3.4% inflation is worst in 5 years

[4_TN_TITANS]

Here's a tidbit for those trying to convince everyone that economy is JUST FABULOUS....

by : Barbara Hagenbaugh

WASHINGTON -- The inflation rate hit its fastest pace in five years in 2005 as higher costs for energy, housing, education and medical care drove up prices.

The closely watched consumer price index rose 3.4% last year, up from a 3.3% increase in 2004 and the biggest gain since 2000, the Labor Department said.

Average weekly earnings for hourly employees were up 2.8% in December from a year before, suggesting that for many workers, income did not keep up with inflation last year.

"For most people, the purchasing power of their income went down," says Joel Naroff of Naroff Economic Advisors. "It raises some real questions about whether the consumer is going to be able to keep it up."

more.... http://www.principal.com/marketnews/news_template.htm?story=20060119/2006011934inflationisworstin5years.xml

[The Whiskey Priest]

1. Frist Chicken is coming home to roost

Just the start....damn tax cuts are going to swamp the middle-class, the poor and the disadvantaged is already under water.

[jackbourassa]

2. What is the growth rate?

Because you have to subtract inflation from the rate of growth and then you get the "real" rate of growth.

[unblock]

6. the numbers you have seen for gdp are probably "real" gdp

http://www.bea.gov/bea/dn/gdpchg.xls

go to the bottom for the latest gdp % change, both nominal and real.

nominal real
2005q1 7.0 3.8
2005q2 6.0 3.3
2005q3 7.6 4.1

[jackbourassa]

23. No way we're growing at a 7.6% nominal rate

No way on God's green earth.

[unblock]

28. it's not evenly distributed, but it's there

the energy and defense sectors are just rolling in money.
federal government expenditures are going through the roof for defense in particular.

note that it's not necessarily saying much for domestic purchase to be going up, say, 7% when government purchases are going up by 10%....

[MadHound]

3. But, but,

If you exclude energy and food costs, inflation only rose by 2.2%, so hey, it's really not that bad:eyes:

I always love how they have two figures, with and without energy and food. Like people can really exclude those costs. Just more BS and spin to try and fool the sheeple. Sadly, it works in some cases.

[JDPriestly]

5. For the elderly, food . medications and energy are the major costs.

Elderly on fixed incomes are feeling the pinch the worst. The unemployed are also suffering from the increases in costs for food, medications and energy and the decreases in incomes that we have now.

[MadHound]

15. I agree with you, but food and energy are vital to everybody.

And the higher those prices rise, especially energy prices, the quicker the economy is dragged down. It just infuriates me how the government tries to trivialize these two most important items. I've got a 52 mile round trip commute, and I would be up the proverbial creek without a paddle if I hadn't gone out and bought a very fuel efficient vehicle. I went out and picked up a Bajaj scooter, gets 100 mpg, goes 55-60 mph. That is the only thing that has saved my ass. Sadly, many people cannot afford to do such things, and are having to decide whether to eat, heat, or purchase their meds.

What a fucked up country we live in. This is what happens when free market, unregulated, crony capitalism rules the roost. And sadly, with our ever increasing national debt load, this isn't going to get better anytime soon, probably much much worse. We are spending 15% of this nation's annual GDP just to pay off the annual interest on our 8 trillion dollar debt. And we're not doing a damn thing to pay down the principle, in fact just the opposite, we're adding to it.

[JDPriestly]

25. How right you are!

And the odd thing is that if you put your money in a savings account, you barely get the inflation rate for your interest. Yet, supposedly Americans are in debt. You'd think if Americans are in debt that money available for loans would be in short supply. If we really are in a free market, wouldn't that (money for loans being in short supply) mean that the cost of borrowing (meaning the interest rates) would rise? I don't understand how it's possible that interest rates on savings are so low yet Americans are carrying so much debt. I realize this is a little off the topic, but my thoughts are moving from the squeeze between high inflation compared to low wage increases and the fact that capital isn't earning much either. I must add, stock market investments aren't making people that rich either, at least not mutual fund investments. And real estate values are starting to fall here in Los Angeles. Over the past few years, there were very few open houses on weekends. That was because houses were sold in bidding wars as soon as the for sale sign went up. Now houses are on the market for several months before they are sold. So real estate investments are not that great either right now. The economy sure doesn't look good to me.

[ewagner]

4. I think the books are cooked

and the rate is actually MUCH higher than 3.4%. I know only that:

Food prices have risen MUCH MORE than 4%
Energy prices have risen MUCH MORE than 4%

I can think of NOTHING that has DECREASED IN PRICE over the last five years....

I don't trust this administration's numbers in any way, shape or form.

[we can do it]

8. You are Right - They Cook the Books On EVERYTHING -

They changed how unemployment is calculated, how inflation is calculated......

[elehhhhna]

11. FOOD & ENERGY are NOT included in the calculations --

"too volatile". I am not making this up.

[Rainscents]

12. Bingo!

[Silverhair]

14. Electronic items continue to tumble in price.

Two years ago I bought a laptop for my daughter in college. Now I can get a better on for half the price. Digital cameras and DVD camcorders have dropped big time.

[mtnsnake]

7. Yeah, but the bushites are claiming such low unemployment numbers

The economy is just zooming, according to them. Assholes.

[seabeyond]

9. since they lie on everything, and literally change numbers

i would suggest it is probably higher, if they are showing this number. i cannot believe a single thing this govt puts out.

