Economic Snapshot

1st Quarter 1997

Q2-96 Q3-96 Q4-96 Q1-97
Growth Rate—Real Gross Domestic Product 4.7% 2.1% 3.8% NA
Inflation Rate—Consumer Price Index 3.4% 2.7% 3.3% 2.4%
Civilian Unemployment Rate 5.4% 5.3% 5.3% 5.3%

How is the CPI calculated?

Every few years the U.S. Census Bureau conducts a Consumer Expenditure Survey to see what the typical urban family buys, and compiles a list of goods and services. The CPI is a weighted average—goods such as salt and toothpicks on which people spend small fractions of their income receive less weight on the average than goods like housing and energy on which people spend a larger percentage. Then each month the Bureau of Labor Statistics (BLS) visits thousands of stores to check the prices of approximately 90,000 items.

Rule of 72

To estimate how fast prices will double, apply the Rule of 72 by dividing 72 by the rate of inflation. For example, if our economy experiences a 6 percent annual inflation rate, prices for cars, houses, and other goods and other services you buy would double every 12 years (72÷6). On the other hand, if the inflation rate is 3 percent, prices would double every 24 years (72÷3).


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Fed in Print: An index of the economic research conducted by the Fed.