Inflation and the Consumer

Abstract

THE STUDY BY F. Thomas Juster and Paul Wachtel in an earlier issue of Brookings Papers on Economic Activity' provides a most useful confirmation of considerations about consumers' reactions to inflation presented by this writer over many years. Juster and Wachtel make extensive use of data collected by Survey Research Center's quarterly surveys of changes in consumer attitudes and expectations. The appendix to article presents two tables on data used, both of which contain adjusted data. The discussion of paper indicates that readers have received a misleading impression about survey findings during last few years. Therefore, some of original survey data are reproduced in this communication. Table B-2 (page 112) presents changes in center's index of consumer sentiment as filtered by Juster, who introduced a considerable lag. The unadjusted index, as presented in Table 1 below and as used by center for purpose of predicting discretionary expenditures, shows different movements. This is case regarding time when recession of 1970 was first predicted (May and August 1969, and not November 1969 as indicated in Table B-2) as well as for winter of 1971-72. In Table B-3 (page 113) Juster and Wachtel present an index of expected price change derived from center's data on consumers' price expectations. They conclude from table that the current inflation is largely