The Simplified Stagflation Index (SFI) is based on two numbers that are released to the public every month by the U.S. U.S. Bureau of Labor Statistics, the Consumer Price Index (CPI-U) and Average Hourly Earnings.

 At -13, the October 2007 Simplified Stagflation Index (SFI) dropped 12 points from the September level of -1 and is 53 points lower than the August level of 39. This is bad news for wage earners as the rise in inflation (CPI up 0.3%) was more than the increase in Average Hourly Earnings: $0.05, which is 0.17%. Wage levels for lower-wage earners are likely to stall for awhile until the next step up in the phased increase of the new federal minimum wage. That won't happen until next year.

*The Consumer Price Index used here is the CPI-U. This and Average Hourly Earnings (AHE) are defined at the U.S. Bureau of Labor Statistics. Average Hourly Earnings are those earned by non-managerial workers in private-sector jobs. This represents about 80% of the American workforce. I chose these two statistics for the SFI because they are widely reported and easy to find. Stagflation has been described as slow economic growth coupled with high inflation. Because economic growth could result from large gains lifting a few people near the top but not benefiting a broad spectrum of the work force, I wanted a statistic that could be used as a proxy for broad-based economic performance. The right statistic would be one that would reflect how the lower four income quintiles, or 80% of the workforce, were getting along in the economy. The Average Hourly Earnings statistic seemed reasonable.

Graphs are available here