It's an intriguing mix of gifts - those twelve items given by her True Love in the song "The Twelve Days of Christmas." It's also a rather costly collection, including some of questionable practicality. For example, although the Eight Maids-a-Milking do useful work, few recipients, particularly urban dwellers, could usefully employ them.
Considerations of practicality aside, the Christmas Price Index compiled for 28 years by PNC Financial Services Group of Pittsburgh, Pa. is an interesting device for examining construction and use of index numbers. Let's take a look at prices of the items given by the song's generous True Love.
The total cost of the items in the Twelve Days of Christmas in 2011 is $24,263.18, or an increase of $823.80 over 2010 for a 3.5 percent increase. This is close to the 3.9 percent increase of the commonly used consumer price index compiled by the U.S. Dept. of Labor.
Although technically out of recession, for all practical purposes we are still in it - the economy remains sluggish, characterized by low consumer spending power and demand. The anemic economy is doubtlessly a factor in the modest price increase.
Let's now take a look at the individual components of the Christmas Price Index, beginning with the Partridge in a Pear Tree. Prices of the birds tend to be volatile. According to Pittsburgh's National Aviary, the price of the partridge increased by an impressive 25 percent, but since it costs only $15, it has little bearing on the total index. The pear tree at $170 represents an increase of 13.3 percent, bringing the dual package to a 14.2 percent increase over 2010.
The Two Turtle Doves also increased by 25 percent over 2010, possibly attributable to higher feed costs. However, like the partridge, their relatively low cost bears little weight on the total index. The price of the Three French Hens was unchanged over last year, and the price of the Four Calling Birds actually declined by 13.3 percent, due to falling demand. Deficient demand is attributable to reduced consumer spending power.
The Five Golden Rings bring us to a more practical and, presumably, more desirable gift conferred by the lady's True Love. Following a dramatic price rise in 2010, demand for gold has remained stable, and even waned slightly, leaving the price of the five golden rings at $645, for a .8 percent decline over 2010. Considering the stubbornly high price of gold, the grateful lady would doubtlessly be pleased with a single golden ring, thus holding down her True Love's expenditures.
The Six Geese-a-Laying priced out at $162 for an 8 percent increase over 2010, again likely due to reduced supply linked to higher feed costs.
The Seven Swans-a-Swimming are a pricey item that tends to swing wildly from year to year. At $6,300, they account for a hefty 12.5 percent increase over 2010 - higher feed and maintenance costs, no doubt.
As every economist, accountant, school board member, and manager of major enterprise knows, labor is inevitably a major cost. It is similarly a major component of the Christmas Price Index, except for the hard-pressed Eight Maids-a-Milking, designated as unskilled labor. Since there was no increase in the federal minimum wage in 2011, the poverty stricken Maids-a-milking price out at a mere $58, the same as in 2010. As $58 is such an insignificant item in the total package, even increasing their price by 50 or 100 percent would bear little weight on the total index. Those with experience in agriculture know it as an industry with low returns to labor.
The skilled labor, the dancers and musicians, weigh heavily on the index. According to the Pennsylvania Ballet Company and Philadanco, the price of the Nine Ladies Dancing remained stable at $6,294. Similarly, the price of the Ten Lords-a-Leaping remained unchanged at $4,767.
The musicians fared somewhat better than the dancers, enjoying a 3.5 percent increase over 2010. The Eleven Pipers Piping price out at $2,428, and the Twelve Drummers Drumming at $2,630. As the dancers and musicians are major components of the index, the stable price of the dancers and the modest increase for the musicians are major factors in holding the index to a modest 3.5 percent rise. The anemic economy makes it difficult for labor to bargain for higher wages.
Recall that in the song, with the exception of the Twelve Drummers Drumming, the generous True Love lauds these gifts on his lady repeatedly over the twelve days, thereby greatly increasing the cost of the season. For example, the Partridge in a Pear Tree is given twelve times, the Two Turtle Doves eleven times, and so on, with the Eleven Pipers Piping given two times and the Twelve Drummers Drumming given only once. This gives rise to the following series:
(1x12) + (2x11) + (3x10) +......+ (10x3) + (11x2) + (12x1) = 364 total items.
When we attach prices to these items according to the series, the generous True Love inclined to purchase the entire package during the twelve days would incur a hefty $101,120 for a 4.4 percent increase in cost over 2010.
As with the modest rise in the Consumer Price Index, the modest increase in the Christmas Price Index does not yet raise significant inflationary flags. Moderate price increases, along with stagnant consumer demand and the still sluggish economy, will doubtlessly motivate the Federal Reserve Bank to keep interest rates low for the foreseeable future.
Given the questionable practicality of some of the items in the Twelve Days of Christmas, the pragmatically-oriented True Love is well advised to turn to our local merchants, including gift certificates for our local eateries.
With that, I always enjoy meeting my readers and urge you to flag me down when you see me. A Merry Christmas to all, and let's all hope for a more prosperous New Year.
