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Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

forbes.com

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Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#211

Post by raincole »

Phiwise_ wrote: post #159
throw0101c wrote: post #127

Earlier quoted context omitted.

> CPI is designed to make the government look good, hence the article. The CPI is run by the Bureau of Labor Statistics: > The "food price index" evolved into what we now call the Consumer Price Index (CPI). During World War I, rapid in­creases in prices, particularly in shipbuilding centers, made a more comprehensive index essential for calculating cost-of-living adjust­ments in wages. Studies of family expenditures…

>> CPI is designed to make the government look good, hence the article. >The CPI is run by the Bureau of Labor Statistics: ... https://www.bls.gov/opub/hom/cpi/history.htm You do notice that your link to back up disagreeing with the assertion of potential government bias is to a .gov domain, surely?

I really like how they put Labor in italics. As if that disputed the fact it's part of the government.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#212

Post by 542458 »

ein0p wrote: post #125
throw0101c wrote: post #91

Earlier quoted context omitted.

> That seems subjectively accurate, looking at my grocery store receipts and $13/lb meat. Certainly more accurate than “3.5%” bullshit the “free press” is asking us to believe. You do know that the CPI (and CPE) are made up of components, right? Like Shelter, Energy, Transportation… Food. Food can go up more that 3.5% while other items (like Transportation/Energy/Oil) go down, so on average the prices you see have go…

CPI is designed to make the government look good, hence the article.

If the CPI was designed to make the government look good it wouldn’t use a modified Laspeyres index which introduces overestimation bias by assuming substitution does not happen between basket adjustments. It would be trivial to use a different index type which introduces the opposite bias, but they don’t.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#213

Post by jogjayr »

tonymet wrote: post #16

I recommend people use many different indicators to get a mental model of inflation, and you will notice that CPI does not represent inflation well. The memes of Arby’s 5 for $5 becoming 4 for $10 are more informative than the CPI numbers. Don’t let the shock at the grocery store wear off – it’s real and painful despite what the news tells you. True inflation would measure the amount of prosperity achieved per hour w…

I randomly ran across this blog post https://economistwritingeveryday.com/2024/04/10/grocery-infl... today. It says fast food prices have gone up faster than grocery prices or inflation. I don't eat fast food so I don't know if it's true. But it got me thinking.

Maybe the likes of Doordash are to blame, at least indirectly. Food delivery companies have proved that people will pay $15 for a lukewarm McDonald's burger if it's brought to their doorstep. So there is obviously some room to increase prices even for in-store purchases.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#214

Post by thebigman433 »

talkingtab wrote: post #66

The big problem here is the breakdown in trust. If the government uses a figure for inflation that differs dramatically from what common Americans experience, the people conclude that the government is working against them instead of for them. Many, perhaps most Americans have lost or are losing trust. The problem with this is where do people turn? Biden represents the government as manipulator. Where is the alternat…

What specifically would you have preferred Biden do differently? The rest of the world also dealt with massive inflation, and most other economies have not. There is no magic formula that would've made our economy recover with insanely good labor statistics without causing some inflation. After the 2008 recession, it took 6 years (!!!) for U-1 unemployment to get under 3%, while it took just over a year for that to happen after 2020! The extra inflation is absolutely worth this tradeoff, but the absolutely insane response to it has basically guaranteed that next time a major event happens, we will be stuck with years of elevated unemployment.

"The governments number is different than what I experience" is not why people are mad. They just see prices go up and get mad immediately, even though statistically, wages have also risen a good amount, especially at the low end! The difference is that people think they worked hard for the raise and deserve it for their own work, and dont see it as a byproduct of the economy changing.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#215

Post by thebigman433 »

shrubble wrote: post #210
thebigman433 wrote: post #206

Earlier quoted context omitted.

You cant seriously be comparing actual cited stats for household size to lyrics from a song that was popular?

I specifically stated it was anecdotal... here are the census stats in graph form however: https://www.census.gov/content/dam/Census/library/visualizat... ; 2.5 kids plus 2 adults is 4.5 in the household.

4.5 in the household is very specifically not 4 kids, like you claim is common. Just an insane random hill to die on

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#216

Post by bugbuddy »

bongodongobob wrote: post #203
bugbuddy wrote: post #157

Earlier quoted context omitted.

According to our experience of the last 7 years, we should expect interest rate cuts, tax cuts, and more fiscal expansion either at the same time or in some sequence. Each of them will help solve our problem. There is no fiscal conservative left in America.

"Fiscal conservativism" is the equivalent of a household not purchasing any insurance, not going to the doctor or dentist, and saying "look how affordable everything is if we cut out all those stupid things? It's wasteful spending!" Then you get into a car accident, go to the hospital, lose your job, and cry about the inefficiency of the market because you now have a huge bill that you can't pay. It's short sighted a…

You are using a straw man. The reason we have a democracy and freedom of speech is so that each of us can voice our opinions and vote for those that share them. Unfortunately, nothing is perfect.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#217

Post by tsimionescu »

randomdata wrote: post #137
mistermann wrote: post #133

Earlier quoted context omitted.

