Tag: energy

Economics-Watching: Multivariate Core Trend Inflation

[from the Federal Reserve Bank of New York]

Overview

The Multivariate Core Trend (MCT) model measures inflation’s persistence in the seventeen core sectors of the personal consumption expenditures (PCE) price index.

Whether inflation is short-lived or persistent, concentrated in a few sectors or broad-based, is of deep relevance to policymakers. We estimate a dynamic factor model on monthly data for the major sectors of the personal consumption expenditures (PCE) price index to assess the extent of inflation persistence and its broadness. The results give a measure of trend inflation and shed light on whether inflation dynamics are dominated by a trend common across sectors or are sector-specific.

The New York Fed updates the MCT estimates and share sectoral insights at or shortly after 2 p.m. on the first Monday after the release of personal consumption expenditures (PCE) price index data from the Bureau of Economic Analysis. Data are available for download.

September 2023 Update

  • Multivariate Core Trend (MCT) inflation was 2.9 percent in September, a 0.3 percentage point increase from August (which was revised up from 2.5 percent). The 68 percent probability band is (2.4, 3.3).
  • Services ex-housing accounted for 0.54 percentage point (ppt) of the increase in the MCT estimate relative to its pre-pandemic average, while housing accounted for 0.50 ppt. Core goods had the smallest contribution, 0.03 ppt.
  • A large part of the persistence in housing and services ex-housing is explained by the sector-specific component of the trend.

Latest Release: 2:00 p.m. ET October 31, 2023

View the Multivariate Core Trend of PCE Inflation data here.

Frequently Asked Questions

What is the goal of the Multivariate Core Trend (MCT) analysis?

The New York Fed aims to provide a measure of inflation’s trend, or “persistence,” and identify where the persistence is coming from.

What data are reported?

The New York Fed’s interactive charts report monthly MCT estimates from 1960 to the present. The New York Fed also provides estimates of how much three broad sectors (core goods, core services excluding housing, and housing) are contributing to overall trend inflation over the same time span. The New York Fed further distinguishes whether the persistence owes to common or sector-specific components. Data are available for download.

What is the release schedule?

The New York Fed updates the estimate of inflation persistence and share sectoral insights following the release of PCE price data from the U.S. Bureau of Economic Analysis each month.

What is the modeling strategy?

A dynamic factor model with time-varying parameters is estimated on monthly data for the seventeen major sectors of the PCE price index. The model decomposes each sector’s inflation as the sum of a common trend, a sector-specific trend, a common transitory shock, and a sector-specific transitory shock. The trend in PCE inflation is constructed as the sum of the common and the sector-specific trends weighted by the expenditure shares.

The New York Fed uses data from all seventeen of the PCE’s sectors; however, in constructing the trend in PCE inflation, we exclude the volatile non-core sectors (that is, food and energy). The approach builds on Stock and Watson’s 2016 “Core Inflation and Trend Inflation.”

How does the MCT measure differ from the core personal consumption expenditures (PCE) inflation measure?

The core inflation measure simply removes the volatile food and energy components. The MCT model seeks to further remove the transitory variation from the core sectoral inflation rates. This has been key in understanding inflation developments in recent years because, during the pandemic, many core sectors (motor vehicles and furniture, for example) were hit by unusually large transitory shocks. An ideal measure of inflation persistence should filter those out.

PCE data are subject to revision by the Bureau of Economic Analysis (BEA). How does that affect MCT estimates?

BEA monthly revisions as well as other BEA periodic revisions to PCE price data do lead to reassessments of the estimated inflation persistence as measured by the MCT estimates. Larger revisions may lead to a more significant reassessment. A recent example of the latter case is described on Liberty Street Economics in “Inflation Persistence: Dissecting the News in January PCE Data.”

Historical estimates in our MCT data series back to 1960 are based on the latest vintage of data available and incorporate all prior revisions.

How does the MCT Inflation measure relate to other inflation measures?

The MCT model adds to the set of tools that aim at measuring the persistent component of PCE price inflation. Some approaches, such as the Cleveland Fed’s Median PCE and the Dallas Fed’s Trimmed Mean, rely on the cross-sectional distribution of price changes in each period. Other approaches, such as the New York Fed’s Underlying Inflation Gauge (UIG), rely on frequency-domain time series smoothing methods. The MCT approach shares some features with them, namely: exploiting the cross-sectional distribution of price changes and using time series smoothing techniques. But the MCT model also has some unique features that are relevant to inflation data. For example, it allows for outliers and for the noisiness of the data and for the relation with the common component to change over time.

