Dominic A Smith

We evaluate the forecasting performance of a wide set of robust inflation measures between 1960 and 2022, including official median and trimmed-mean personal-consumption-expenditure inflation. When trimming out different expenditure categories with the highest and lowest inflation rates, we find that the optimal trim points vary widely across time and also depend on the choice of target; optimal trims are higher when targeting future trend inflation or for a 1970s-1980s subsample. Surprisingly, there are no grounds to select a single series on the basis of forecasting performance. A wide range of trims-including those of the official robust measures-have an average prediction error that makes them statistically indistinguishable from the best-performing trim. Despite indistinguishable average errors, these trims imply different predictions for trend inflation in any given month, within a range of 0.5 to 1 percentage points, suggesting the use of a set of near-optimal trims.

Increases in national concentration have been a salient feature of industry dynamics in the U.S. and have contributed to concerns about increasing market power. Yet, local trends may be more informative about market power, particularly in the retail sector where consumers have traditionally shopped at nearby stores. We find that local concentration has increased almost in parallel with national concentration using novel Census data on product-level revenue for all U.S. retail stores between 1992 and 2012. The increases in concentration are broad based, affecting most markets, products, and retail industries. We show that the expansion of multi-market firms into new markets explains most of the increase in national retail concentration, with consolidation via increases in local market shares increasing in importance between 1997 and 2007, and single-market firms playing a negligible role. Finally, we find that increases in local concentration can explain one-quarter to one-third of the observed rise in retail gross margins.

U.S. import and export price indexes replaced unit value indexes forty years ago, given quality concerns of mismeasurement due to unit value bias. The administrative trade data underlying the unit values have greatly improved since that time. The transaction records are now more detailed, available electronically, and compiled monthly with little delay. The data are used by academic researchers to calculate price measures, and unit value indexes based on trade data are used by other national statistical offices (NSOs). The U.S. Bureau of Labor Statistics is now evaluating whether replacing price indexes with unit value indexes for homogeneous products calculated from administrative trade data could expand the number of published official import and export price indexes. Using export transactions, the research calculates detailed unit value indexes from 200 + million trade records from 2012–2017 for 123 export product categories. Results show that 27 of the 123 unit value indexes are homogeneous and closely comparable to published official price indexes. This article presents the concepts and methods considered to calculate and evaluate the unit value indexes and to select the product categories that are homogeneous. Compared to official price indexes, export unit value indexes for the 27 5-digit BEA (U.S. Bureau of Economic Analysis) end-use product categories would deflate real exports of these goods by 13 percentage points less over the period. Incorporating these 27 indexes into the top-level XPI would increase the value of real exports of all merchandise goods by 2.6 percentage points at the end of 2017.

The “factoryless manufacturing” (FM) business model is employed by a rising share of U.S. firms. Factoryless manufacturers outsource the fabrication of products but maintain control of the production process, own the associated intellectual property, and bear the entrepreneurial risk. FM is an important component in the role of U.S. firms in global manufacturing value chains. We estimate the scope of U.S. factoryless manufacturing using three approaches. First, we use financial reports for S&P 500 companies to show that FM is prevalent and increasing in the United States and that FM, once only common in the production of apparel, electronics, toys, and pharmaceuticals, has spread to a broader array of products. Second, we use Economic Census microdata to estimate that manufacturing value-added would have been 5 to 20 percent greater for 2007 if all FGPs were reclassified to manufacturing. Third, using a list of FM semiconductor companies matched to Economic Census microdata, we estimate that value-added would be 20 to 30 percent greater for semiconductor manufacturing, an industry where FM is especially prevalent, if FGPs were included. These results suggest that outsourcing and offshoring of product fabrication by U.S. firms is coupled with significant domestic production management. Thus, identifying FGPs in economic data is important for the study of fragmentation and globalization.

Results in this paper have been moved into other projects.