In yesterday’s article for TalkMarkets, I showed my readership a graph that plotted the history of U.S. inflation over the period of the last 101-years. From that graph, it was easy to see how the last 101-years of the U.S. economy could be segregated into four distinct U.S. economic periods. The following table shows; (1) those periods again; (2) the length of time covered by each period; (3) the average “annual” change in inflation (measured by the CPI) during the period; and (4) the statistical variation (standard deviation) of the changes.
Time Period
Economic Description
Years Covered
Average Change in CPI
Standard Deviation
1916-1951
The Crazy World Period
36
5.74%
5.25%
1952-1967
A Good U.S. Period
16
1.99%
1.77%
1968-1981
A Not so Good U.S. Period
14
7.45%
3.10%
1982-2016
A Very Good U.S. Period
35
2.85%
1.29%
From the above table it is worth taking away two very important points:
(1) The two periods with the lowest average change in the CPI (1952-1967 and 1982-2016) also showed the least variance—meaning that annual change in inflation was more steady and fluctuated less from the average inflation for these periods.
(2) The most recent of the good periods for the U.S. (1982-2016) has lasted more than twice as long as the earlier good period for the U.S.—35-years compared to 16-years.
In my previous article, I claimed that the first three periods shown above are interesting to look at, but that none of them have any bearing on the current period in which we are living. I said the current period reflects a “new world economy”, one that did not exist during the earlier periods and reflects an economy driven by “unparalleled technological advances”, “significant productivity enhancements”, and “globalization”—all of which I claim were lead by the United States of America.
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