How useful can MCT data be for policymakers?

The MCT model provides a timely measure of inflationary pressure and provides insights on how much price changes comove across sectors.

View the Multivariate Core Trend of PCE Inflation data here.

New Ultrathin Capacitor Could Enable Energy-Efficient Microchips

Scientists turn century-old material into a thin film for next-gen memory and logic devices

[from Berkeley Lab, by Rachel Berkowitz]

Electron microscope images show the precise atom-by-atom structure of a barium titanate (BaTiO3) thin film sandwiched between layers of strontium ruthenate (SrRuO3) metal to make a tiny capacitor. (Credit: Lane Martin/Berkeley Lab)

The silicon-based computer chips that power our modern devices require vast amounts of energy to operate. Despite ever-improving computing efficiency, information technology is projected to consume around 25% of all primary energy produced by 2030. Researchers in the microelectronics and materials sciences communities are seeking ways to sustainably manage the global need for computing power.

The holy grail for reducing this digital demand is to develop microelectronics that operate at much lower voltages, which would require less energy and is a primary goal of efforts to move beyond today’s state-of-the-art CMOS (complementary metal–oxide semiconductor) devices.

Non-silicon materials with enticing properties for memory and logic devices exist; but their common bulk form still requires large voltages to manipulate, making them incompatible with modern electronics. Designing thin-film alternatives that not only perform well at low operating voltages but can also be packed into microelectronic devices remains a challenge.

Now, a team of researchers at Lawrence Berkeley National Laboratory (Berkeley Lab) and UC Berkeley have identified one energy-efficient route—by synthesizing a thin-layer version of a well-known material whose properties are exactly what’s needed for next-generation devices.

First discovered more than 80 years ago, barium titanate (BaTiO3) found use in various capacitors for electronic circuits, ultrasonic generators, transducers, and even sonar.

Crystals of the material respond quickly to a small electric field, flip-flopping the orientation of the charged atoms that make up the material in a reversible but permanent manner even if the applied field is removed. This provides a way to switch between the proverbial “0” and “1” states in logic and memory storage devices—but still requires voltages larger than 1,000 millivolts (mV) for doing so.

Seeking to harness these properties for use in microchips, the Berkeley Lab-led team developed a pathway for creating films of BaTiO3 just 25 nanometers thin—less than a thousandth of a human hair’s width—whose orientation of charged atoms, or polarization, switches as quickly and efficiently as in the bulk version.

“We’ve known about BaTiO3 for the better part of a century and we’ve known how to make thin films of this material for over 40 years. But until now, nobody could make a film that could get close to the structure or performance that could be achieved in bulk,” said Lane Martin, a faculty scientist in the Materials Sciences Division (MSD) at Berkeley Lab and professor of materials science and engineering at UC Berkeley who led the work.

Historically, synthesis attempts have resulted in films that contain higher concentrations of “defects”—points where the structure differs from an idealized version of the material—as compared to bulk versions. Such a high concentration of defects negatively impacts the performance of thin films. Martin and colleagues developed an approach to growing the films that limits those defects. The findings were published in the journal Nature Materials.

To understand what it takes to produce the best, low-defect BaTiO3 thin films, the researchers turned to a process called pulsed-laser deposition. Firing a powerful beam of an ultraviolet laser light onto a ceramic target of BaTiO3 causes the material to transform into a plasma, which then transmits atoms from the target onto a surface to grow the film. “It’s a versatile tool where we can tweak a lot of knobs in the film’s growth and see which are most important for controlling the properties,” said Martin.

Martin and his colleagues showed that their method could achieve precise control over the deposited film’s structure, chemistry, thickness, and interfaces with metal electrodes. By chopping each deposited sample in half and looking at its structure atom by atom using tools at the National Center for Electron Microscopy at Berkeley Lab’s Molecular Foundry, the researchers revealed a version that precisely mimicked an extremely thin slice of the bulk.

“It’s fun to think that we can take these classic materials that we thought we knew everything about, and flip them on their head with new approaches to making and characterizing them,” said Martin.

Finally, by placing a film of BaTiO3 in between two metal layers, Martin and his team created tiny capacitors—the electronic components that rapidly store and release energy in a circuit. Applying voltages of 100 mV or less and measuring the current that emerges showed that the film’s polarization switched within two billionths of a second and could potentially be faster—competitive with what it takes for today’s computers to access memory or perform calculations.

