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newthinking

(3,982 posts)

102. Here is some reading material for you. Why CPI has understated inflation.

Mon Jun 25, 2012, 03:20 AM

Jun 2012

There are a lot of economists who would argue otherwise. But none of us who are old enough to know better need to be convinced. We KNOW.

This material comes from one. Link at the bottom.
________

Consumer Price Index Has Been Reconfigured Since Early-1980s
So As to Understate Inflation versus Common Experience

•CPI no longer measures the cost of maintaining a constant standard of living.
•CPI no longer measures full inflation for out-of-pocket expenditure.
•With the misused cover of academic theory, politicians forced significant underreporting of official inflation, so as to cut annual cost-of-living adjustments to Social Security, etc.
•Use of the CPI to adjust retirement benefits, private income or to set investment goals impairs the ability of retirees, income earners and investors to stay ahead of inflation.
•Understated inflation used in estimating inflation-adjusted growth has created the illusion of recovery in reported GDP.

From:
http://www.shadowstats.com/alternate_data/inflation-charts

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A two-income family today is poorer than a one-income family was in the 1970s [View all] kpete Jun 2012 OP

so we have to vote for neoliberals to keep the neoliberals out of power? MisterP Jun 2012 #1

Answer Dirty Socialist Jun 2012 #3

Just say no .... dtom67 Jun 2012 #78

I think it's important to note that they do NOT "create wealth for the few"... JHB Jun 2012 #2

'15% poorer than a one-income family of 40 years ago' tawadi Jun 2012 #4

True Dat! Phlem Jun 2012 #28

We married in 1970, had our first son in 1973..last son in 1978 SoCalDem Jun 2012 #105

k&r HiPointDem Jun 2012 #5

I just wonder what's still keeping the cups and saucers spinning in the air aint_no_life_nowhere Jun 2012 #6

They'll probably start fighting each other yellerpup Jun 2012 #9

We're already serfs. Debt Serfs, Wage Serfs TalkingDog Jun 2012 #45

Perhaps I should have used yellerpup Jun 2012 #53

My husband and I made our own way for 15 years, until.... PassingFair Jun 2012 #60

+1000! Single Payer = Freedom. nt SunSeeker Jun 2012 #86

That's a lot of it and a great example of lying with figures and statistics. Egalitarian Thug Jun 2012 #42

And workers could be making that kind of money before they graduated high school in 1973 NNN0LHI Jun 2012 #7

attacked? hfojvt Jun 2012 #10

and back then employers expected to train on the job and pay you while you learned SoCalDem Jun 2012 #106

That is 100% correct NNN0LHI Jun 2012 #107

I don't see how that can be true hfojvt Jun 2012 #8

I would think that median income when figured using the kind of wages the billionaires get would jwirr Jun 2012 #17

No, because the median averages that out hfojvt Jun 2012 #19

The real story here is not the median but the mode. The divide had expanded so far that those above Egalitarian Thug Jun 2012 #43

The entire all-consuming goal of the GOP is lower wages ... TahitiNut Jun 2012 #11

financial service tax, whenever a stock is "traded" KakistocracyHater Jun 2012 #40

Agreed. TahitiNut Jun 2012 #68

ever notice how easy they raise sales tax? but financial KakistocracyHater Jun 2012 #108

Even worse ... tax cigarettes. TahitiNut Jun 2012 #109

cig taxes are NOT Even worse, people have to put food KakistocracyHater Jul 2012 #113

We need to tax the rich Politicalboi Jun 2012 #12

We need to eat the rich, since they've tainted all our food anyway. nt valerief Jun 2012 #20

I'd be glad to help with the barbecue ... even though I'd avoid them in my diet. TahitiNut Jun 2012 #110

Dogs aren't fussy about what they eat and we 99%ers have lots of dogs. valerief Jun 2012 #111

We need to tax more than income, income tax is a canard to distract us from Egalitarian Thug Jun 2012 #44

This is true. DLevine Jun 2012 #13

I don't know what it will take to wake up tea party types to these facts. senseandsensibility Jun 2012 #14

"(T)ea party types"? We have a bunch right here. n/t Egalitarian Thug Jun 2012 #51

Overhead wasn't nearly the percentage of income back then either. ananda Jun 2012 #15

Many jobs could be accessed via public transportation, too. You know, that thing valerief Jun 2012 #21

So many "out of pocket" expenses raising children now, far more than before also newthinking Jun 2012 #67

And many jobs are more than the 8 hour day that was usual back then. jwirr Jun 2012 #16

k&r for the truth, however depressing it may be. n/t Laelth Jun 2012 #18

"Should I buy a Prius?" nt Romulox Jun 2012 #22

Supply side takes a while to work kenny blankenship Jun 2012 #23

This is brazenly untrue. mathematic Jun 2012 #24

Um, mathematic? Are those figures adjusted for purchasing power (you know, the cost of living?) Romulox Jun 2012 #25

If it is not adjusted then the census folks are pretty useless at giving us good information. dkf Jun 2012 #26

I don't think yours is a safe assumption. Moreover, guessing shouldn't be required. nt Romulox Jun 2012 #27

Yes, those figures are adjusted for inflation mathematic Jun 2012 #29

I'd like a link to your figures and methodology, please. nt Romulox Jun 2012 #30

Links-a-plenty. mathematic Jun 2012 #34

Let me understand the thesis implicit here: despite huge decreases in household wages, Romulox Jun 2012 #62

