By Jim Cline and Kate Kremer
As we recently wrote, CPI Edging Up , the Seattle CPI continues to far outpace the All-Cities Index. The latest report has the Seattle Index at 2.6%, far outpacing the 0.8% All Cities Index. This probably should not be too surprising giving the robust Seattle economy which is far outpacing the most modest economic growth occurring elsewhere. The economic growth is no doubt placing additional pressures on local prices.
As we have discussed, the Seattle index appears to be the better bet to tie your labor contract to:
It has been a recurring statement on our part that the Seattle index has a bit of a long-term upside “advantage” that should make it the “preferred” choices to use to negotiate your contract.
This certainly does not mean that the Seattle index will outperform in all cycles or indefinitely in the future. There may well be, and in fact likely will be, future economic cycles where the Seattle economy and CPI index under-perform relative to the rest of the nation. But we have been advocating use of the Seattle index almost consistently over the past 20 years and that bet has proven. Our last discussion, Seattle CPI Still Appears to Retain Edge over All-Cities CPI Index, demonstrated that the Seattle index had outpaced the All Cities index by 2.8% in a 10 year cycle.
Will the Seattle Index outperform the All-Cities index over the next 10 years? At this point, that would be difficult to predict. But we certainly are anticipating the Seattle index to outperform for at least the next few years. There are a number of factors impacting regional variation in inflation rates, but the strength of the local economy is undoubtedly the strongest factors. With all current indicators suggesting a continuation of the Seattle mini-boom, we have no reason to believe that the Seattle inflation will fall below the national rate in the near future.
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