5 ms·

What are the actual metrics they use to measure inflation? My electric bill is 33% higher than previous years, my gas bill is similar. City/Water/Sewer doubled.

by donatj 4y ago

What are the actual metrics they use to measure inflation? My electric bill is 33% higher than previous years, my gas bill is similar. City/Water/Sewer doubled. Trips to the grocery store are up close to 20%, and gasoline doubled. Everything you actually purchase day-to-day is up far more than the inflation benchmarks, so much so it’s beginning to feel like propaganda. I overnight went from thinking “I make good money” with a respectable savings to going backwards every single month, and I am generally a VERY frugal person.

bombcar 4y ago
There's no way to do "the main inflation number" and make everyone happy - because they have to try to find some way to include housing, and that either drags it way up or way down relative to how you "feel". If all other prices double, but you own or have fixed rent, you're going to feel it but the numbers will be muted; if all prices stay the same but your rent doubles, you're still going to feel it but the numbers will now seem off again.
- eldenwrong 4y ago
  The official measures have always been BS. Its obvious to everyone now. Hedonic adjustments + flat out replacing expensive items for cheap items was always retarded
  - snapcaster 4y ago
    But they have to do something like this right? I mean, consumption patterns have obviously changed since the 1960s. I understand maybe the way they adjust isn't correct but if you think this is a really easy problem you probably haven't considered it enough
    - silent_cal 4y ago
      No they don't have to do something like this. The change in consumption patterns is caused by inflation and should be measured. If someone has to switch from buying steak to ground beef, it's not a change in preference. They've stopped buying something they can't afford.
      - ac29 4y ago
        > The change in consumption patterns is caused by inflation and should be measured While inflation can change consumption patterns, its not the only factor. For example, how do you compare your current spending on a mobile data plan or video streaming service compared to how consumers spent their money in the 1970s?
        burnished 4y ago
        Constant or diminished? I am squinting at print media, broadcasts, and maybe live performances as a form of data. For example in the 1970s I expect my family had a book budget. My book budget has been subsumed by my ISP budget and they both effectively accomplish the same thing (reading material). I know that this specific example wasn't crucial to your overall point, but I thought it was an interesting tangent to take literally.
    - Consultant32452 4y ago
      Eric Weinstein says it better than I could, with helpful pictures that make it obvious why the inflation metric we see must always be bunk. https://twitter.com/EricRWeinstein/status/1550934168195850241 https://twitter.com/EricRWeinstein/status/155093416819585024...
      - boole1854 4y ago
        And par for the course for Weinstein, he makes an interesting point while wrapping it in a vale of needless conspiracy mongering. Yes, the rate of inflation is slightly different for different products and services (it is a "field" rather than a "scalar"). Yes, it would be nice if the government reported the entire inflation "field" rather than just the top-of-the-line aggregated inflation number. Does this mean the government or economists are "lying" (his word)? Well, not really. The government DOES report the entire inflation "field". They have done so every month, as part of literal press releases, for years. All the data is available on bls.gov for anyone who is interested. And many people are interested and have made use of the data, which -- again -- is entirely public.
        BitwiseFool 4y ago
        >"Does this mean the government or economists are "lying" (his word)?" The way I see it, it is in the government's interest to "lie" about the rate of inflation because it is advantageous for them to do so. Inflation is used as a tool in monetary and fiscal policy. "Inflating away" debt is a real strategy and policy. "Lie" is a loaded term, and perhaps this is a limitation of our vocabulary. Because inflation has no universal definition or universally accepted measure, economists and statisticians have leeway when they calculate what the rate of inflation is. For the sake of argument, let's assume there is a "real" inflation rate. Having an "official" number lower than the real number means the government saves money on expenses that are indexed against inflation, and they get to repay debt with inflated money. The converse of this is costly for the government, as an official number higher than the real number means they have to spend more than expected. Therefore, it makes sense to me that the government is incentivized to under-report, and that they can do so because of how complex the calculations are. Is it a lie to switch to a different model, one that happens to result in lower official numbers? That's up to your own interpretation.
