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Economic data released by the government from GDP to unemployment most of it is highly manipulated then revised months later when no one is paying attention. The stock market too is highly manipulated and no longer about price discovery which they no longer deny, and look at the size and frequency of the new POMO schedule just blatant manipulation.
Let's face it folks---the Feds have been lying to us regarding the true CPI numbers for too many years to count.
Their tabulations never account for reduced package sizes, such as half-gallons of ice cream being reduced to 56 oz. with no concurrent reduction in price, and the same trickery applies to thousands of the 40,000+ different items in a grocery store.
Remember how much coverage Hershey got several years ago when they reduced the 8 oz. Hershey bar to 7 oz.?
Big bags of dry cat food used to be 18 lbs but now its 16 lbs. I would love to punch all the creeps in the mouth who reduced the contents in ALOT of the items (food, cat food, etc).
I've followed this thread with some interest but must say that I've been a bit surprised at that passion it seems to have invoked. It illustrates (to me) a common problem with folks' understanding of macro economic data and their "real" life financial situations.
One may agree or disagree with the composition and calculations of the CPI (and harbor any beliefs about manipulation thereof they wish) but --- it is what it is. What it is, in my understanding, is a national, macro economic measurement, just that.
Do I pay any attention to it? Not really, I don't think its very useful for anyone other than economists or policy "wonks" doing macro analysis. Yes, my pension & the wife's SS are impacted by the CPI but I reiterate --- it is what it is. Fussing about the current CPI won't get you much satisfaction or change the reality of the current situation.
I've run my own 'real world" budget tracking for decades and the CPI isn't terribly germane to my personal life, becoming less so the older I get as I've transitioned into a retirement situation.
For example, that portion of the CPI housing component (which is a significant % of the total CPI) related to rental/ownership is irrelevant to me --- my home is paid off. I don't care nor am impacted by the costs of housing. (Mathjak, don't beat me over the head, obviously the costs related to housing, e.g. RE taxes, utilities, etc. are pertinent --- but are separate components in the CPI).
A major refurb of my home (siding, insulation, boiler, propane stove, AC, windows, doors, etc.) just after I retired and we decided to stay put knocked down my energy costs by 45%. A major reduction in car use sans commuting means that gas prices are a minor budget item.
We've become gardeners and much of our veggie consumption is home grown. I purchase my heating oil and propane supplies on annual contracts (with upfront discounts for cash at lower rates than most pay). We buy beef and poultry in bulk (at much higher quality than you get in the supermarkets) for cash, again at prices much lower than CPI compilations reflect). All of these actions are not reflective of components in the CPI measurement for typical cost factors as derived in the BLS's computations. The result being that the CPI has only a marginal impact on my real life.
My summary point is that you can beat this CPI discussion to death without much being accomplished. No offense is intended to anyone --- I just found it odd that folks got so worked up about it. JMO
Last edited by Pilgrim21784; 11-20-2010 at 11:23 PM..
your are correct when you say it is what it is.. its just their way of measuring things and bares almost no resemblance to real life over time . its like looking in those circus mirrors.
the bad part is there are to many things linked to these indexes that folks depend on for their income adjustments and over time they have been eaten up alive by the real price increases .
we have been killed by reduced services and pay more and more taxes and by reduced sizes of packaging as well as the price increases. the last decade is an example of how skewed those indexs are are even in a low inflation climate compared to what most of our expenses cost us ..
there are very few who would say their expenses rose only 60% for anything energy related or only 30% for everything else not counting food over the last 10 years which has seen even way more of an increase..
Last edited by mathjak107; 11-21-2010 at 03:04 AM..
Mathjak107 - you are one of the most astute numbers people on CD. What puzzles me is why waste your time on it? CPI numbers are about as reliable (and useful) as the latest up and coming politician's promises (from whatever party) to "fix" the system.
Yes, it impacts a lot of people's income, mine included, but other than voting --- there isn't much you can do about it. I suggest that folks make a better use of their T&A by focusing on their personal expenses and how to control them, that's all. JMHO
i dont really spend much time on it, like you said they are what they are. it justs gets me though when others point out the accuracy of them or the fact they are not massaged like they are living in a bubble..
i actually suck at numbers ha ha the screen name is because my first name is matthew and my last starts with jak
Last edited by mathjak107; 11-21-2010 at 06:41 AM..
"Chuckle", I knew your screen name history but don't be shy about your numeric (and logical) abilities. I'm a former number cruncher by profession (accounting/finance background) and I don't waste my time reading posts from people that don't "compute" well. I read all your posts, they are worth reading.
Aside from some pro bono financial planning I do for folks, I long ago gave up trying to deal with ignorance. Its not worth my time. I have a somewhat merciless view that one is responsible for their own situation, education, fact verification, etc.
Many of our fellow citizens are quick to accept the latest disinformation as fact, prefer platitudes to reality and generally don't do their homework before forming opinions used to guide their life (and votes). In a way it depresses me, but not enough for me to pay much attention to it. Karma.
yep, everyone of us have a tendency to believe our own bull-sh%t.. we believe what we do ,right or wrong because our brains can only rationalize about what we know and can never put into an equation what we dont know.
thats why ill never say an outcome will happen because of my reasoning,thats just dumb to think that. only fools think they know whats happening next.. the only given so far is those that are dooms dayers have turned out wrong for over 100 years. those that invested in the markets,and beileved better times were coming when things looked soooo bad made alot of money over the decades . the dooms dayers may one day be right but im not betting the ranch on it.
I totally agree, and hopefully will be long dead before the doom & gloom folks have their day. In the meantime, you are absolutely correct --- it has been a profitable time to ignore the talking heads. I suspect it has always been so.
Fortunes where made during Germany's hyper inflation period, as one example. The salient point being that one must pay attention without the confusion of popular rhetoric and 'noise" distracting one's financial plans. Popular opinion isn't something I pay much attention to, and seriously believe that folks are better served in their personal life to focus on cost control planning as opposed to the "flavor of the day" issues.
Its nice when CPI adjustments go up but not really a huge issue going forward for me. Its easier for me to deal with real world cost issues which I can exert some impact on rather than worry about the income side, which is largely beyond my control. My cost versus income focus is at odds with most financial planning advice, but so far it has worked for me.
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