The work follows the bigger goal of creating materials with small switching voltages, and examining how interfaces with the metal components necessary for devices impact such materials. “This is a good early victory in our pursuit of low-power electronics that go beyond what is possible with silicon-based electronics today,” said Martin.

“Unlike our new devices, the capacitors used in chips today don’t hold their data unless you keep applying a voltage,” said Martin. And current technologies generally work at 500 to 600 mV, while a thin film version could work at 50 to 100 mV or less. Together, these measurements demonstrate a successful optimization of voltage and polarization robustness—which tend to be a trade-off, especially in thin materials.

Next, the team plans to shrink the material down even thinner to make it compatible with real devices in computers and study how it behaves at those tiny dimensions. At the same time, they will work with collaborators at companies such as Intel Corp. to test the feasibility in first-generation electronic devices. “If you could make each logic operation in a computer a million times more efficient, think how much energy you save. That’s why we’re doing this,” said Martin.

This research was supported by the U.S. Department of Energy (DOE) Office of Science. The Molecular Foundry is a DOE Office of Science user facility at Berkeley Lab.

World-Watching: Global Energy Tracker

[from the Council on Foreign Relations]

by Benn Steil and Benjamin Della Rocca

The Global Energy Tracker allows you to gauge trends in energy use across the globe through time.

The charts on the tracker page compile data on energy-consumption trends in seventy-nine countries going back to 1990. Each chart shows how much energy a given country consumes from nine different sources.

The charts display each country’s consumption data for each energy source by the amount of exajoules consumed, by exajoules consumed per capita, and as a share of that country’s total energy consumption. (Exajoules are a measure of energy; one exajoule is roughly equivalent to California’s annual electricity use.)

As the legend indicates, five energy sources covered by the tracker—coal, oil, natural gas, biofuels, and other (unclassified)—emit high levels of carbon dioxide. Four others—solar, wind, nuclear, and hydroelectric—are low-carbon emitters.

Together, the charts reveal significant trends in global energy usage. They show, for example, that high-carbon energy sources—especially oil—are the world’s dominant source of power. On average, 83 percent of tracker countries’ energy comes from high-carbon sources, and 37 percent specifically from oil.

Low-carbon sources, however, are on the rise, particularly in developed countries. Since 2010, the United States’ low-carbon consumption share climbed from 12 to 16 percent, the United Kingdom’s from 10 to 19 percent, and Germany’s from 14 to 19 percent. China, the world’s largest energy consumer, saw its low-carbon share rise from 9 to 15 percent. Rapid cost declines for low-carbon sources such as wind and solar, beneficiaries of technological innovation, explain much of the change. Still, low-carbon power’s share has actually declined in some rich countries, such as Japan—where it has fallen from 18 to 11 percent.

Some tracker countries rely highly on low-carbon energy. Twenty-five percent of Canada’s energy and 29 percent of Brazil’s, for example, comes from hydroelectric—compared with 9 percent for tracker countries on average. France derives over a third of its energy from nuclear. Other countries remain heavy users of higher-carbon sources. China derives 56 percent of its power from coal—although that figure is down from 70 percent a decade ago.

View the Global Energy Tracker.

Science-Watching: High-Energy Physics (CERN Courier – May/June 2022)

[from CERN Courier – May/June 2022, by Matthew Chalmers, editor]

As the LHC beams prepare to set new records in brightness and energy, the Courier takes an in-depth look at the Run 3 physics prospects in searches, precision measurements, flavor and heavy-ion physics. Together with a diverse fixed-target program, the LHC experiments are forging new research directions, while recent developments advance the feasibility study for a possible Future Circular Collider.

Also in the issue: a massive surprise from CDF, intriguing results at Moriond, luminosity versus energy, the CERN Neutrino Platform, International Linear Collider, and much more.

Read the May/June 2022 issue [archived PDF].

IMF, ECB and Others Give 2022 Economic Outlook Today

from the World Economic Forum Davos Agenda:

Today the IMF, European Central Bank, and global economic leaders discussed the future of the economy at the “Global Economic Outlook” session at Davos Agenda 2022.

Inflation, global economic recovery and COVID-19 impacts are discussed.

Please find selected quotes below. View the full session here.

