I wanted to verify the relationship between inflation and unemployment empirically, so I took data from the World Bank and used excel to correlate them.
I got a very, very bad correlation between unemployment and inflation (from 1991 to 2016). Am I doing something wrong here?
I took these two sets of indicators: (1) Unemployment, total (modeled ILO estimate) and (2) Inflation, consumer prices. Here are the links: http://data.worldbank.org/indicator/SL.UEM.TOTL.ZS and http://data.worldbank.org/indicator/FP.CPI.TOTL.ZG
I downloaded the data from here and I studied the data for the United States of America. Is the low correlation because of the fact that the market needs time to react to unemployment rates? If so how did Phillips study it in the first place?