Inflation: thought I would share...

Cancel 2016.2

Cancel 2016.2

The Almighty
many of my clients have been asking why the government reports inflation at only 1.5% when it seems so much higher to them.

To be clear, the government is not lying to you. The CPI numbers are accurate. The difference between what we are seeing and what we are feeling is due to how the CPI is calculated.

The following are just broad categories. But they should give you an idea of why inflation seems so much higher. Beside the categories is their weighting in the overall CPI number.

Food and Beverage 14.795%
Apparel 3.695%
Transportation 16.685%
Medical Care 6.513%
Recreation 6.437%
Education & Communication 6.434%
Housing 41.96%
Other 3.483%

As you can see, Housing makes up just over 40% of the CPI number. Thus the decline in housing values throughout the nation have had a negative impact upon overall CPI. This is why it feels worse than the reported 1.5% inflation.

Food, Health care, transportation... things we see and get hit with every day are rising dramatically. While we don't tend to feel the significance (unless you are in foreclosure) of the housing decline.

Just thought I would pass the above along in case others were curious.
 
I appreciate having a professional providing insight. We don't always agree but I respect your knowledge. Your football teams sucks
 
Superfreak said:
many of my clients have been asking why the government reports inflation at only 1.5% when it seems so much higher to them.

To be clear, the government is not lying to you. The CPI numbers are accurate. The difference between what we are seeing and what we are feeling is due to how the CPI is calculated.

The following are just broad categories. But they should give you an idea of why inflation seems so much higher. Beside the categories is their weighting in the overall CPI number.

Food and Beverage 14.795%
Apparel 3.695%
Transportation 16.685%
Medical Care 6.513%
Recreation 6.437%
Education & Communication 6.434%
Housing 41.96%
Other 3.483%

As you can see, Housing makes up just over 40% of the CPI number. Thus the decline in housing values throughout the nation have had a negative impact upon overall CPI. This is why it feels worse than the reported 1.5% inflation.

Food, Health care, transportation... things we see and get hit with every day are rising dramatically. While we don't tend to feel the significance (unless you are in foreclosure) of the housing decline.

Just thought I would pass the above along in case others were curious.
Click to expand...

Ahhh! That explains why increases in indexed, government stipends are so little. :(
 
Superfreak said:
many of my clients have been asking why the government reports inflation at only 1.5% when it seems so much higher to them.

To be clear, the government is not lying to you. The CPI numbers are accurate. The difference between what we are seeing and what we are feeling is due to how the CPI is calculated.

The following are just broad categories. But they should give you an idea of why inflation seems so much higher. Beside the categories is their weighting in the overall CPI number.

Food and Beverage 14.795%
Apparel 3.695%
Transportation 16.685%
Medical Care 6.513%
Recreation 6.437%
Education & Communication 6.434%
Housing 41.96%
Other 3.483%

As you can see, Housing makes up just over 40% of the CPI number. Thus the decline in housing values throughout the nation have had a negative impact upon overall CPI. This is why it feels worse than the reported 1.5% inflation.

Food, Health care, transportation... things we see and get hit with every day are rising dramatically. While we don't tend to feel the significance (unless you are in foreclosure) of the housing decline.

Just thought I would pass the above along in case others were curious.
Click to expand...
To be clear, the government IS lying to us, and they know full well they are lying to us. Does anyone believe they used that 40% weighting for housing back when housing prices were shooting up like a space shuttle launch? (hollow laugh) They adjust weights to give them the figures they want to publish.

There are lies, damned lies, and statistics. Just because the statistics support the published figures does not mean those figures aren't a deliberately calculated lie.
 
Good Luck said:
To be clear, the government IS lying to us, and they know full well they are lying to us. Does anyone believe they used that 40% weighting for housing back when housing prices were shooting up like a space shuttle launch? (hollow laugh) They adjust weights to give them the figures they want to publish.

There are lies, damned lies, and statistics. Just because the statistics support the published figures does not mean those figures aren't a deliberately calculated lie.
Click to expand...


Of course, actually looking up the relative weight of housing prices over time reveals that it hasn't really changed all that much over the past decade. In 2001, housing was weighted 40.5%, not too far off from what it is weighted now. And if you go back twenty years to 1991, you find that it was weighted at 41.54%.


http://www.bls.gov/cpi/cpiri_2001.pdf

ftp://ftp.bls.gov/pub/special.requests/cpi/usri1991.txt
 
Good infomration, I predected higher inflation by now.... maybe I was not wrong.
 
Good Luck said:
To be clear, the government IS lying to us, and they know full well they are lying to us. Does anyone believe they used that 40% weighting for housing back when housing prices were shooting up like a space shuttle launch? (hollow laugh) They adjust weights to give them the figures they want to publish.

There are lies, damned lies, and statistics. Just because the statistics support the published figures does not mean those figures aren't a deliberately calculated lie.
Click to expand...

That is completely incorrect. They have used approximately the same weightings for decades.
 
Jarod said:
Good infomration, I predected higher inflation by now.... maybe I was not wrong.
Click to expand...
Inflation in pretty much every area other than housing is huge. And the housing is a bad indicator. The vast majority of us have mortgages that have not gone down in any way and cannot due to the loss of value in our homes.
 
apple0154 said:
Ahhh! That explains why increases in indexed, government stipends are so little. :(
Click to expand...

Yes, It is why seniors are bitching so much about no COLA. They are feeling the hits to energy, food and health care, yet the government is telling them no COLA.

The government should, in my opinion, report the numbers that are meaningful. Right now they give us the CPI and CPI minus food and energy.

Who the hell cares what the CPI is minus food and energy?

We would care about CPI minus housing.

They have all the data, they should break it down to where it is meaningful to consumers.
 
Superfreak said:
Yes, It is why seniors are bitching so much about no COLA. They are feeling the hits to energy, food and health care, yet the government is telling them no COLA.

The government should, in my opinion, report the numbers that are meaningful. Right now they give us the CPI and CPI minus food and energy.

Who the hell cares what the CPI is minus food and energy?

We would care about CPI minus housing.

They have all the data, they should break it down to where it is meaningful to consumers.
Click to expand...
But if they did that Obama might be compared to Jiminy Carter.
 
Damocles said:
But if they did that Obama might be compared to Jiminy Carter.
Click to expand...

I am sure that would indeed occur from the right. But we would have to have them go back and present the data for the past as well. Otherwise we would not have anything to compare it to. We could then see just how bad it was then and now.
 
Superfreak said:
Yes, It is why seniors are bitching so much about no COLA. They are feeling the hits to energy, food and health care, yet the government is telling them no COLA.

The government should, in my opinion, report the numbers that are meaningful. Right now they give us the CPI and CPI minus food and energy.

Who the hell cares what the CPI is minus food and energy?

We would care about CPI minus housing.

They have all the data, they should break it down to where it is meaningful to consumers.
Click to expand...


The BLS actually reports insanely specific data in addition to CPI and CPI minus food and energy. It just isn't regularly reported and you have to do a little digging for it.
 
NigelTufnel said:
The BLS actually reports insanely specific data in addition to CPI and CPI minus food and energy. It just isn't regularly reported and you have to do a little digging for it.
Click to expand...
Wow, we should provide a service, do the digging and put it out there for all to see so people can be educated.
 
You must log in or register to reply here.
Back
Top