BLS was established in 1884, and some of our programs date back nearly that far. We have more than a century of statistics on prices, employment, wages, productivity, and more. But even in those early days, we realized that pages full of numbers can be a little dull. We frequently use pictures to tell the stories behind those numbers and help readers see the important points more quickly. Let’s look at over a century of BLS price statistics, in five charts.
The first chart, which looks hand drawn, was originally presented as part of the Department of Labor’s exhibit at the Century of Progress International Exposition in Chicago in 1933, also known as the Chicago World’s Fair.
The chart below depicts changes in the cost of living from 1913 to 1932, based on the BLS Consumer Price Index. Here we see market baskets (with legs) rising during World War I, then declining and holding steady during the roaring 1920s, and declining as the nation entered the Great Depression.
The next chart, again looking hand drawn – this time perhaps with a ruler – compares wholesale prices (what we now call the Producer Price Index) in the years leading up to the United States entering World War I and World War II. It comes from the first of two BLS bulletins on Wartime Prices. The increase in the wholesale price for all commodities was nearly twice as great in the earlier period, reflecting large differences in the price change for such commodities as fuel and chemicals.
Now, let’s move forward about 20 years. BLS published a chart book in 1963 focusing on price changes over the prior decade. The chart book presented both consumer and wholesale prices for the nation, along with consumer price trends in the 12 largest U.S. cities. The chart shown here, perhaps produced on an early computer, tracks the change in prices for all consumer items, and separately for various categories. Prices for durable commodities, such as appliances and furniture, declined in the early part of the period and later rebounded, resulting in virtually no price change over the decade. In contrast, the price of services, such as shelter, transportation, and medical care, rose steadily throughout the period.
With advances in computer software, BLS expanded the use of charts to allow readers to visualize data trends. Such charts became prominent in the BLS flagship publication, the Monthly Labor Review. In an article from 1987, data from the BLS International Price Program track price changes for selected imports.
BLS ushered in the age of interactive charts in recent years, making chart packages available with most news releases. In the chart below, readers can track a decade of consumer price changes for all items, and then click on selected categories to compare trends. Want to compare price changes for food at home with food away from home? It’s just a couple of clicks away.
Our charts today are a lot more sophisticated than the hand-drawn charts of the early twentieth century. They may not have amusing cartoon characters like the CPI market basket with legs, but they have interactive features that let you dig into more details about the data or choose the data you want to see. We also have several publications that focus on the visual display of data. Check out The Economics Daily and Spotlight on Statistics!
BLS is one of several U.S. statistical agencies that follow consistent policies and share best practices. These agencies also frequently work with their statistical counterparts around the world to develop standards, share information, troubleshoot issues, and improve the quality of available data. At BLS, our Division of International Technical Cooperation coordinates these activities. The division helps to strengthen statistical development by organizing seminars, consultations, and meetings for international visitors with BLS staff. The division also provides BLS input on global statistical initiatives. Without missing a beat, most of these activities moved to virtual platforms during the COVID-19 pandemic. Despite some time-zone challenges, which often lead to early morning or late-night video meetings, BLS continues to play an active role on the world stage.
Today I’m highlighting some recent international engagements, which have included our colleagues from Australia, Canada, France, Greece, Italy, Mexico, South Korea, and the United Kingdom. These events are often mutually beneficial, as they provide opportunities for BLS staff to learn more about the experiences of our international counterparts.
BLS staff met with a former Australian Bureau of Statistics official who was working with the U.K. Statistics Authority and the U.K. Office for National Statistics to research best practices in implementing international statistical standards. They discussed the international comparability of domestic industry and product classifications, data quality and publishing, and the independence of statistical organizations.
Staff from the Australian Bureau of Statistics are planning to revise their household expenditure survey. They turned to BLS experts, who shared their insights and experiences in improving our Consumer Expenditure Surveys.
Staff from the Statistical Division at the United Nations asked BLS to comment on issues surrounding the classification of business functions; household income, consumption, and wealth; and unpaid household service work. Input from staff in multiple offices will inform the BLS response to this request.