- pojzon 4y ago
  Thats why median makes more sense for most calculations than average. The median inflation for ppl in EU is around 30-50%. In US its probably less 10-20%. But its nowhere near of what goverments proclaim it to be. Its really bad and its going to be worse if climate change hits hard.
  - thomascgalvin 4y ago
    With our stubborn refusal to do anything more than the bare minimum, I think it's actually "when" climate change hits hard.
- throwaway0a5e 4y ago
  >There's no way to do "the main inflation number" and make everyone happy Not making everybody happy would be one thing. But it sure looks a lot like the main inflation number isn't making ANYBODY happy.
- deleted 4y ago
  [deleted]
em500 4y ago
> What are the actual metrics they use to measure inflation? The long answer is here: https://www.bls.gov/opub/hom/cpi/home.htm https://www.bls.gov/opub/hom/cpi/home.htm The short answer is, the BLS samples prices of many consumer products in various categories (some from direct observation, some from consumer surveys) and calculates a weighted average[1] of the prices. The result is the Consumer Price Index (CPI). The consumer price inflation is calculated as the percentage difference of the current CPI compared to twelve months ago. [1] Weights: https://www.bls.gov/cpi/tables/relative-importance/home.htm https://www.bls.gov/cpi/tables/relative-importance/home.htm
deleted 4y ago
[deleted]
jpadkins 4y ago
The 1980 and prior CPI calculation is still calculated here: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts As inflation was measured in the 1970's, we are experiencing ~15% consumer inflation.
- calgarymicro 4y ago
  I'm no economist, but this [1] badeconomics post and the comment section were quite convincing for me as to why shadowstats is not a good resource. [1]https://www.reddit.com/r/badeconomics/comments/3zik5t/shadowstatscom/ https://www.reddit.com/r/badeconomics/comments/3zik5t/shadow...
  - jpadkins 4y ago
    thanks! I didn't know shadowstats was just adding a constant to the BLS data. I thought they were actually re-calculating using the pre-1980 method as they claim.
- vel0city 4y ago
  What percentage of household spending did they allot for high speed home internet access in the 1970s inflation statistics? How about people's budgets for cell phones and personal computer hardware?
- schemescape 4y ago
  ShadowStats claims ~8% inflation since 2000, i.e. a 5x cumulative increase in cost of living. I don't buy it.
  - NDizzle 4y ago
    I mean, you could buy a 3 bed / 1.5 bath house in the bay area for around $200k in 2000. 5x is roughly correct, easily.
    - _delirium 4y ago
silent_cal 4y ago
It is propaganda. I don't see how anyone can think it wouldn't be. The BLS is part of the executive branch and therefore has a vested interest in making the executive branch look good. If you gave a private company the responsibility of auditing itself, most would regard the audit as worthless, and I think rightly so. But for some reason people still trust the government to have totally pure and disinterested scientific intentions, and I have no idea why.
Consultant32452 4y ago
You should be suspicious of any metric that attempts to whittle inflation down to a single number. The purpose of single number measures of inflation is so that the people who get judged by those metrics can manipulate them.
- ghaff 4y ago
  Yes, any single number that measures unemployment or inflation can be misleading which is why there are in fact multiple measures. However, the public generally is used to a specific unemployment measure and a specific inflation measure which is what's generally reported in the news.
  - zo1 4y ago
    They're used to half ass analysis from news outlets that report on that single number instead of doing their job and adding detail/nuance to the discussion.
weberer 4y ago
Yeah, the problem with inflation is that it compounds year after year. If the inflation rate remains stable at 7%, it only takes 10 years for the value of the dollar to halve.
rhacker 4y ago
Food: Cheese 2x from pre-pandemic. Eggs 2x from pp. Chicken 3x, Bacon 4x, Beef 1.5x Construction: Sheathing products (plywood/osb) are 3x pre-pandemic, other wood is 2x (at least) Insurance (health care) my employer is shielding it from me but it's like 8x from what it was 8 years ago. I went from being a little casual with my money to being very frugal. My last raise was early 2020.
stuckinhell 4y ago
I have the same problem. This is why the the official inflation number is highly manipulated. My everyday life and family and friends are feeling inflation far differently than the number crunchers in DC apparently. This disconnect is not a good thing!

