Re: The economy - a new era?

["Devine, James" <jdevine@xxxxxxx>]

> Long ago - 10, 12 years - I did a piece on the general experience of
> dereg. That's when I discovered that the airfares subindex of the CPI
> had been increasing far faster than  the overall CPI, mainly because
> of quality declines (e.g., tighter purchase restrictions, more
> stops). Kahn had been quoting the real fare per seat mile measure,
> which had been going down (though no more quickly than it did
> pre-dereg). But when I asked him to comment on the behavior of the
> CPI component, he refused to believe it.
> 
> Doug

for what it's worth, here's the ratio of the airfares CPI to the overall CPI in recent years:

1989    106.3
1990    113.6
1991    113.9
1992    110.6
1993    123.7
1994    125.2
1995    124.5
1996    122.7
1997    124.1
1998    125.9
1999    131.3
2000    139.0
2001    135.2
2002    128.8
2003    125.7 

this generally rises until 2000. Falling real airline prices have been a result of 911 and the recession, I'd guess.

But the airfares price looks better relative to the price of fuel oil:

1993    198.0
1994    208.9
1995    215.3
1996    194.2
1997    199.9
1998    228.3
1999    240.2
2000    185.6
2001    185.9
2002    200.8
2003    166.6

Maybe this is what Kahn was thinking of.

(all stats from the BLS) 

Jim Devine