Consumer Spending Up – It’s Inflation, Stupid

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Consumer Spending Up – It’s Inflation, Stupid: written by Tom Peranteau

I always cringe when I see a new government report on inflation.  Not only can you not trust the government to ever tell you anything truthful, but you never know just what metrics went into their numbers.

In a recent report released on August 18th of this year, the following statement was released:

“The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.5 percent in July on a seasonally adjusted basis, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.6 percent before seasonal adjustment.”

I would doubt that there is anyone living in this country that has not felt the ravages of inflation on the family budget.  As a business owner I can tell you that we also feel it at the office.  Not only has business slowed for all business owners, but inflation has also taken its toll there, too.  What is really irritation, though, is how the government skews numbers with some sort of mathematical dishonesty so they can appear to be improving the economy, when they are in fact doing everything in their power to further-wreck it.

So we look at the “all items index” and they give us an increase of 3.6% before seasonal adjustment.  Are you kidding me?  Prices in general are up closer to 50%, and in some cases have doubled at the supermarket, and they want us to believe that there has only been a 3.6% increase over all.  It reminds me of the old saying, “Who you gonna believe, me or your own eyes?”.

Then they tell us that consumer spending is up, and that is a good thing.  Of course spending is up because inflation has made our dollar worth less and we must spend more to live.  Consumer spending is not up because we’re all happy and blowing money that we have so much of.  Spending is up because the price of a loaf of bread has gone up.  The price of a gallon of gas has gone up.  The price of everything has gone up.

I doubt that we will ever be told the truth by the politicians in D.C.  We’re at the end of a food chain that is not designed with our well being in mind.  Perhaps the masses will wake up to that one day, but I have my doubts.  Until then, I guess I may end up seeing some of you in the food lines.

 

 

 

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  • A Supporter

    Here's a link to the current CPI report: http://www.bls.gov/news.release/cpi.nr0.htm

    It's not that inaccurate.  Fuel costs are way up. 

    Food costs are up 6%, but I think that the bulk of that increase followed the previous surge in fuel prices, over 12 months ago.  It was around a 10% increase in 2008 I think.  If you tack on a couple years of 6% increases, that works out to something like a 25% increase in food prices.  (Also, there's a trend in the supermarket where junk food is now cheaper than before, and fresh foods are way more expensive than before.  The basic cost of food is skyrocketing due to fuel costs, but there's enough of a profit margin in junk food that they can reduce prices to retain customers.  So, today, an orange costs almost a dollar, and a big sack of potato chips is $2.75.  In the past, the orange was 50 cents, and the chips were $4.)

    Other costs are rising around 4%.

    The CPI needs to have two calculations – a basket of typical goods, and another basket that reflects actual spending patterns.  People are exposed more to the food price increases, and less to the others, because they're not buying cars, not moving, etc.  We're also not seeing annual raises to keep up with inflation.  So this 3.6 inflation really feels way worse than before.

  • jk2001

    Here’s a link to the current CPI report:
    http://www.bls.gov/news.release/cpi.nr0.htm

    It’s not that inaccurate.  Fuel costs are way up. 

    Food costs are up 6%, but I think that the bulk of that increase followed the previous surge in fuel prices, over 12 months ago.  It was around a 10% increase in 2008 I think.  If you tack on a couple years of 6% increases, that works out to something like a 25% increase in food prices.  (Also, there’s a trend in the supermarket where junk food is now cheaper than before, and fresh foods are way more expensive than before.  The basic cost of food is skyrocketing due to fuel costs, but there’s enough of a profit margin in junk food that they can reduce prices to retain customers.  So, today, an orange costs almost a dollar, and a big sack of potato chips is $2.75.  In the past, the orange was 50 cents, and the chips were $4.)

    Other costs are rising around 4%.

    The CPI needs to have two calculations – a basket of typical goods, and another basket that reflects actual spending patterns.  People are exposed more to the food price increases, and less to the others, because they’re not buying cars, not moving, etc.  We’re also not seeing annual raises to keep up with inflation.  So this 3.6 inflation really feels way worse than before.