Christine Lagarde, President, European Central Bank:

“In Europe, we are not seeing inflation spiral out of control. We assume energy prices will stabilize from the middle of 2022, bottlenecks will also stabilize in 2022 and gradually, inflation numbers will decline.”

“When I look at the labor market, we are not experiencing anything like The Great Resignation, and our employment participation numbers are getting very close to the pre-pandemic level.”

“In Europe we are unlikely to face the kind of inflation increases that the U.S. market has faced.”

“More recently, we have learnt the lesson of humility–the ECB, IMF, OECD and others all underestimated the recovery, the employment participation and, obviously, inflation.”

Kristalina Georgieva, Managing Director, International Monetary Fund (IMF):

“The response to the pandemic crisis has been anything but orthodox— in a highly coordinated manner both central banks and finance authorities have prevented the world falling into yet another great depression.”

“If I were to offer policy makers a new year’s resolution, it would policy flexibility.”

“In low-income countries, 60% are in either debt distress or in danger of debt distress–more than twice as many as in 2015.”

Haruhiko Kuroda (黒田 東彦), Governor, Bank of Japan:

“Japan response to the pandemic has been relatively successful, however, the pandemic has had a significant, negative impact on Japan’s economy.”

“Unlike U.S. or Europe, we have to continue extremely accommodative, easy monetary policy for the time being. We expect the inflation rate in 2022 and 2023 to be around 1 percent still.”

Paulo Guedes, Minister of Economy, Ministry of Economy of Brazil:

“Central banks are sleeping at the wheel–inflation will be a real problem very soon for the western world.”

“More than 3 million new jobs were created in 2021 and the government has assisted 68 million Brazilians with direct income transfers.”

Sri Mulyani Indrawati, Minister of Finance, Ministry of Finance of Indonesia: 

“We see a strong recovery in the Indonesian economy in 2022, and to build on this we are expecting more than 1% of additional GDP growth from a series of recent reforms.”

“Indonesia is the largest economy in the ASEAN region, but it is vulnerable to a dependence on commodities–the emphasis now is on value-added activities.”

About the Davos Agenda 2022

For over 50 years, the World Economic Forum has been the international organization for public-private cooperation. The Davos Agenda 2022 is the focal point at the start of the year for leaders to share their outlook, insights and plans relating to the most urgent global issues. The meeting will provide a platform to accelerate the partnerships needed to tackle shared challenges and shape a more sustainable and inclusive future. Learn more about the program and view sessions live and on demand.

Essay 83: Press Release: World Energy Outlook 2019 Highlights Deep Disparities in the Global Energy System

Rapid and widespread changes across all parts of the energy system are needed to put the world on a path to a secure and sustainable energy future

Deep disparities define today’s energy world. The dissonance between well-supplied oil markets and growing geopolitical tensions and uncertainties. The gap between the ever-higher amounts of greenhouse gas emissions being produced and the insufficiency of stated policies to curb those emissions in line with international climate targets. The gap between the promise of energy for all and the lack of electricity access for 850 million people around the world.

The World Energy Outlook 2019, the International Energy Agency’s flagship publication, explores these widening fractures in detail. It explains the impact of today’s decisions on tomorrow’s energy systems, and describes a pathway that enables the world to meet climate, energy access and air quality goals while maintaining a strong focus on the reliability and affordability of energy for a growing global population.

As ever, decisions made by governments remain critical for the future of the energy system. This is evident in the divergences between WEO scenarios that map out different routes the world could follow over the coming decades, depending on the policies, investments, technologies and other choices that decision makers pursue today. Together, these scenarios seek to address a fundamental issue – how to get from where we are now to where we want to go.

The path the world is on right now is shown by the Current Policies Scenario, which provides a baseline picture of how global energy systems would evolve if governments make no changes to their existing policies. In this scenario, energy demand rises by 1.3% a year to 2040, resulting in strains across all aspects of energy markets and a continued strong upward march in energy-related emissions.

The Stated Policies Scenario, formerly known as the New Policies Scenario, incorporates today’s policy intentions and targets in addition to existing measures. The aim is to hold up a mirror to today’s plans and illustrate their consequences. The future outlined in this scenario is still well off track from the aim of a secure and sustainable energy future. It describes a world in 2040 where hundreds of millions of people still go without access to electricity, where pollution-related premature deaths remain around today’s elevated levels, and where CO2 emissions would lock in severe impacts from climate change.

