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So many run on old wives tales about food and energy being excluded. There are some index's that do exclude it but not the main ones used to judge overall or cola adjustments
Correct. The headline CPI numbers are those based on "All Items." BLS produces a number of sub-indices because scholars and researchers are interested in them and it's easier for BLS to do the math once than for all those other people to try to do it perhaps thousands of times.
So-called "core inflation" for instance is equal to All Items less Food and Energy. These two categories have high volatility. Core inflation is thought by many to provide a better indicator of inflationary potential in the economy. But of course, FOX News-style deceit-mongers will bellow that the government is trying to trick people by removing food and energy data from the CPI. It's both laughable and disastrous that so many people actually fall for that sort of rubbish.
My cost of living is way up this year. I am about to go to Hawaii for 3 weeks instead of the 2 weeks last year. I am having my roof rebuilt and reshingled. I have taken up archery again. I spent money on a bow, arrows, miscellaneous and lessons. My utility rates and bills have increased this past year. My wife has enrolled in the local U for a special 18 month program. I need to replace the AGM batteries in my camper. The cost will be close to $1000 which is twice what I paid 7 years ago. This is my first year for RMDs so my income taxes are increasing from virtually nothing to several thousand dollars.
Who has low inflation? My costs are way, way up for last year and for this year as well.
You adding a lot of things to your bills is not inflation . It is you spending more for other things not in the budget last year. Sure some things have gone up but other things have not. Holy cow i couldn't believe how beef prices fell off a cliff. I paid 1/2 of what i did for eggs recently too.
By the same token my wife going on medicare cut our healthcare costs by thousands.
Her supplemental insurance even pays 480 a year for her gym membership.
Second year in a row no rent increases here in nyc
So clearly our personal cost of living has little to do with the price index changes of the cpi year over year
Last edited by mathjak107; 02-19-2017 at 07:11 AM..
You adding a lot of things to your bills is not inflation.
Exactly. The cost-of-living (at least as estimated by the CPI) essentially deals with price changes. Increases in expenditures might eventually have some tiny effect on category weights within the CPI, but otherwise, they are a horse of a different color.
My neighbor next door is 62 years old and since she has an income less than 50k and the rent makes up 1/3 of her income she is exempt from future rent hikes.
She does not own a car so energy costs are irrelevant .
She eats the cheapest foods too.
there is a definite difference in her personal cost of living and mine and the effects of inflation and we live next door .
Seniors can be far less sensitive to inflation than those raising family's.
Study' show as seniors age they tend to spend less on many things as well as do less. Much of what they no longer spend on helps cover the inflation in what they do spend on.
Most seniors will not feel inflation at the same levels as someone raising a family
Last edited by mathjak107; 02-19-2017 at 08:01 AM..
BLS has for some years now been preparing the CPI-E which is specially weighted to the market basket of those 62 and over. There are still bugs to be ironed out in it, but to this point, CPI-E has shown an only slightly higher COL for senors, most of that associated with housing and medical care costs, categories where inflation rates have been falling in comparison to overall rates over more recent years.
Seniors tend to spend less on transportation, education, food, and apparel than other cohorts, but nearly the same amounts on recreation.
But it does not consider what a senior is no longer buying so there inflation tends to go down until much older when healthcare rises. Study's show far less inflation adjusting is needed than the calculators figure because they figure yearly adjustments. The mid range of retirement tends to need very little.
We tend to spend smile shaped . We spend more early on in retirement , then it falls off a cliff for a while . Then spikes again near 80
Last edited by mathjak107; 02-19-2017 at 08:33 AM..
All of those are in fact included in the CPI and we still have low inflation.
Their inflation is mitigated using various statistical and sampling methods. Greenspan admitted nearly ten years ago that the CPI was underestimating inflation. He attempted to blame it for the Fed missing the bubble, even though he claimed that they were making decisions based on the GDP price deflator. They don't even use real market prices for real estate and automobiles. Also, the core CPI almost always falls below the broader CPI measure. The official explanation for using the core inflation measures is that they smooth out fluctuations, but that's not how they've behaved historically.
Quote:
Originally Posted by Pub-911
In the real world, markets go up and markets go down, but bubbles are extremely rare.
They're very common when there is more than 2 trillion dollars being printed by the central banks. What's extremely rare is global central banking policy of the last 8 years.
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