The BLS has a very well-documented method [1] of measuring core consumer inflation. The basket of goods they track likely does not reflect your personal consumption patterns.
Its not about withholding information. Its about aggregating the important bits together.
With a 60% rise in gasoline prices in the past year, it makes sense why you'd want to track gasoline separately from everything else.
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If you want to just track "everything", then quote "CPI", not "core CPI" (a different number entirely).
And I live in one of those high-priced metros, so I actually experienced a rent cut since everyone fled to Miami and Austin (thereby increasing prices there).
Obviously your experience may be different, but remember econometrics tracks the entire economy, not just your budget.
Do you believe that your way of living is representative of the average American's?
Obviously not in a California metro where the state decided to subsidize rents to compensate for preventing evictions resulting in a windfall for landlords and massive rent increases throughout the state.
What we need is tools that help individuals plug in their budget and track how inflation affects them. These overall inflation figures are pretty much useless because they have to exclude information in order to not be too highly amplified in either direction. Creating a budget of how much I typically spend on food, gas, utilities, and such and being able to backtest that budget would be really helpful, and perhaps that data could be used to crowdsource inflation figures that are more representative of what the average person is actually experiencing.
Fed releases all kinds of data (unemployment and monetary) and is pretty transparent.
It is disingenuous of you (and contributing to the erosion of institutional trust of Federal institution) by falsely accusing them.
Federal agencies aren't perfect, but at least educated people in HN should take the responsibility of giving constructive criticism based on facts rather than being brainwashed by random YouTuber/Blogger who is generally clueless about economics
I understand the sensitivity to folks spouting "fake news", but let's not discourage critical thinking in a time where there is precious little to go around.
Almost no one on HN is reflective of the 'average' American and that lack of understanding is part of the reason the poor suffer so much in policy decisioning.
It's hard, but if we want to have productive discussions we need to treat each other with empathy and talk to the best possible interpretation of each other's arguments. This assumes people are coming to a dialog in good faith, but everything needs to start with a little trust somewhere. Trolls are also not too hard to spot.
The median salary for software developers in 2019 in the US was $107,000, with 50% between $82,000 and $136,000. The mean salary in California was $134,000 and the mean in San Francisco was $145,000. (https://money.usnews.com/careers/best-jobs/software-develope...)
The median household income in the US in 2019 was $69,560 with a 90% confidence interval of <$1000. The "median earnings of all workers aged 15 and over with earnings" in 2019 was $42,065. (FWIW, the median household income for black people in 2020 was $46,000, and for Asian people was $95,000.) The median household income of those with no college education was $47,000, some college was $64,000, and at least a bachelors degree was $107,000. (https://www.census.gov/library/publications/2021/demo/p60-27...)
(The median household income in California in 2019 was $78,000.)
The median salary for software developers individually in 2019 therefore puts them in the highest 40% of households. (In 2019, 1/5th of households made less than $28,000, 2/5 made less than $54,000, 3/5 made less than $86,000, and 4/5 made less than $143,000. 95% made less than $270,000.)
For many of the people frequenting HN, this is your mileage in the act of varying.
Building an argument based on personal anecdotes and applying it to national policy not good faith. Science literally exists to limit subjective bias and to separate actual trends in reality from notions in your head, subjective experience basically worthless for understanding large-scale trends.
If you're a well-paid engineer, and nearly everyone you interact with is a well-paid engineer, you're going to think everyone lives like you.
And I wonder how many of them grew up poor. And I mean, poor as in "half my meals as a kid were rice and beans", not "One time my dad didn't get the bonus he was expecting, so we had to fly coach rather than First Class when we to France during Christmas".
If OP had made some more detailed arguments, like 'the methods for imputing homeowners rent seem biased' or 'it seems disingenuous to keep a static weighting during COVID, despite the major observed shift away from services and to goods' then I would love to engage on that.
But randomly saying 'this EXTREMELY transparent dataset seems fishy' is just encouraging people to 'do their own research' on things they have no expertise in.
There are trillions of dollars tied to these inflation numbers. Many social services are tied to these values. So if an agency could get reported inflation down just a few basis points based on their subjective decisions on what to include and what to substitute, that could save the government billions.
That's not saying that they are necessarily doing that, but its wise to be suspicious when there are such large stakes
> Public debate needs a core set of facts to reason about the world so politicizing BLS numbers is... really bad
When it becomes tied to trillions and the agencies are selected by politicians then its by definition political.
There is no perfect world where nothing can be gamed. We have a respected institution in the BLS and setting an impossible bar only promotes misinformation by discrediting what's credible.
> the agencies are selected by politicians
This is why there are specific roles for political appointees and others for career civil servants.
In this specific case, we're talking about the usual noise of someone not understanding the point of core inflation, not knowing that there are other measures of inflation, and jumping to a conclusion that the numbers must be bogus. Regardless of what you think about inflation numbers, the reasoning was bad.
Why does applying the right monetary policy depend on excluding inflation in food and energy?
Edit: answered by dragontamer
1) Increase in prices because of increase in money supply
2) Increase in prices because of supply shocks (weather, strikes, supply chain, disruption) or unusual spiky demand.
