Dominic A Smith

Time series data for robust inflation measures, such as median and trimmed mean inflation, only start in 1977. We extend these series back to 1960 for Personal Consumption Expenditure (PCE) inflation, providing additional episodes of high and rising inflation. We evaluate the robustness of the series along multiple dimensions: First, we find that robust inflation measures tend to diverge in periods of low inflation, but agree when headline inflation is high. The range between the robust measures averages 0.76 percentage points. Second, using yearly instead of monthly inflation when trimming or computing median inflation produces markedly different time series. Third, by contrast, variation in the number of PCE categories used in calculation and trim points for trimmed means do not have significant effects. Finally, we compare the performance of 61 robust inflation measures in predicting (current and future) trend inflation. Trimmed mean measures that trim based on yearly inflation perform best overall, while core inflation performs well when inflation is low, and median inflation consistently underperforms.

Increases in concentration have been a salient feature of industry dynamics during the past 30 years. This trend is particularly notable in the U.S. retail sector, where large national firms have displaced small local firms. Existing work focuses on national trends, yet less is known about the dynamics of concentration in local markets and the relationship between local and national trends. We address these issues by providing a novel decomposition of the national Herfindahl-Hirschman Index into a local and a cross-market component. We measure concentration using new data on product-level revenue for all U.S. retail stores and find that despite local concentration increasing by 34 percent between 1992 and 2012, the cross-market component explains 99 percent of the rise in national concentration, reflecting the expansion of multi-market firms. We estimate an oligopoly model of retail competition and find that the increase in markups implied by rising local concentration had a modest effect on retail prices.

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.