US Economic Figures ''Cooked'' Before Election

[Thurston Howell IV]

The last several US inflation reports, including the CPI and PPI reports and others, were reported as “low or negative,” but don’t show the true picture of the US economy, due to outsized subtractions from real inflation numbers. The subtractions are related to large “price drops” tied to US vehicle maker finance programs, rather than normal economic forces of supply and demand. The price drops are so large, they shouldn’t have been included--one of them comes out to be a 30 percent annualized rate. In fact, the US bureau that publishes the statistics normally removes such large values as “outliers,” according to official documentation-but it hasn’t done so this time, right before the election. Further, the July CPI has not one, but up to three negative outliers

http://www.scoop.co.nz/mason/stories/HL0409/S00192.htm

[cidliz2004]

1. What does this mean?

[CarolynEC]

3. Means the Bushies are cooking the numbers, as usual.

Manipulating the statistics to make it seem the economy is better than it actually is.

[Cleita]

4. It means they have five star "chefs" cooking the books.

[CarolynEC]

2. If I remember correctly, just about every recent economic report...

... has been "revised" a few weeks after the intital numbers were released. And the "revised figures" invariably showed that things are even worse than the original reports indicated.

[Digit]

5. People in the trenches know

the numbers don't truly reflect what is happening with the economy.
It is all smoke and mirrors. If only we could find an economist to blow recent stats out of the water.

[richabk]

6. My stab at this....

CPI = Consumer Price Index
The Consumer Price Index is a measure of the price level of a fixed market basket of goods and services purchased by consumers. CPI is the most widely cited inflation indicator, and it is used to calculate cost of living adjustments for government programs and it is the basis of COLAs for many private labor agreements as well.

PPI = Producer Price Index
The Producer Price Index measures prices of goods at the wholesale level. There are three broad subcategories within PPI: crude, intermediate, and finished. The market tracks the finished goods index most closely, as it represents prices for goods that are ready for sale to the end user. Goods prices at the crude and intermediate stages of production often provide an indication of coming (dis)inflationary pressures, but the closer you get to crude goods, the more that these prices track commodity prices which are already available in traded indices such as the CRB (Commodity Research Bureau).


Let's use the current polling events as an analogy.
We had 1 poll come out saying Bush was 11 pts. ahead, but all other
polls taken said Bush and Kerry were effectively tied. Most people would consider the 11 pt. spread a blip and not count it. But if the Bush people wanted to make themselves look in the best possible light, they will use it to their advantage.

In the same vein...if CPI and/or PPI go up that means that prices, on average, are rising (milk, gas, etc.) Because of sagging car sales, manufacturers are offering huge discounts to move them - so lower prices. This car rebate would normally be considered an outsider because it's not in sync with the price moves of other items. But, if you do include these numbers it will drag down all the other numbers and make inflation look better than it really is.

I hope this helps. And if I'm wrong, please let me know.

[On the Road]

7. I Think They SHOULD Include Outliers If They're Real Changes

If the price of gas drops 30%, it should be part of the change in CPI. Not all prices move together.

What I don't understand is what kind of auto program could result in a 30% drop in price? That just doesn't line up with any car-buying experience I've ever had.