by donatj 4y ago

bombcar 4y ago

There's no way to do "the main inflation number" and make everyone happy - because they have to try to find some way to include housing, and that either drags it way up or way down relative to how you "feel". If all other prices double, but you own or have fixed rent, you're going to feel it but the numbers will be muted; if all prices stay the same but your rent doubles, you're still going to feel it but the numbers will now seem off again.

eldenwrong 4y ago
The official measures have always been BS. Its obvious to everyone now. Hedonic adjustments + flat out replacing expensive items for cheap items was always retarded
- snapcaster 4y ago
  But they have to do something like this right? I mean, consumption patterns have obviously changed since the 1960s. I understand maybe the way they adjust isn't correct but if you think this is a really easy problem you probably haven't considered it enough
  - silent_cal 4y ago
    No they don't have to do something like this. The change in consumption patterns is caused by inflation and should be measured. If someone has to switch from buying steak to ground beef, it's not a change in preference. They've stopped buying something they can't afford.
    - ac29 4y ago
      > The change in consumption patterns is caused by inflation and should be measured While inflation can change consumption patterns, its not the only factor. For example, how do you compare your current spending on a mobile data plan or video streaming service compared to how consumers spent their money in the 1970s?
      - burnished 4y ago
        Constant or diminished? I am squinting at print media, broadcasts, and maybe live performances as a form of data. For example in the 1970s I expect my family had a book budget. My book budget has been subsumed by my ISP budget and they both effectively accomplish the same thing (reading material). I know that this specific example wasn't crucial to your overall point, but I thought it was an interesting tangent to take literally.
  - Consultant32452 4y ago
    Eric Weinstein says it better than I could, with helpful pictures that make it obvious why the inflation metric we see must always be bunk. https://twitter.com/EricRWeinstein/status/1550934168195850241 https://twitter.com/EricRWeinstein/status/155093416819585024...
    - boole1854 4y ago
      And par for the course for Weinstein, he makes an interesting point while wrapping it in a vale of needless conspiracy mongering. Yes, the rate of inflation is slightly different for different products and services (it is a "field" rather than a "scalar"). Yes, it would be nice if the government reported the entire inflation "field" rather than just the top-of-the-line aggregated inflation number. Does this mean the government or economists are "lying" (his word)? Well, not really. The government DOES report the entire inflation "field". They have done so every month, as part of literal press releases, for years. All the data is available on bls.gov for anyone who is interested. And many people are interested and have made use of the data, which -- again -- is entirely public.
      - BitwiseFool 4y ago
        >"Does this mean the government or economists are "lying" (his word)?" The way I see it, it is in the government's interest to "lie" about the rate of inflation because it is advantageous for them to do so. Inflation is used as a tool in monetary and fiscal policy. "Inflating away" debt is a real strategy and policy. "Lie" is a loaded term, and perhaps this is a limitation of our vocabulary. Because inflation has no universal definition or universally accepted measure, economists and statisticians have leeway when they calculate what the rate of inflation is. For the sake of argument, let's assume there is a "real" inflation rate. Having an "official" number lower than the real number means the government saves money on expenses that are indexed against inflation, and they get to repay debt with inflated money. The converse of this is costly for the government, as an official number higher than the real number means they have to spend more than expected. Therefore, it makes sense to me that the government is incentivized to under-report, and that they can do so because of how complex the calculations are. Is it a lie to switch to a different model, one that happens to result in lower official numbers? That's up to your own interpretation.
pojzon 4y ago
Thats why median makes more sense for most calculations than average. The median inflation for ppl in EU is around 30-50%. In US its probably less 10-20%. But its nowhere near of what goverments proclaim it to be. Its really bad and its going to be worse if climate change hits hard.
- thomascgalvin 4y ago
  With our stubborn refusal to do anything more than the bare minimum, I think it's actually "when" climate change hits hard.
throwaway0a5e 4y ago
>There's no way to do "the main inflation number" and make everyone happy Not making everybody happy would be one thing. But it sure looks a lot like the main inflation number isn't making ANYBODY happy.
deleted 4y ago
[deleted]