The Sustainable Development Scenario indicates what needs to be done differently to fully achieve climate and other energy goals that policy makers around the world have set themselves. Achieving this scenario – a path fully aligned with the Paris Agreement aim of holding the rise in global temperatures to well below 2°C and pursuing efforts to limit it to 1.5°C – requires rapid and widespread changes across all parts of the energy system. Sharp emission cuts are achieved thanks to multiple fuels and technologies providing efficient and cost-effective energy services for all.

“What comes through with crystal clarity in this year’s World Energy Outlook is there is no single or simple solution to transforming global energy systems,” said Dr. Fatih Birol, the IEA’s Executive Director. “Many technologies and fuels have a part to play across all sectors of the economy. For this to happen, we need strong leadership from policy makers, as governments hold the clearest responsibility to act and have the greatest scope to shape the future.”

In the Stated Policies Scenario, energy demand increases by 1% per year to 2040. Low-carbon sources, led by solar PV, supply more than half of this growth, and natural gas accounts for another third. Oil demand flattens out in the 2030s, and coal use edges lower. Some parts of the energy sector, led by electricity, undergo rapid transformations. Some countries, notably those with “net zero” aspirations, go far in reshaping all aspects of their supply and consumption.

However, the momentum behind clean energy is insufficient to offset the effects of an expanding global economy and growing population. The rise in emissions slows but does not peak before 2040.

Shale output from the United States is set to stay higher for longer than previously projected, reshaping global markets, trade flows and security. In the Stated Policies Scenario, annual U.S. production growth slows from the breakneck pace seen in recent years, but the United States still accounts for 85% of the increase in global oil production to 2030, and for 30% of the increase in gas. By 2025, total U.S. shale output (oil and gas) overtakes total oil and gas production from Russia.

“The shale revolution highlights that rapid change in the energy system is possible when an initial push to develop new technologies is complemented by strong market incentives and large-scale investment,” said Dr. Birol. “The effects have been striking, with U.S. shale now acting as a strong counterweight to efforts to manage oil markets.”

The higher U.S. output pushes down the share of OPEC members and Russia in total oil production, which drops to 47% in 2030, from 55% in the mid-2000s. But whichever pathway the energy system follows, the world is set to rely heavily on oil supply from the Middle East for years to come.

Alongside the immense task of putting emissions on a sustainable trajectory, energy security remains paramount for governments around the globe. Traditional risks have not gone away, and new hazards such as cybersecurity and extreme weather require constant vigilance. Meanwhile, the continued transformation of the electricity sector requires policy makers to move fast to keep pace with technological change and the rising need for the flexible operation of power systems.

“The world urgently needs to put a laser-like focus on bringing down global emissions. This calls for a grand coalition encompassing governments, investors, companies and everyone else who is committed to tackling climate change,” said Dr. Birol. “Our Sustainable Development Scenario is tailor-made to help guide the members of such a coalition in their efforts to address the massive climate challenge that faces us all.”

A sharp pick-up in energy efficiency improvements is the element that does the most to bring the world towards the Sustainable Development Scenario. Right now, efficiency improvements are slowing: the 1.2% rate in 2018 is around half the average seen since 2010 and remains far below the 3% rate that would be needed.

Electricity is one of the few energy sources that sees rising consumption over the next two decades in the Sustainable Development Scenario. Electricity’s share of final consumption overtakes that of oil, today’s leader, by 2040. Wind and solar PV provide almost all the increase in electricity generation.

Putting electricity systems on a sustainable path will require more than just adding more renewables. The world also needs to focus on the emissions that are “locked in” to existing systems. Over the past 20 years, Asia has accounted for 90% of all coal-fired capacity built worldwide, and these plants potentially have long operational lifetimes ahead of them. This year’s WEO considers three options to bring down emissions from the existing global coal fleet: to retrofit plants with carbon capture, utilisation and storage or biomass co-firing equipment; to repurpose them to focus on providing system adequacy and flexibility; or to retire them earlier.

Access the 2019 World Energy Outlook report.

About the IEA: The International Energy Agency, the global energy authority, was founded in 1974 to help its member countries co-ordinate a collective response to major oil supply disruptions. Its mission has evolved and rests today on three main pillars: working to ensure global energy security; expanding energy cooperation and dialogue around the world; and promoting an environmentally sustainable energy future.

International Energy Agency Press Office
31-35 Rue de la Fédération, Paris, 75015