Wikinvest Wire

The pause that refreshes

Friday, March 14, 2008

A short time ago, the Bureau of Labor Statistics reported that, after doing yeoman's work since last fall, "inflation" took the month of February off as consumer prices registered no change from January.

On a year-over-year basis, consumer prices have reportedly risen 4.0 percent.

That just doesn't sound right, does it? Four percent? From last February?
Since last September, after the credit crunch hit and interest rates started dropping like a rock (along with hedge funds, mortgage lenders, and consumer confidence), the following monthly changes have been registered by the Consumer Price Index:

  • 0.4% in September
  • 0.3% in October
  • 0.9% in November
  • 0.4% in December
  • 0.4% in January
Adding in the goose egg for February yields a six-month annualized rate of 4.8 percent.

Again, that just doesn't feel like it describes what is really happening out there. Gasoline now costs $4 in Hawaii and you have to be very careful when shopping for food lest you wind up with an $8 block of cheese in your cart.

Health care isn't getting any cheaper yet the consumer price index puts the annual increases for both food and medical care at just 4.5 percent.

Where does the BLS shop and who are their doctors?

The BLS data shows increases of 33 percent for both gasoline and heating oil from one year ago - now that sounds about right.

But, prices continue to fall for apparel, household furnishings, and new cars while that owners' equivalent rent sits there like the Rock of Gibralter, contributing almost a quarter to the overall consumer price index with an increase of just 2.6 percent from one year ago.

No matter how fast and how high consumer prices actually rise, we'll probably never have much "inflation".

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Anonymous said...

Strange that government stats are always great whereas in the real world it just gets ugly( Bear Stearns)

Nick said...

"Where does the BLS shop and who are their doctors?"

A-fricken-men. If only this posting could be reprinted or linked in every major news publication in the country.

pft said...

From shadowstats.

" This morning’s (March 14th) release of "unchanged" February CPI was as close to overt data manipulation from the Bureau of Labor Statistics (BLS) as you get.....

How they (the BLS) came up with [it] was through the use of unbelievably low food and energy inflation. For example, the data show a not-seasonally-adjusted 0.6% decline in gasoline prices for February. The data are supposed to be reflective of a monthly average, not a point in time as used in the Producer Price Index (PPI). Yet, calculating the change in monthly average national gasoline prices, all grades, based on data published by the Depart of Energy shows a monthly gain of 0.5%. The difference with that number, alone, would have brought in the seasonally-adjusted CPI-U at a 0.3% monthly gain, which was the consensus forecast."

They must have made some hedonic adjustments to gasoline and food.
The food is tastier and cleaner, with nano packaging, and the gasoline is more powerful and pollutes less.

I mean, they do not even try to be believable anymore, since MSM will spin it the way they want it.

Uisng pre-Clinton era methodology
(1990), inflation was 7.3% in February.

Anonymous said...

Page 6 of Barron's (03/10/2008 had calculations showing the street-level REAL rfate @ 11.8%. Australia, N.Z., and Euroland are also fudging, but they are at least closer to reality and are RAINING interest rates. The bond markets are figuring up to a 1% CUT next week! Do not believe any BLS figures.

Expat said...

The idiots and cheerleaders on CNBC poo-pooed the whole BLS cooking the numbers conspiracy theory on that basis that there are too many of them to keep the secret. Er, if there are too many employees at the BLS and too many complicated statistics to compile, it seems logical to me that the final calculations are done at the top of a very broad pyramid structure. Frankly, I would bet that the man in charge of publishing the final numbers on inflation is none other than Karl Rove.

When can we march on Washington and waterboard everyone there? Notice, dear snoopers at the NSA, CIA and DHS, that I suggested we WATERBOARD the Bush, Cheney, Mukasey, Benanke, and Congress. I did not suggest doing anything illegal to them or harming them in any way, which would be illegal. I merely suggest waterboarding Bush until he tells the truth about the economy. Subtle, eh?

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