Core CPI is an attempt to measure (1) to ensure the money supply, which the fed controls is at balance (with their other mandate of full employment).
It's a hard problem because there are lot of nuances and still we want to measure the same thing for a fair MoM or YoY comparison.
This raises a question: Is economics being used as science or as after-the-fact justification, much like economic statistics were manipulated in the Soviet Union? More importantly, is anyone paying attention? Are we willing to give government agents a free hand to keep changing this all-important formula whenever it suits their political needs, simply because they think we won’t get the math?"
This was written by Edward Frenkel, a math professor at UC Berkeley who was born in the USSR in 1968 and so, we can assume, had some familiarity with statistical games played by regimes trying to hold onto power.
I invite you consider that you might extend too much faith toward federal institutions that have presided over a ceaseless rise in inequality and erosion of rights in recent decades.
https://slate.com/technology/2013/02/should-algebra-be-in-cu...
The truth is that the game is rigged. Like entropy, government power always increases over a long enough timeframe. Anytime the spotlight is shined on government they manipulate the game or blame corporations. Then they introduce regulation to "protect" citizens but these regulations add up to just keeping big business entrenched.
And he is not an economist, yet he is a well known econ crank.
Here's an actual economist [1], looking at the evidence one decade past the Boskin report - concludes the same thing.
And, the really cool thing about inflation over that length of time, is you can check it for yourself (which I have showing people why ShadowStats is complete nonsense).
Get some old ads from the start of the period (say 1996, the year of the Boskin Report), and look at prices. Put them in excel. Do the same for now. Compute a reasonable basket.
And here is the really neat part - see if the BLS reported CPI over that period matches reality, or if adding 1.1% annually matches reality.
I will spoil the result - BLS is correct.
From the CPI calculator, Jan 1996 to Jan 2021, inflation is a 1.69 multiplier, for an annual rate of 2.12%. Add back the supposed 1.1%, take the 3.22% over the same 25 years, get a 2.21 multiplier, quite a difference.
And, for the record, there are lots of other places tracing inflation, like the Billion Prices Project, that reach the same conclusions. If the govt lied about it, there would be awesome arbitrage opportunity (and like all such things, people have even investigated that - no such lies - papers on Arxiv).
[1] https://www.nber.org/system/files/working_papers/w12311/w123...
If you dig around you'll find finance papers measuring such things, demonstrating no one has found any such exploitable gaps. Plenty of groups try.
I know this is a direct quote from a Slate article, but it's a blatant lie. The commission was officially the "Advisory Commission to Study the Consumer Price Index", i.e. it's founding purpose was to evaluate the accuracy of the CPI, not an open-ended mission to save the government money.
Food...................... .4 .8 .7 .4 .9 .9 .7 6.1
Energy.................... .0 1.5 1.6 2.0 1.3 4.8 3.5 33.3* using "owners equivalent rent" rather than house prices: https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
* factoring in technology as deflationary. yea, your phone is 20% more expensive, but it has twice the computation power, so it's actually a deflationary component
* substituting goods to account for substitution bias (https://www.frbsf.org/economic-research/publications/economi....). Substituting chicken for beef was heavily criticized.
I guess you could also make increases in health care costs go away with this approach. It’s way more expensive than 20 years ago but the tech is way better so it’s actually cheaper.
makes sense, considering that most people own their homes, aren't exposed to the housing market, and aren't buying houses every month.
>* factoring in technology as deflationary. yea, your phone is 20% more expensive, but it has twice the computation power, so it's actually a deflationary component
Why do you have to get the flagship phone? Why not get a low end phone today, that has about the same capabilities/speed as the phone you had 5 years ago?
"When a measure becomes a target, it ceases to be a good measure" https://en.wikipedia.org/wiki/Goodhart%27s_law
The CPI index has been running continuously for decades and yet you've decided based on one uninformed HN comment that we need to scrap it and rebuild it with different measurements? Peak hubris.
I spent ten years building and maintaining one of the most important economics time-series databases in the world (tracking the US chain store sales index), if that's a credential.
I would say that criticism of the CPI isn't something I invented: https://www.investopedia.com/articles/07/consumerpriceindex....
https://www.forbes.com/sites/perianneboring/2014/02/03/if-yo...
You can search around for plenty of criticism of the CPI if you're interested. The former is reviewed by a guy with a doctorate in economics from Harvard. Is he "uninformed"?
If you believe that CPI isn't accurate and your methods more accurately represent real-world inflation conditions, there's a ton of money to be made betting on the TIPS spread.
https://www.thebalance.com/10-year-treasuries-historical-cha...
https://fred.stlouisfed.org/series/T10YIE
Right now it appears the market is actually reducing long-term expectations for inflation.
Or anyone's, really.
It's not really consistent either, because hedonic adjustments are effectively "arbitrary". BUT at least they are published, so you can, if you had the time, look at all of the fudge factors they drop in and decide for yourself how much skepticism to apply.
Look at their data under "Rent of primary residence". They claim it's only 3% Nov 2020 to Nov 2021.
https://www.bls.gov/news.release/pdf/cpi.pdf
That's an obvious lie.
https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...