President Joe Biden smiles as he walks past members of the press after his remarks on the December jobs report, Friday, January 7, 2022, in the State Dining Room of the White House. (Official White House Photo by Cameron Smith)
Inflation is Down? What Are the Real Numbers and How Do We Access Them?
Inflation isn’t coming down – it’s just not going up as fast?
By Katy Grimes, August 15, 2024 2:55 am
Inflation is outpacing wages. But the left wants you to believe “Americans’ wages are finally outpacing inflation.” (Fake News).
The Labor Department announced on Wednesday that the consumer price index rose 0.2% in July from the previous month, in line with expectations. But excluding food and energy, core Consumer Price Index came in at a 0.2% monthly rise and a 3.2% annual rate, “meeting expectations.”
Why would consumer goods and services – gasoline, groceries and rent – be excluded from the core CPI? Is that the same as California Governor Gavin Newsom backing out of the state budget the more than $1.5 trillion unfunded public employee pensions and long term healthcare costs? (Short answer… No).
The CPI is a measure of the average change over time in the prices paid by consumers for a “market basket” of consumer goods and services – goods like gasoline, groceries and rent.
If you factor in the CPI consumer goods and services, inflation is at least double what we are being told. But we already knew that.
CNBC reports:
Inflation rose as expected in July, driven by higher housing-related costs, according to a Labor Department report Wednesday that is likely to keep an interest rate cut on the table in September.
The consumer price index, a broad-based measure of prices for goods and services, increased 0.2% for the month, putting the 12-month inflation rate at 2.9%. Economists surveyed by Dow Jones had been looking for respective readings of 0.2% and 3%.
Prices climbed 2.9% from the same time last year, beating the 3% headline gain forecast by LSEG economists.
CNBC added, “A 0.4% increase in shelter costs was responsible for 90% of the all-items inflation increase. Food prices climbed 0.2% while energy was flat.”
And “Overall prices are up 20.2% since Kamala took office, according to a brand new inflation report.”
According to Forbes, because housing, food and energy are highly volatile areas of the economy, “Supercore inflation” deliberately ignores these to give a clearer picture of inflation – of the underlying price pressure.
Yet these very consumer goods and services are what consumers use to measure their personal inflation. These are what we are judged by with banks and credit agencies also because our long term debt matters. When the economy is in trouble, long term consumer debt increases.
“For example, when inflation spiked in June, the majority of the increase was due to the rapid rise in gas prices,” Forbes says. “When gas was removed from the final tally, core inflation dropped from 9.1% to 5.9%.”
Food and energy trade on open markets where traders use adverse events to justify moving prices up or down. However, it’s not always traders influencing these prices. These are commodities – like pork bellies and orange juice futures, if you remember Trading Places from 1983.
But we just want to know the bottom line – what is the total rate of inflation – the rate of inflation that we actually feel – and why all consumer goods and services have gone up so significantly?
What about the 7% mortgage interest? Or the increased cost of auto and homeowners insurance? In California, this has doubled in five years for consumers – that’s a 20% per year increase.
In California, high energy costs (doubled since last year) and gas prices (highest in the country), are self-imposed. California has not allowed a new oil refinery to be built in decades. Today California imports about 75% of the oil we consume. In 1982, California had 43 operational oil refineries and a population of nearly 25 million; today we have 11 operational oil refineries and a population of nearly 40 million.
California’s energy commission even recommended government control of the petroleum industry, clearly demonstrating their preference for socialism.
Grok Speaks
The Globe had a little fun and asked Grok – X/Twitter’s AI – “Why is food and energy backed out of inflation calculations?”
Wow. Wow. Wow. I’m done with Google research after this thorough answer – with a dash of humor. It was as if I was lunching with Economists Art Laffer and Steve Moore!
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Volatility: Food and energy prices can swing like a pendulum at a heavy metal concert. They’re influenced by factors like weather, geopolitical drama, and the whims of oil barons. By excluding them, economists get a smoother, less erratic picture of inflation.
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Policy Impact: Central banks like the Fed want to focus on inflation they can actually influence through monetary policy. Food and energy prices? Not so much. It’s like trying to control the weather with a fan.
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Core Inflation: What they call “core inflation” is supposed to give a clearer view of underlying price trends. Think of it like looking at your garden without the weeds (food and energy). Sure, it’s not the whole picture, but it’s less chaotic.