BLS staff, our counterparts in Canada and Mexico, and colleagues from across Europe and Asia discussed data ethics in a meeting organized by the Centre for Applied Data Ethics at the U.K. Statistics Authority. Country representatives summarized how their organizations assess ethical considerations when producing official statistics. The U.K. Statistics Authority identified the following ethical considerations as being especially important:
And that’s just some of what we did this summer! BLS has a longstanding reputation for providing expert training and guidance and participating in international statistical forums. We also provide BLS data to the International Labour Organization and the Organisation for Economic Cooperation and Development, among others. These organizations often feature BLS statistics in their databases. Since its inception, BLS has provided technical assistance to our international counterparts, starting with our first Commissioner, Carroll Wright, who directed BLS staff to advise foreign governments establishing statistical agencies. Commissioner Wright was also a member of several international statistical associations, a tradition that continues today. Currently, BLS staff participate in many international expert groups, including the Voorburg Group on Service Statistics, the Wiesbaden Group on Business Registers, and the International Conference of Labor Statisticians. These groups provide BLS staff with opportunities to discuss topics of common interest, to propose and learn about innovative solutions to data measurement issues, and to influence discussions about important economic concepts.
BLS began providing technical assistance in earnest in the late 1940s as part of the U.S. government’s European Economic Recovery Program. BLS staff planned and conducted productivity studies and helped European governments establish their own economic statistics. Similar efforts continue today for our colleagues around the world, many of whom have participated in our international training programs. While we have temporarily halted in-person training programs because of the pandemic, our staff plan to provide more training modules virtually in response to the popularity of these programs. Over the last 10 years, BLS has provided training or other technical assistance to over 1,700 seminar participants and other visitors from 95 countries. More recently, the International Monetary Fund has asked BLS to provide training on Producer Price Indexes and Import and Export Price Indexes to our colleagues abroad.
I am incredibly grateful to all the subject matter experts throughout BLS who provide invaluable assistance with these activities and help maintain our excellent reputation in the international statistical community. We look forward to your continued support as BLS strengthens important international relationships, virtually for now, and hopefully in person soon.
Whether I’m working from my home “office” or I travel into my “real” office, I notice a lot of construction activity. In my neighborhood, the number of work trucks seems to multiply every day, with homeowners getting new roofs, updated decks, expanded kitchens, and even large additions. Away from the neighborhood, I pass cranes high above me that are the makings of new residences, new office buildings, new schools, and more. Given all this construction, I thought I’d take a look at what BLS data have to say about construction prices.
I am going to focus on the Producer Price Index (PPI) for “intermediate demand.” You might already be familiar with the PPI, which was first published in 1902. The PPI measures the average change over time in the selling prices domestic producers receive for their output. The headline number reports on “final demand.” That is the average change in selling prices received by producers for products sold for personal consumption, capital investment, government, and export. But what about goods and services sold to businesses for further production, such as those used in construction projects? That’s where the “intermediate demand” index comes in.
Within the intermediate demand categories, the PPI provides price changes for both services and goods. Goods used for construction include “materials” and “components.” Materials are partially processed products that will be further processed into completed products. Softwood lumber and plywood are examples of materials.
Components are complete commodities purchased for assembly with other commodities. Sinks, windows, and doors are “components.” There are other inputs to construction as well, such as energy, transportation, and trade services, which fall into other PPI intermediate demand categories. But today the main focus is on materials and components we see every day at construction sites.
Your local roofing contractor and the mega-construction company building that new hospital are affected by the change in price for these intermediate demand goods. Those price changes probably are passed on to the final customer. So let’s look at what’s been happening to some of those intermediate demand prices.
Overall, the price of materials and components for construction registered a 1-month increase of 0.6 percent in July 2021 and a 20-percent increase from a year earlier. Here’s a chart showing a little longer history, separately for materials and components. The prices of both changed little during 2019 but surged upward later. Between the two, materials prices grew earlier, and by a larger amount, but fell back a bit in July 2021.
Editor’s note: Data for this chart are available in the table below.
The PPI measures price changes for many products. I chose a few, based on some local construction projects I’ve seen lately. For example, the neighbor down the street is putting a two-story addition onto the back of her house. A project like that probably requires a lot of wood products—and that might make it expensive. In the last 19 months, the prices received by producers of plywood more than doubled.
Along the nearby highway, there’s a large warehouse under construction, perhaps related to the increase in online shopping and home delivery. The owner may have seen price increases for many of the construction materials, including an 83-percent increase in the price of iron and steel in the past 19 months. The second chart shows that large price increases in wood and metal products dwarfed those observed for most other materials and components for construction.