Poster won't be able to do that because the methodology for calculating inflation is not constant NNN0LHI Jun 2012 #35

+1 ArcticFox Jun 2012 #37

The poster most certainly was able to do that. mathematic Jun 2012 #38

I agree the author from the linked article does appear to be a crackpot NNN0LHI Jun 2012 #52

Is there a purchasing power parity index for wages somewhere? laundry_queen Jun 2012 #54

In what way do you find the CPI-U-RS to be insufficent as a "purchasing power index"? mathematic Jun 2012 #59

Well, for example, they're not arguing we *can afford* new cars as readily. They've decided instead Romulox Jun 2012 #63

Most who are old enough to have worked 30 years ago know that the government figures do not reflect newthinking Jun 2012 #66

ABSOLUTELY CORRECT Skittles Jun 2012 #79

Your criticism of quality adjustments and substitutions is not novel mathematic Jun 2012 #70

"All other things held constant" means ALL other things held constant. It's literal language. Romulox Jun 2012 #80

I stand by every last thing I said. mathematic Jun 2012 #83

"All things held constant" means the PRICE IS THE SAME. It's the *literal* meaning of the phrase. Romulox Jun 2012 #87

English is certainly my first language. mathematic Jun 2012 #90

You've done all that arguing only to concede the point? Romulox Jun 2012 #93

And you somehow try to use this as justification that CPI should not adjust for quality mathematic Jun 2012 #99

This message was self-deleted by its author Romulox Jun 2012 #101

I notice you skipped the parent's basement example, btw. It's an indictment of your methods, imo. nt Romulox Jun 2012 #81

Similarly, the *quality* of parent's basements is surely rising, what with broadband and all... Romulox Jun 2012 #64

I know what CPI is thanks laundry_queen Jun 2012 #76

You really should read the CPI documentation mathematic Jun 2012 #77

I'm in Canada laundry_queen Jun 2012 #84

Amazing mathematic Jun 2012 #91

Just *AMAZING* that anyone dare pose a question that you aren't able to answer. How rude! nt Romulox Jun 2012 #94

Fundamentalist? laundry_queen Jun 2012 #97

Since when do Keynesians reject price based inflation measures? mathematic Jun 2012 #100

Here is some reading material for you. Why CPI has understated inflation. newthinking Jun 2012 #102

Just to be clear: not being an "economist", I notice various factors are typically excluded from Romulox Jun 2012 #31

I took a look at the CPI links laundry_queen Jun 2012 #56

Agreed. It's based on the author's assessment of what consumers *should* want, not what they do-- Romulox Jun 2012 #65

I find it pragmatically useful to regard the CPI as a "Keep Up With The Joneses" Index. TahitiNut Jun 2012 #69

Hard to contextualize "keeping up" when workers are demonstrably *falling behind* though... nt Romulox Jun 2012 #89

Wow. Way to promote a factoid. TalkingDog Jun 2012 #46

Context? I gave PLENTY of context. mathematic Jun 2012 #57

In the initial post only provided data from census.gov TalkingDog Jun 2012 #73

Nice dodge but I provided all that information hours before your response mathematic Jun 2012 #74

Ok, I've reconsidered re: GMO grass link mathematic Jun 2012 #75

What did I start and how, exactly, did I start "it"? TalkingDog Jun 2012 #104

Link to the GMO cyanide grass is not GMO retraction story please. TalkingDog Jun 2012 #48

Do your calculations account for the increase in hours worked sans compensation? TalkingDog Jun 2012 #49

What's the mode? I saw it here (I think) a couple of weeks ago. Egalitarian Thug Jun 2012 #50

I found the data for households mathematic Jun 2012 #61

And one more rebuttal: TalkingDog Jun 2012 #71

This poster speaks with such confidence, but following the subthreads, it's all backpedaling. nt Romulox Jun 2012 #88

What an embarassing mischaracterization. mathematic Jun 2012 #92

There is NOTHING more embarrassing than a *sloppy* know-it-all. Work on your Romulox Jun 2012 #95

And everyone else you've insulted tonight? Are you embarrassed for them, too? Romulox Jun 2012 #96

You did not account for inflation nor increased living costs. NutmegYankee Jun 2012 #103

It's actually much worse: he's arguing that "QUALITY" of life today is higher, so it doesn't matter Romulox Jun 2012 #112

Vulture Capitalism Peaceful Protester Jun 2012 #32

Mafia Style Wall Street Scam Peaceful Protester Jun 2012 #33

Privatization and Deregulation Peaceful Protester Jun 2012 #36

Deregulation of the trucking indurstry cost the teamster union 300,000 good paying jobs. demosincebirth Jun 2012 #39

do they realize that the "public sector" is basically their nation? KakistocracyHater Jun 2012 #41

And the formula for the poverty rate... dajoki Jun 2012 #47

That's okay. The GOP is now working on making us all one-income families again AllyCat Jun 2012 #55

wow nt inna Jun 2012 #58

i wish it were only the repub party that was to blame; StarryNight Jun 2012 #72

repukes are FAR more responsible for the mess Skittles Jun 2012 #82

No kidding. n/t EFerrari Jun 2012 #98

And they tell us, with a shrug, to forget owning homes, or retiring. DirkGently Jun 2012 #85