I’m not sure what this adds to the debate (see PolitiFact Wisconsin, WisconsinWatch).
THE Monitoring of state inflation JEC-Republicans :
quantifies the inflation costs that U.S. households face in the high inflationary environment that began in early 2021. We define monthly inflation costs as the additional spending in a given month required for a household to achieve the same standard of living that he achieved during the reference month. , January 2021.
When I first heard about this resource, I thought, “Great! – Someone went to the trouble of determining a state-specific inflation rate. Once one reads the literature, one sees that the resulting calculations produce a combination of family size and inflation effects, where “family size” must be imputed from ‘a sub-regional basis and prices must be imputed from a sub-regional basis. In fact, the resulting index is not specific to Wisconsin.
Here is the algorithm as described by JEC-Republicans:
Estimating inflation costs for the average household in each state involves three main steps: (1) estimating average monthly household spending by state, (2) estimating inflation rates by state, each compared to January 2021, and (3) the application of inflation rates. to monthly household expenditures to estimate the costs of inflation at the state level. For each state, we estimate overall monthly household inflation costs as well as inflation costs in four spending categories: food, housing, transportation, and energy.
The main problem I see is that in order to calculate a “household cost”, they have to translate BLS consumption expenditures and PCE expenditures, and consumption units into households. The ratios are by census region. CPIs are broken down by BLS regions. Some of these translations could have been avoided if they were simply calculated on a per capita basis and used BLS weights. For Wisconsin, the “cost of inflation to ‘households'” matches the CPI pretty closely through March 2024, keeping in mind that the so-called Wisconsin index isn’t really about Wisconsin. (As far as I know, they are using the 2019 consumption unit count.)
Figure 1: CPI Central-East-North, nsa (black), JEC-Republican estimated the cost of inflation in Wisconsin per unit of consumption (red), both in newspapers 2021M01=0. Source: BLS, JEC-Républicains and author’s calculations.
In my opinion, it would have been simpler to simply take the sub-regional CPI series from the BLS and multiply it by household size. It should be noted that adjusting CPI spending to PCE spending weights increases the dollar amount per household, compared to using the BLS CPI, which might have been the goal .
In the methodological notes, JEC-Rep did not directly provide expenditures for the food, housing and transportation subcategories, so I was unable to compare their measure of household costs of inflation to the BLS subregional inflation index.