It’s time for a new roof at my house—and I see companies producing the asphalt products used on roofs charged 12 percent higher prices in July 2021 than 19 months earlier. From my window, I can see one neighbor is replacing an aging heating and air conditioning unit, while another is installing a new patio. Their contractors are experiencing a variety of price changes. In the past 19 months, producer prices rose 11 percent for heating equipment and 7 percent for concrete products. Finally, with a lot of people spending the last year or more working and schooling from home, it may be time to spruce up that interior. Some of the materials your contractor may need include cabinets, windows, doors, and other “millwork,” whose prices over the last 19 months are up 25 percent; paint products, up 10 percent; lighting fixtures, up 6 percent; and sinks and other plumbing fixtures, up 4 percent.
Unusually large and fast price increases sometimes turn out to be temporary. Fuel prices often are volatile like this. Recently, consruction materials prices might have been as well. In July 2021, producer prices for softwood lumber fell 29 percent.
Editor’s note: Data for this chart are available in the table below.
BLS measures changes in producer prices for items like these each month. The PPI moves differently for final demand and intermediate demand because the mix of goods and services consumed by these users differs. Likewise, even within the construction sector, the mix of inputs used for production varies. For example, construction of single-family homes might require more lumber, while construction of warehouses might require more steel.
We just looked at the producer price indexes that examine “intermediate demand” for detailed materials and components used in construction overall. Additional breakdowns of price changes for products used in construction and other industries are available from a different set of producer price indexes, known as the “inputs to industry” indexes. These two sets of indexes rely on somewhat different data and methods to track different producers’ use of inputs, so their estimates of overall producer price changes sometimes differ slightly. Together they offer a fuller picture. The inputs-to-industry indexes offer a more detailed breakdown of price changes for inputs consumed by specific construction industries.
Consider the overall producer prices paid for goods (excluding food and energy) used as inputs to different types of construction. The third chart shows that these prices rose most for construction of new single-family homes. This might partly reflect more intensive use of softwood lumber in construction of new single family homes than in some other types of construction.
Editor’s note: Data for this chart are available in the table below.
The price changes examined here just scratch the surface of the detail available from the PPI each month. As you think about your next homeowner project or pass by another large construction site, you now know where you can find that latest information on selling prices for intermediate demand. These data let you know how much contractors’ input prices change for the materials they need for the projects in your homes and neighborhoods.
Percent change since December 2018 in producer prices for materials and components for construction
Percent changes in producer prices for selected materials and components for construction
Material or component
December 2019 to December 2020
January 2021 to July 2021
Iron and steel
Fabricated structural metal products
Asphalt felts and coatings
Paints and allied products
Major household appliances
Plumbing fixtures and fittings
Percent change since December 2018 in producer prices for goods (excluding food and energy) used as inputs to selected types of construction
We first reported in December 2019 on the expert panel convened by the National Academy of Sciences, Committee on National Statistics (CNSTAT), to study the U.S. Consumer Price Index (CPI). At the time, we were looking forward to the upcoming baseball season—and we didn’t know yet how different the 2020 season would be. Since then, CNSTAT assembled a panel of experts to tackle some of the biggest issues facing the CPI. The panel is chaired by Daniel Sichel, professor of economics at Wellesley College. Panel members include members of academia and experts at government agencies. Visit the CNSTAT website to review the panel members’ biographies and see the breadth of accomplishments and experiences on this team.
While the future of the baseball season that spring was uncertain, the CNSTAT panel on Improving Cost-of-Living Indexes and Consumer Inflation Statistics in the Digital Age forged ahead. The panel held a public meeting virtually on May 27, 2020, and invited BLS staff and luminaries from across the statistical community to clarify the study’s scope. The discussion centered on how we can harness new sources of data to improve CPI methods and produce accurate, timely, and relevant measures of consumer price change.
The baseball season finally got underway over the summer of 2020, and the CNSTAT panel continued its work. They held closed sessions to discuss the issues and to plan the gathering of information. The panel envisioned a series of public workshops designed to gather information from top experts in the field. Unlike the fate of the 2020 Major League All-Star Game, this gathering of experts would go on—as a series of virtual sessions rather than the typical one- or two-day event.