- John Waelti's column appears every Friday in the Times. He can be reached at jjwaelti1@tds.net.
Considerations of practicality aside, the Christmas Price Index compiled for 28 years by PNC Financial Services Group of Pittsburgh, Pa. is an interesting device for examining construction and use of index numbers. Let's take a look at prices of the items given by the song's generous True Love.
The total cost of the items in the Twelve Days of Christmas in 2011 is $24,263.18, or an increase of $823.80 over 2010 for a 3.5 percent increase. This is close to the 3.9 percent increase of the commonly used consumer price index compiled by the U.S. Dept. of Labor.
Although technically out of recession, for all practical purposes we are still in it - the economy remains sluggish, characterized by low consumer spending power and demand. The anemic economy is doubtlessly a factor in the modest price increase.
Let's now take a look at the individual components of the Christmas Price Index, beginning with the Partridge in a Pear Tree. Prices of the birds tend to be volatile. According to Pittsburgh's National Aviary, the price of the partridge increased by an impressive 25 percent, but since it costs only $15, it has little bearing on the total index. The pear tree at $170 represents an increase of 13.3 percent, bringing the dual package to a 14.2 percent increase over 2010.
The Two Turtle Doves also increased by 25 percent over 2010, possibly attributable to higher feed costs. However, like the partridge, their relatively low cost bears little weight on the total index. The price of the Three French Hens was unchanged over last year, and the price of the Four Calling Birds actually declined by 13.3 percent, due to falling demand. Deficient demand is attributable to reduced consumer spending power.
The Five Golden Rings bring us to a more practical and, presumably, more desirable gift conferred by the lady's True Love. Following a dramatic price rise in 2010, demand for gold has remained stable, and even waned slightly, leaving the price of the five golden rings at $645, for a .8 percent decline over 2010. Considering the stubbornly high price of gold, the grateful lady would doubtlessly be pleased with a single golden ring, thus holding down her True Love's expenditures.
The Six Geese-a-Laying priced out at $162 for an 8 percent increase over 2010, again likely due to reduced supply linked to higher feed costs.
The Seven Swans-a-Swimming are a pricey item that tends to swing wildly from year to year. At $6,300, they account for a hefty 12.5 percent increase over 2010 - higher feed and maintenance costs, no doubt.
As every economist, accountant, school board member, and manager of major enterprise knows, labor is inevitably a major cost. It is similarly a major component of the Christmas Price Index, except for the hard-pressed Eight Maids-a-Milking, designated as unskilled labor. Since there was no increase in the federal minimum wage in 2011, the poverty stricken Maids-a-milking price out at a mere $58, the same as in 2010. As $58 is such an insignificant item in the total package, even increasing their price by 50 or 100 percent would bear little weight on the total index. Those with experience in agriculture know it as an industry with low returns to labor.
The skilled labor, the dancers and musicians, weigh heavily on the index. According to the Pennsylvania Ballet Company and Philadanco, the price of the Nine Ladies Dancing remained stable at $6,294. Similarly, the price of the Ten Lords-a-Leaping remained unchanged at $4,767.
The musicians fared somewhat better than the dancers, enjoying a 3.5 percent increase over 2010. The Eleven Pipers Piping price out at $2,428, and the Twelve Drummers Drumming at $2,630. As the dancers and musicians are major components of the index, the stable price of the dancers and the modest increase for the musicians are major factors in holding the index to a modest 3.5 percent rise. The anemic economy makes it difficult for labor to bargain for higher wages.
Recall that in the song, with the exception of the Twelve Drummers Drumming, the generous True Love lauds these gifts on his lady repeatedly over the twelve days, thereby greatly increasing the cost of the season. For example, the Partridge in a Pear Tree is given twelve times, the Two Turtle Doves eleven times, and so on, with the Eleven Pipers Piping given two times and the Twelve Drummers Drumming given only once. This gives rise to the following series:
(1x12) + (2x11) + (3x10) +......+ (10x3) + (11x2) + (12x1) = 364 total items.
When we attach prices to these items according to the series, the generous True Love inclined to purchase the entire package during the twelve days would incur a hefty $101,120 for a 4.4 percent increase in cost over 2010.
As with the modest rise in the Consumer Price Index, the modest increase in the Christmas Price Index does not yet raise significant inflationary flags. Moderate price increases, along with stagnant consumer demand and the still sluggish economy, will doubtlessly motivate the Federal Reserve Bank to keep interest rates low for the foreseeable future.
Given the questionable practicality of some of the items in the Twelve Days of Christmas, the pragmatically-oriented True Love is well advised to turn to our local merchants, including gift certificates for our local eateries.
With that, I always enjoy meeting my readers and urge you to flag me down when you see me. A Merry Christmas to all, and let's all hope for a more prosperous New Year.
- John Waelti's column appears every Friday in the Times. He can be reached at jjwaelti1@tds.net.