[hatrack]

10. There's no inflation - prices are just higher, that's all!

Now, don't you feel all silly and alarmist?

:sarcasm:

[elehhhhna]

19. ...and products are getting smaller.

[Silverhair]

13. 3.4% is rather mild inflation. I remember double-digit inflation.

In fact, to have inflation of only 3.4% is a bragging point.

[ProfessorGAC]

16. No It's Not

While you're right about double digit inflation from 1975 to 1981, you have to keep in mind that this is only the CPI. The CPI doesn't include food, direct energy, medical, housing, or owned transportation. Direct energy costs alone added almost 2% to cost of living at the median household income. So, inflation is actually worse than that. But, it's far worse than the last several years, even on CPI. When you do a TOTAL INFLATION calculation, it's worse than any point since 1989.
The Professor

[papau]

18. are you referring to "Core" numbers? - the 3.4% is a

year over year number (core inflation went up "only" 2.2%). There are 8 major categories of items considered in the CPI, with roughly 200 total selections (the major groups are listed with a few selections from each).

FOOD AND BEVERAGES (breakfast cereal, milk, coffee, chicken, wine, service meals and snacks)
HOUSING (rent of primary residence, owners' equivalent rent, fuel oil, bedroom furniture)
APPAREL (men's shirts and sweaters, women's dresses, jewelry)
TRANSPORTATION (new vehicles, airline fares, gasoline, motor vehicle insurance)
MEDICAL CARE (prescription drugs and medical supplies, physicians' services, eyeglasses and eye care, hospital services)
RECREATION (televisions, pets and pet products, sports equipment, admissions)
EDUCATION AND COMMUNICATION (college tuition, postage, telephone services, computer software and accessories)
OTHER GOODS AND SERVICES (tobacco and smoking products, haircuts and other personal services, funeral expenses)

Now I agree that the quality improvement reductions to the inflation calculation make the "CPI" low by 1 to 2 % - and it's closer to 2% - but in theory the core plus non-core equals total inflation which in turn does capture food and energy.

[ProfessorGAC]

21. My Numbers Differ From Their Numbers, Then

My core CPI is 3.13%. My total inflation value, based upon a population weighted average and regional pricing shifts, is over 5%.
The Professor

[papau]

26. Are you using the same quality improvement discounts - or are you

using the way the rest of the world measures inflation ?? :-)

[ProfessorGAC]

27. No I Don't Measure Inflation The Conventional Way

I haven't for 20+ years. The point of my measure is to understand the actual impact on cost of living based upon regional pricing differences and population densities, so the true impact measured on a consumer basis. In addition, i use an indexing against the real wages, again regional adjusted, and weighted to the population density, to determine the impact of inflation on overall cost of living and quality of life.

I've been teaching this technique for over 18 years, so there are economists who use it. Nobody in gov't is using it though. The paper on this was published, peer reviewed, in JUSE, in 1987.

The Professor

[papau]

29. Thanks - your paper is now on my to read list! - :-)

Is there a website that has the resulting CPI chained numbers so as to do a historical inflation since some date to some date calculation?

[ProfessorGAC]

30. I Use The Website of SAUS

The Statistical Abstract Of The United States has been available on-line for several years now, but i'm pretty sure that it's a subscription site. I use the library at the university nearest my home. But, the SAUS book is available in just about every library in the country. I think the book goes back 10 years, then provide 10 year aggregates for about 4 or 5 more decades. I have the 2004 copy at home, but i haven't looked through it for probably a year, so i'm not 100% sure.

I hope you can find JUSE. It's not the widest circulation journal. Most college libraries have it though.
The Professor

[havocmom]

22. 3.4% inflation rate is the cooked number. The CEOs are running things

and we know how they love well cooked numbers. More interested in selling stock than goods and services ... they are trying to sell the myth that things are grand. 3.4% inflation rate includes a lot of things more and more people don't have the discretionary income to take advantage of and excludes things which are 'too volatile' but even the poor have to purchase, like, oh, fuel 'n stuff. And, since it takes fuel to grow & transport food...

3.4% IS a lovely figure. It just isn't the actual inflation rate. It is fiction posing as reality just like Intelligent Design is fundamental religious doctrine posing as science! They take the items where prices are stable and reject items where prices are volatile to cook their books. It's the volatile stuff that really matters.

[4_TN_TITANS]

17. It can't be accurate...

my family has been in "survival mode" for years eventhough me and the wife both have decent jobs. I can literally feel our buying power being sucked out of us. Somebody remarked the other day that grocery prices were higher. I haven't noticed item prices higher, but we are buying far more groceries because eating out is less and less affordable. We've only eaten out as a family at a good restaurant once in the last three weeks.

Honestly, I prefer homecooking now, unless it's something like good Chinese food that I can't replicate....

[papau]

20. I'm noticed the large increase in Food prices - but the Bush folks

say you are getting better quality so part of the increase in prices does not count.

It is hard to believe government numbers post Bush.

[newportdadde]

24. Wait just exclude energy and food! and that computer is cheaper!

Its all good, lets all go buy some stock. Note to business: If food and gas go gangbusters it DESTROYS extra income we use to buy your China made junk.

The fact I can get a more powerful computer for less money means jack shit if all my computer money is going to gas and freakin over priced food like milk.

I have a good job and my wife and I just look at each other and say "WTF happened to the money?". I haven't bought and 'toys' in years. Between gas/food and god damn healthcare premiums ripping me apart any cola just blows away like dust.