With the Washington Nationals out of playoff contention, everyone focused on the first workshop session held October 2, 2020. At this session, the panel discussed the challenges of measuring price change for different population groups. The CNSTAT panel added this topic to their scope of work in the May meeting. The panel heard from presenters in academia who use highly granular data and uncover measurement issues when combining information across households. The panel also heard from the United Kingdom’s Office for National Statistics and BLS about each agency’s efforts to improve price measurement for different population groups. Staff from the Bureau of Economic Analysis (BEA) also discussed potential uses for these indexes.
The next two workshop sessions (October 7, 2020 and October 30, 2020) centered on new data sources as an alternative to data from traditional surveys. The panel brought together experts from the Office for National Statistics, Statistics Canada, Statistics Belgium, and the Australian Bureau of Statistics. A benefit of a virtual meeting was the ability to convene people from so many countries without the cost of travel—although it was a challenge to coordinate a meeting over so many time zones. It is both reassuring and enlightening to hear that other countries face similar challenges and opportunities regarding new data sources. To give another perspective, the panel also convened experts from academia and the private sector to review research conducted outside of the statistical agencies. The panel heard about automated data collection efforts and methods to address quality change using new sources of data.
The final sessions (December 15, 2020 and March 31, 2021) tackled housing and medical care, arguably the most difficult areas to measure in the CPI market basket. Measuring the change in the cost of shelter for homeowners is a longstanding challenge. Since the late 1970s, BLS has used an approach called owner’s equivalent rent, which aims to isolate homeowners’ consumption of shelter services from their capital investment in a home. This method has been as hotly debated as baseball’s addition of the designated hitter around the same time. Presenters from BLS, BEA, Statistics Canada, and academia discussed potential improvements to owner’s equivalent rent and alternatives such as a user cost approach (how much it costs a homeowner to own their home).
Measuring price change for medical care services and health insurance is another longstanding challenge. While the panel’s scope is limited to health insurance, any changes to the BLS approach affect the larger scope of measuring price change for medical care services. The panel invited experts in health economics from government, academia, and nonprofits to discuss critical questions about quality change—such as medical care outcomes, utilization rates, and risk premiums.
With the All-Star public sessions now complete, the panel is weighing the information it has gathered. The panel originally planned to deliver its final report around the start of the 2021 baseball season, but the broader scope pushed back their timeline. We now expect the final report to coincide roughly with the beginning of the 2021 World Series. A truly global series of meetings produced a wealth of information for the panel to sift through. As they deliberate, we will enjoy the baseball season and report back on their recommendations in the fall.
I have repeatedly seen during my time as Commissioner of Labor Statistics how driven and conscientious BLS employees are. This is especially true of how they relate to our customers.
At the core of our agency’s mission is a responsibility to our customers. BLS strives to meet the needs of a diverse set of customers for accurate, objective, relevant, timely, and accessible information. At the same time, we need to keep pace with a rapidly changing economy. Our data must reflect world events, such as the COVID-19 pandemic.
How do we meet this responsibility to our customers and keep them informed? How do we stay informed about what our customers face and what they need? For years, BLS Regional Offices have sponsored data user conferences to address these questions. These conferences have always been successful forums with broad representation from our data users.
I have participated in many such conferences virtually and in person. I recently had the pleasure of a different kind of virtual BLS data user conference, the price index users conference.
How did it come about? The staff of our Office of Prices and Living Conditions saw the success of our regional events and wanted to interact directly with our customers. What better way to communicate with price index users and get their feedback!
Especially now, with so much attention focused on inflation, customers want to know the pandemic’s effects on not only our survey results, but also on our survey methods, participation, and data quality.
This conference featured presentations by program experts from the Consumer Price Index, Producer Price Index, and U.S. Import and Export Price Indexes. There was plenty of technical detail that researchers, financial journalists, finance professionals, and other participants welcomed. The conference covered alternative data collection methods, medical care, quality adjustment, the impact of COVID-19, and other topics.
Beyond the technical detail, this event featured a listening session. This session went beyond the usual questions and answers to provide a forum for a robust exchange between our sophisticated data users and our experts. Everyone was in the same “room” and could participate in this discussion about methods, customer needs, COVID-19 effects, and future plans.
We at BLS benefit from this type of open exchange, and we thank all who attended for enhancing the 2-day event. We also owe a big thank you to all of our respondents for their survey participation throughout a very challenging time. When you agree to share your company’s information with BLS, you help ensure that we can continue to provide quality data. Survey participants are our bedrock, the foundation for good information about our economy. We cannot succeed in our mission for the American people, let alone our customers, without your help.
We look forward to your participation at our next event!