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Economic Insight: By stripping out these volatile components, economists can see if inflation is due to broader economic pressures or just because the oil sheikhs decided to play hardball this quarter.
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Historical Precedence: This practice has been around for decades. It’s like a tradition, akin to not talking about politics at dinner. It might be awkward, but we do it anyway.
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Consumer Behavior: People might change their behavior more drastically with food and energy prices. If steak prices skyrocket, you might switch to tofu. But if your sofa’s price goes up, you’ll probably still buy it when you need to.
If the election is about the economy, Donald Trump will win. Employment. Inflation. Small Business. All were better when Donald Trump was President.
Notably, 60% of Americans think the country is in a recession which is two straight quarters of negative growth.
It’s about less money in your bank account.
It’s not about price gouging.
Real people are suffering.
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1977 was the first time that the “Core CPI” was introduced less food and energy costs. Just as we are today during the Carter years, we had high energy costs which also led to inflation. For some strange reason the government has this innate reflex to tell us to ignore what we know to be true and to believe the lie that they are telling us that all is well. It is rare when we have politicians that actually do what is in the best interest of all Americans and solve the energy price problem which is the core issue with the inflation that we are experiencing today. Politicians that do not have a realistic market based (forget price gouging) approach to solve energy costs only want to further enslave the American public.
The inflation rate for me as a homeowner in SoCal doesn’t seem to include the cost of homeowner and auto insurance going up at least 30% last year. My electricity rate went up 13% last year and is continuing to rise at a similar rate. Can’t wait to see what my income surcharge will be on my electrical bill in the next couple years. Driving through a drive-thru restaurant is now almost a luxury. There is no way the cost of living is up only 2.9%.
My results are pretty much like yours except my electricity went up 20%.
Forgot to mention that the cost of water is going up 9% for home owners.
Inflation is part of the lefts war on the public. They are stripping every last vestige of wealth from ordinary people in their never ending quest for power and money. Greed is the number one driver of the Democrat party. Remember their motto – “You will own nothing and (not) be happy”).
The c**p data the governments feeds us is intended to prevent the natives from becoming restless.
We Americans are being played to financial extinction by foreign oligarchs through the commendering of our currency by way of the sinister and very private non-governmental Federal Reserve Bank.
The following articulation is from the political comments section of Craigslist Orange County, CA.
All credits go to the “spot on” author.
The US is so deep in debt;
over 101+ $Trillion, ( $35 Trillion is only the balance due not the full amount owed). Our rulers have no intention of ever paying down even a penny of the debt; they couldn’t even if they wanted to. They really only have a couple trillion in reserve. So, as long as they can continue to sell US debt there’s no problem; they can and will keep spending like crazy. The debt has become so emense they are now selling debt just to pay the interest on the debt. If too many people or groups try to cash in their US debt at once, the US would not be able to pay. The US only has enough money to cover around 1% of the amount loaned. Of course that’s how the banks work. They lend out 100 times what they have in reserve. Then when the economy crashes like 2008, they get the government to bail them out and pay off the loans driving the debt up higher and higher. The whole system is basically a Ponzi scheme.
The US Government operatives knows absolutely 100% that the US will eventually go bankrupt. Thus they figure why not just keep spending and printing as much money as possible. When we do have a global downfall, our government will quickly go bankrupt and only 1% of the debt holders will get paid, the country will collapse, massive chaos 10,000 times worse than the George Floyd riots and then most or all the of debt will be wiped out in the end. We will then probably be taken over by another country like China
Every time the stock market goes down we wonder is the start of the end. Can we do anything about it? Nope, it’s just like climate control and global warming, even if we wanted to change things it’s too late. Humans are just too greedy and stupid and our government is so saturated with corruption now that there’s simply no hope .
Whenever I read that in recent polls, 30% of people responding think the economy is “great” I wonder who the hell these people are? Are they billionaires, highly paid government employees? Union bosses? They never go shopping, don’t worry about car insurance, pay no energy bills, don’t pay for gas, never go to a restaurant? Are there that many people with FU money? No, the polls are false, the labor statistics are released then revised downwards, and the inflation numbers don’t reflect consumer reality.
The government is lying.
Whatever the “numbers” are, prices for everything are still sky high. I can’t remember a time in my life when prices rose so steeply, so fast. The Labor Dept’s announcement has little to no value for most of us; we’re still being bled financially.
Suggestion for the Globe. Do a poll on what people think the real inflation numbers are.
I am not seeing the part of the article where we can access the real inflation numbers.