore which ranges from 5,000 to 10,000. Both of these cities look flat line during this period even though when you examine them closely they really aren't. Y axis scaling options such as the possibility of calculating the Min-Max scaling for the factors charted would help bring the trends for all cities into clear view.

D. No available view of the data using percentage change from a baseline value for determining the Y axis value. Such a normalizing option would simplify comparisons between cities.

E. No option for showing aggregate results for a region or for stacking the factors selected.

F. If you wish to look at each factor separately, it takes two clicks. One to de-select the previous factor, and one to select the new factor.

G. No option for smoothing with features such as moving averages

H. Missing trend data for other related factors for each city such as

• Inventory breakdown by New and Existing housing
  
• Average number of months houses have been on the market (total, new, existing)
• Median selling price in that market (total, new, existing)
• Rate of sales per month in that market (total, new, existing)
• Number of months of inventory at current sales rate (total, new, existing)

I. Missing option for downloading the underlying data set thereby enabling further analysis.

Hat tip to Barry Ritholtz at The Big Picture

The Big Picture | Some More Housing Charts

Barry Ritholtz does it again with this excellent post which contains 4 excellent and easily readable charts on the trends affecting the housing market.

This time, Barry tells the story using pictures without commentary. The charts he selected are excellent and speak for themselves without commentary. However, Barry always adds something to the mix when he adds in his thoughts and perspectives and experience on what he sees in the charts and what it is most likely to mean.

Barry does give us a money quote with these few words to wrap up his post:

Funny thing: The charts tell pretty much the same story the words did: The housing story is only halfway done, going to get worse as time progresses. We are not anyway near a bottom in Residential Real Estate.

I do miss the words, so here are copies of the charts accompanied with my ordinary citizen, non-housing-expert comments on what they might be telling us and focusing on the degree to which these charts make best use of best practices for conveying trend results graphically.

This first chart is both interesting and scary. It would have been great to see what the Reset Amounts have been for the past 10 or 20 years rather than just the past 4 or 5 months. If I am reading this correctly, it sure looks like we are into a 12-18 month period with extremely high reset amounts, where a very small percent are for Prime ARM. Note that this chart is originally from Credite Suisse via Lamont Trading Advisers to At These Levels and then to The Big Picture.

Stacked bar charts are often difficult to use to interpret the behavior of the sub components such as Unsecuritized ARMs. Important trend information about these sub factors may be hiding in a chart such as this. My own preference in these cases is to use individual charts for each factor that I consider important so I can understand the individual behavior AND the composite behavior of all these factors.

This 3 year chart originally from Northern Trust is plain as day. Having the 20 or 25 year chart for this same key factor would have made this even better and clearer and more useful. Some smoothing, maybe a 3 month average could also be helpful here. It's important to note that this chart is based on combining two other factors - the actual total inventory of homes, and the most recent rate of sales of existing homes. For reference, having charts for these other two factors to look at in parallel to this calculated metric would also be useful.


This next chart gives us a nice 20 year view. having a complementary 3 year view would let us look more closely and better understand the very sharp recent spike.


For this next chart, my own preference would be to look at these two factors separately on their own chart first using a 20 to 25 year view.



As a general comment, having a shifting time window for every chart makes things much more difficult on the viewer.

Job Openings and Labor Turnover Report

Here's the two reasonably readable graphs from this morning's JOLT (Job Openings and Labor Turnover) report from the Bureau of Labor Statistics (BLS). Looks like there has been a moderately strong trend at work in the job openings picture for the past 3 years.



As has been typical in the BLS formal reports like this, the time span is too short to be able to place recent behavior in context and the number of factors shown in visual form is far too few to fully grasp what is going on in the world of employment.

In the full monthly report itself which runs to 15 pages, there are numerous tables with literally hundreds of important factors. Unfortunately, these covering an even shorter two year time period with even fewer sample trend sample points per factor. This again matches the current BLS standard not-particularly-reader-friendly approach for their "printed" reports.

In my view, this standard BLS approach is far from the best way to present important trend data. All the time consuming work of searching for and extracting meaning is left to reader (which means in most cases it will never happen) or it is left to the expert pundits who will typically comment on a few of the sub factors that they find most interesting and perhaps present one or two charts.

Of course, back at the BLS web site, just about all the trend data for all the factors for all the time periods is available for those who have the time and skill to track it down.