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The thing about this that always shocks me is that when they calculate prices to then compute inflation they always forget to report on quantities sold. It's n
by GDC7 5y ago
The thing about this that always shocks me is that when they calculate prices to then compute inflation they always forget to report on quantities sold.
It's not the case with inflation, but for example with deflation economists are very scared about prices collapsing , but if that's due to a positive supply shock with quantities sold rising then it's a good news which doesn't warrant any correction.
An example is cars. Sure the price of cars maybe is rising slightly compared to the 70s-80s-90s-00s....but you are buying a totally different animal in terms of metal mass, semiconductors mass and so forth.
The term "car" is just not enough to properly describe a vehicle in 2021, because it's the exact same term used in 1970 but the they are not the same thing.
- rattlesnakedave 5y ago>An example is cars. Sure the price of cars maybe is rising slightly compared to the 70s-80s-90s-00s....but you are buying a totally different animal in terms of metal mass, semiconductors mass and so forth. BLS uses hedonic adjustments to account for this.
- GDC7 5y agoI think sticking to raw materials is the answer The periodic chart doesn't lie. Each and every element on that has a price. If there is sand in the cogwheel that transforms raw materials into products that is surely of social nature and once you are in that realm, then all predictions and analysis capability are off. You'd be better off throwing darts in a pitch black room
- Lhiw 5y agoLabour isn't free.
- mistrial9 5y agoto my own way of thinking, the post-industrial world has always had internal efforts to prop-up the prices of mass produced goods, to repay the capital used to build factories. I think this is known but not often acknowledged in public.
- sparrish 5y agoI disagree. It is the same 'thing'. It's personal transportation. Doesn't really matter what it's made of as it performs the same function.
- MagnumOpus 5y agoWhy would it shock you? Think about it for a minute. Collecting CPI data is simple, although a big logistical exercise: go to the shops and write down current prices (for 1000 shops and 1000 goods). Collecting aggregate sales data has to be done at a different point - more easily done by surveying companies or collecting export/import volume data. This is done too - but only quarterly and only published way after the end of the quarter, rather than prices that are collected monthly and published after 2 weeks. It is also done by a different agency, the BEA calculate Personal Consumption Expenditure (the volumes consumed) while the BLS collects CPI (price inflation data).