> Right. I am referring to all those who want to know only this, along with everyone else . "along with everyone else" is incorrect, because you have no way of knowing what other people want (and worse, maybe no way to know that). And the only way you "know" what "all those who want to know only this" is because it is a tautology, it is necessarily true . Though, you have no way of knowing what percentage of the popu…

> No, "we" did not pick it, someone else picked it "on our behalf" With a gun to your back, eh? We can use whatever source of inflation we want. Nobody is selecting for us. But, as it happens, CPI is the one we've chosen as the default. If we change our minds, we don't have to default to it forevermore. It's up to us. > Are you blaming others for the way you think? I don't think. You do enough of that for all of us.…

People discuss inflation because everyone from the Economist to Yellen to the President brings up inflation numbers whenever people start feeling their COL increase, or when people demand better state services etc. It is one of the most widely publicized economic indicators, along with GDP, unemployment rate, and foreign debt.

But in many of these discussions, it is deliberately being presented as equivalent to COL, which is never addressed separately. So, in reality, for the vast majority of people who learn about these numbers from the media, not economics degrees, "inflation" actually refers to COL, except that the numbers they are given are the ones for what economists call inflation.

Given that a word is defined by what the majority of the people using it mean by it, I think inflation in common English is closer in meaning to COL than to the technical economics term inflation.

Edit: typos

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#218

Post by thebigman433 »

tonymet wrote: post #16

I recommend people use many different indicators to get a mental model of inflation, and you will notice that CPI does not represent inflation well. The memes of Arby’s 5 for $5 becoming 4 for $10 are more informative than the CPI numbers. Don’t let the shock at the grocery store wear off – it’s real and painful despite what the news tells you. True inflation would measure the amount of prosperity achieved per hour w…

> In case you think this is academic, look at the occupations for those who lived in today’s wealthiest neighborhoods. Today Palo Alto, Menlo Park, and other super zips are exclusively $500k incomes and up. In the 1960 census records you will find these good neighborhoods occupied with plumbers, painters and other blue collar workers.

How much is this related to inflation compared to the complete refusal of the Silicon Valley suburbs to building new housing? If rich people want to move somewhere, and people living in that area dont build houses for them to move into, its going to drive the prices up, because the wealthy people will go there no matter what.

Also your whole bit about the past being so much better is insane. Hard to tell what is you exaggerating and what is a serious argument. My partner and I make ~100k + 40k combined a year, and we rent an apartment in one of the nicest SF neighborhoods, save for retirement, go out and do (paid) things every weekend, and still save a good chunk of money every month. We also have gym memberships, own cars, buy nice groceries, etc.

Inflation does suck, and the sticker shock is bad, but the high inflation also stems from policies that have let us have insanely good unemployment levels. Post 2008 we saw less inflation, but unemployment stayed high for almost a decade. Unemployment is already down to super low levels post 2020, which is better for everyone. Average and lower wage workers have also seen large growths in what they make.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#219

Post by bongodongobob »

bugbuddy wrote: post #216
bongodongobob wrote: post #203

Earlier quoted context omitted.

"Fiscal conservativism" is the equivalent of a household not purchasing any insurance, not going to the doctor or dentist, and saying "look how affordable everything is if we cut out all those stupid things? It's wasteful spending!" Then you get into a car accident, go to the hospital, lose your job, and cry about the inefficiency of the market because you now have a huge bill that you can't pay. It's short sighted a…

You are using a straw man. The reason we have a democracy and freedom of speech is so that each of us can voice our opinions and vote for those that share them. Unfortunately, nothing is perfect.

I'm using the term as it's used 9/10 times it comes up. I've never in my life met a self proclaimed fiscal conservative that didn't just mean "I want lower taxes". The way to lower taxes is a healthy and intelligent population. That is seen as a cost but is actually an investment that pays massive dividends. That's what a fiscal conservative would do, invest at the societal level. Otherwise they're basically just a libertarian.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#220

Post by usaar333 »

tonymet wrote: post #16

I recommend people use many different indicators to get a mental model of inflation, and you will notice that CPI does not represent inflation well. The memes of Arby’s 5 for $5 becoming 4 for $10 are more informative than the CPI numbers. Don’t let the shock at the grocery store wear off – it’s real and painful despite what the news tells you. True inflation would measure the amount of prosperity achieved per hour w…

> Remember in 1963 only the man was working, and typically supported 4 kids, a wife and often parents in the home.

Things are a lot cheaper if you keep them in a 1200 square foot house

> Today you have 2 people working 100 hours a week to support 1-2 additional people , while living in an apartment and living in a run down and crime infested neighborhood.

Highly doubt people at this income rank were buying houses in 1960 and living comfortably.

> Summers is right more than he’s wrong

Entire argument is whether you should count interest or not. I can see arguments both ways

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