em500 4y ago

> What are the actual metrics they use to measure inflation? The long answer is here: https://www.bls.gov/opub/hom/cpi/home.htm https://www.bls.gov/opub/hom/cpi/home.htm The short answer is, the BLS samples prices of many consumer products in various categories (some from direct observation, some from consumer surveys) and calculates a weighted average[1] of the prices. The result is the Consumer Price Index (CPI). The consumer price inflation is calculated as the percentage difference of the current CPI compared to twelve months ago. [1] Weights: https://www.bls.gov/cpi/tables/relative-importance/home.htm https://www.bls.gov/cpi/tables/relative-importance/home.htm

deleted 4y ago

[deleted]

jpadkins 4y ago

The 1980 and prior CPI calculation is still calculated here: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts As inflation was measured in the 1970's, we are experiencing ~15% consumer inflation.

calgarymicro 4y ago
I'm no economist, but this [1] badeconomics post and the comment section were quite convincing for me as to why shadowstats is not a good resource. [1]https://www.reddit.com/r/badeconomics/comments/3zik5t/shadowstatscom/ https://www.reddit.com/r/badeconomics/comments/3zik5t/shadow...
- jpadkins 4y ago
  thanks! I didn't know shadowstats was just adding a constant to the BLS data. I thought they were actually re-calculating using the pre-1980 method as they claim.
vel0city 4y ago
What percentage of household spending did they allot for high speed home internet access in the 1970s inflation statistics? How about people's budgets for cell phones and personal computer hardware?
schemescape 4y ago
ShadowStats claims ~8% inflation since 2000, i.e. a 5x cumulative increase in cost of living. I don't buy it.
- NDizzle 4y ago
  I mean, you could buy a 3 bed / 1.5 bath house in the bay area for around $200k in 2000. 5x is roughly correct, easily.
  - _delirium 4y ago

silent_cal 4y ago

It is propaganda. I don't see how anyone can think it wouldn't be. The BLS is part of the executive branch and therefore has a vested interest in making the executive branch look good. If you gave a private company the responsibility of auditing itself, most would regard the audit as worthless, and I think rightly so. But for some reason people still trust the government to have totally pure and disinterested scientific intentions, and I have no idea why.

Consultant32452 4y ago

You should be suspicious of any metric that attempts to whittle inflation down to a single number. The purpose of single number measures of inflation is so that the people who get judged by those metrics can manipulate them.

ghaff 4y ago
Yes, any single number that measures unemployment or inflation can be misleading which is why there are in fact multiple measures. However, the public generally is used to a specific unemployment measure and a specific inflation measure which is what's generally reported in the news.
- zo1 4y ago
  They're used to half ass analysis from news outlets that report on that single number instead of doing their job and adding detail/nuance to the discussion.

weberer 4y ago

Yeah, the problem with inflation is that it compounds year after year. If the inflation rate remains stable at 7%, it only takes 10 years for the value of the dollar to halve.

rhacker 4y ago

Food: Cheese 2x from pre-pandemic. Eggs 2x from pp. Chicken 3x, Bacon 4x, Beef 1.5x Construction: Sheathing products (plywood/osb) are 3x pre-pandemic, other wood is 2x (at least) Insurance (health care) my employer is shielding it from me but it's like 8x from what it was 8 years ago. I went from being a little casual with my money to being very frugal. My last raise was early 2020.

stuckinhell 4y ago

I have the same problem. This is why the the official inflation number is highly manipulated. My everyday life and family and friends are feeling inflation far differently than the number crunchers in DC apparently. This disconnect is not a good thing!