The 2Q2007 GDP numbers just came out (+3.4%), just as expected. Analysts also rushed to hail the PCE price index rise of "only" +1.4% - minus food and fuel, of course.
I have had enough of this absolute "minus food and fuel" baloney. So here is a chart of the full PCE inflation, along with the measure minus food+fuel. Reach your own conclusions, but keep in mind that according to the same release, a full 21.2% of all personal consumption expenditures are made for food, fuel and transportation services. Try minusing those from your real life....
I have had enough of this absolute "minus food and fuel" baloney. So here is a chart of the full PCE inflation, along with the measure minus food+fuel. Reach your own conclusions, but keep in mind that according to the same release, a full 21.2% of all personal consumption expenditures are made for food, fuel and transportation services. Try minusing those from your real life....
Oh, and something else: Market-based PCE inflation, i.e. excluding items that the government says you get for "free" (like getting money out of an ATM without incurring a charge) rose by 4.6%, the highest in at least 15 quarters.
Thanks for your blogging efforts. Very much on the mark here as in other posts. Though I fear the real PCE deflator/CPI-U numbers are higher still than you've alluded to.
ReplyDeleteJohn Williams' Shadow Gov't Statistics http://www.shadowstats.com/cgi-bin/sgs?
carries a reconstructed, pre-Clinton era CPI measure graphically displayed along with current measures. This is not pointing a finger at either political party, they are both guilty of managing economics stats for political reasons.
Thank goodness for all the 5th Estate Alternative Media Truth Tellers. And again, keep up the efforts, they are appreciated.
Thank you for your kind words. There is little question that "real" inflation as felt by the average wage earner is higher than reported. There are many reasons for this, including hedonic pricing, income/spending patterns, etc.
ReplyDeleteMy point here was that we should stop fooling ourselves with "minus food and fuel" figures and start focusing on the fact that it is precisely the food and fuel prices that are now rising very fast. I could even say that this is the new "structural" inflation.
Regards