Economics Glossary

This glossary is written for readers who want clear definitions without jargon. If you’re new to macro data, start here.

Inflation

Inflation is the rate at which the general price level rises over time.

Why it matters for US Kill Line:

• When prices rise faster than income, your monthly surplus shrinks.
• A smaller surplus means fewer days above the line when a shock happens.

CPI (Consumer Price Index)

CPI is one of the most common measures of inflation in the United States.

Notes:

• CPI is an average; your personal inflation rate depends on your spending mix.
• We often look at year-over-year (YoY) change to smooth seasonal noise.

Nominal vs real

• Nominal values are not adjusted for inflation.
• Real values are inflation-adjusted (closer to purchasing power).

Practical shortcut:

Real wage growth ≈ nominal wage growth − inflation

Wage growth

Wage growth measures how pay changes over time.

Why it matters:

• Wage growth that lags inflation usually feels like a “squeeze” even if your paycheck is bigger.

Unemployment rate

The unemployment rate is the share of people in the labor force who are jobless and actively looking for work.

Why it matters:

• It’s a high-level signal for how likely households are to face job shocks.

Policy rate (Federal funds rate)

The federal funds rate is the main short-term policy rate set by the Federal Reserve.

Why it matters:

• It influences borrowing costs across mortgages, credit cards, auto loans, and business credit.

Mortgage rate (30-year fixed)

The 30-year fixed mortgage rate is a common reference for US housing finance.

Why it matters:

• Higher rates raise monthly payments for new buyers and reduce refinancing options.
• Housing is typically the largest fixed cost for households.

Savings rate

The personal saving rate is the share of disposable income that households save.

Why it matters:

• Lower savings rates often correlate with thinner buffers and higher fragility.

Delinquency

Delinquency means payments are past due (credit card, auto, mortgage, etc.).

Why it matters:

• Rising delinquencies often signal stress spreading from “tight budgets” to “missed payments”.

YoY vs MoM

• MoM (month-over-month) is fast but noisy.
• YoY (year-over-year) is slower but more stable.

For household planning, YoY is usually easier to interpret.

Primary sources

• BLS CPI: https://www.bls.gov/cpi/
• BLS employment situation: https://www.bls.gov/ces/
• Federal Reserve: https://www.federalreserve.gov/
• FRED time series: https://fred.stlouisfed.org/