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> the survey evaluates the median spending of a sample of Americans, but the median American spends pretty much all of their money. I feel like this is relevan

> the survey evaluates the median spending of a sample of Americans, but the median American spends pretty much all of their money. I feel like this is relevant. If you already don’t save anything, then your spending power decreases drastically over a year or two, you still spend all of your money but just buy fewer of the nonessential or “nicer” things. So CPI adjusts and assumes that “this is normal spending now”, but really there was no flexibility in someone’s spending anyways. They would’ve kept buying more if they could, but now their quality of life has decreased but CPI treats it as if the product has improved & they don’t need as much anymore (even as a QOL increase). Am I understanding this correctly?

lend000 4y ago
That was my interpretation when I first read the detailed process about the BLS survey. It will still measure inflation, but if the median American's spending preferences changes when prices change (which is true until the median American can never afford anything except the bare necessities to begin with), then those changing preferences will result in falsely lower inflation numbers. Combined with Hedonic adjustments, true inflation has probably been about 50% higher than reported for the last two decades (and more in line with the Big Mac index) [0]. [0] https://medium.datadriveninvestor.com/what-do-big-mac-prices-tell-us-about-true-inflation-27f44912500f?gi=9fa6a5f3f65d https://medium.datadriveninvestor.com/what-do-big-mac-prices...