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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

#221

Post by wakawaka28 »

randomdata wrote: post #41
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 other words you had 1 man working 50 hours a week afford a house... With inflation, we want to know about the change in value of the dollar only . We don't want to factor in the change in value of houses, food, etc. There is a place for understanding that too, but inflation is not it. Something like a cost of living index is more suitable to that kind of information. On that note, houses are unquestionably more…

>On that note, houses are unquestionably more valuable today. For one, they are twice the size they were 60 years ago. We can all agree that a bigger house has more value than a small house, at least within reason. You can fit more in it, it is more comfortable, etc. and that is valuable. They are also a lot safer. That too is more valuable.

Keep in mind, demand was higher with the baby boom than it is today. Houses also used to be built to much higher specifications. Old houses were made with tons of premium timber that is still valuable even 50+ years later.

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

#222

Post by demondemidi »

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…

Crime infested neighborhoods? You mean like living with a bunch of billionaires as neighbors?

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

#223

Post by panarky »

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…

Price inflation tells you very little about how well the average person lives.

The average person today has a far higher standard of living than the average person in 1963.

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

#224

Post by imnotlost »

fragmede wrote: post #80
adriand wrote: post #33

Earlier quoted context omitted.

But it’s not like our standard of living has remained static while we need to work more. A lot has changed. In 1960 the average single family home was 1300 square feet, now it’s more than double that, and it’s packed with amazing amenities and entertainment options. What would an iPad cost in 1960? Obviously the question is kind of nonsensical and yet on the other hand, if you were to try and quantify the price of ou…

What did a college education cost in 1960? I would gladly trade WFH to be the one person supporting a family of 6. (Me, partner, two kids, two grandparents.) The Internet's great and all (although sometimes it seems like it was a mistake), but we're so far from 1 very average person being able to support a middle class life style for 6 people. Median income in 1960 was $5,600, which is equivalent to $60,000 today, bu…

Ah, the 1850s when life was good!

The US Post is great and all, but I would gladly trade the US post for a large beaver-hunting territory!

Horses are too fast! Walking is better.

Or whatever... come on!

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

#225

Post by usaar333 »

caseysoftware wrote: post #188
caesil wrote: post #37

I don't really understand the argument at the heart of this article, which is "we should include interest rates in CPI". How do interest rates effect everyday people exactly, other than price inflation on goods and services (which is included separately in CPI)? The only way seems to be interest rates on personal loans and mortgages. So if anything, we should only include interest rates in proportion to how many peop…

> "The only way seems to be interest rates on personal loans and mortgages." Yes, exactly. As noted in the article and the underlying study, 80% of car purchases are done via a loan and financing is not part of the inflation measure. When you look at buying a home, most are also done via loans and still financing is not part of the measure. In both cases, interest rates are a factor in affordability and cost. > Blind…

I think this is valid for car purchases.

I don't buy this is reasonable for home purchases. They already factor imputed rent in CPI; you'd have to somehow do some sort of complex weighing of own vs rent to factor mortgages (complex since it only affects new purchases given most folks are on fixed rate mortgages)

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

#226

Post by tsimionescu »

zeroonetwothree wrote: post #207
tonymet wrote: post #122

Earlier quoted context omitted.

Some aspects have improved, and others have declined. Home entertainment has more options, we spend more time at the TV and computer. Other aspects of life have declined. It's challenging because there are qualitative and aesthetic aspects to the process, so it takes some discussion to come up with a good understanding. Regardless CPI is misleading. The amount of time spent working over a lifetime to support the fami…

What specifically has declined? When I compare life that my grandparents had to now it is absurdly better in every way.

Community/social life has greatly declined for almost everyone. Home appliances are fancier today, but they are far less reliable. Furniture is much worse in almost every way (e.g. my grandma sleeps today on the same bed and spring mattress that her parents-in-law bought, some 60-70 years ago, and it is still extremely comfortable). Clothes are far less durable as well. Fruits and vegetables are typically worse in taste. Education is extraordinarily more expensive. Job security is much worse.

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

#227

Post by seanmcdirmid »

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.

They used older kids to watch younger kids, and generally let the kids fend more for themselves (my boomer dad was the oldest of 8 kids, and that was his experience, but having his grandparents die of spanish flu after WW2 hurt and helped a bit). I actually kind of admire that, and think we've lost something with more hands on parenting.

I totally agree. In a sense, FAANG salaries aren't especially high by historical standards, it is just that everyone else has fallen so far behind. $500k/year household income is firmly middle class, and is like earning $135k in 1980, my dad made more than that contracting in building nuclear plants with an associates degree from Spokane Community College.

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

#228

Post by wakawaka28 »

tootie wrote: post #73
ein0p wrote: post #32

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.

The "free press" is reporting BLS data. And BLS produces a CPI number based on a formula to act as an indicator, not an absolute measure. People tend to react to things they buy frequently which also happen to be the most volatile (food and fuel) and react less to things they actually spend most of their money on (shelter and transportation). CPI is a broad indicator and will never match the lived experiences of 350M…

>People tend to react to things they buy frequently which also happen to be the most volatile (food and fuel) and react less to things they actually spend most of their money on (shelter and transportation).

Are you suggesting housing prices haven't gone up similar to food prices? Because they have. House prices in many places went up 50% in the last few years and never went back down. People aren't imagining this inflation. It isn't 3%, that's for damn sure. It's at least 10% right now, and probably hit as high as 20% during the pandemic.

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

#229

Post by shrubble »

thebigman433 wrote: post #215
shrubble wrote: post #210

Earlier quoted context omitted.

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

You're deliberately misunderstanding. Have a nice day.

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

#230

Post by wakawaka28 »

Dylan16807 wrote: post #171
ein0p wrote: post #52

Earlier quoted context omitted.

But _all_ cuts of beef went up by a lot as far as I can tell. So did chicken, fish, and all other sources of protein. It’s not just protein though, everything across the board is on average 25-30% more expensive now than it was 3-4 years ago. A cart of foodstuffs that used to cost $100 give or take is now $130-140. This isn’t some Whole Foods kind of situation, this is a run of the mill Kroger normal people shop at

If you're comparing against 3-4 years ago, CPI says inflation was 18-21%. So if it's actually 25-30%, that's a significant level of error but not an enormous one. CPI says that, of those four years, almost all the inflation was in the middle two. So when it says 3.5% since last year, that's not a crazy number, it's more that it's hard to determine/remember which part of the inflation happened in exactly which month.…

>So if it's actually 25-30%, that's a significant level of error but not an enormous one.

Tell that to people on Social Security... They will come up short because of these "errors".

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