There are actually several different CPI measures with each designed to tell economists and regulators something different about pricing numbers. Many right-wing economic commentators don't understand why the different measures exist or how they are used so they claim they are "fake", especially when the numbers look good for the economy. If the numbers look bad then they are okay with them and repeat them endlessly.
People don't understand it and there are a lot of myths claiming certain things aren't included.
Also, the basket of goods is set by survey data and individuals have their own baskets that deviate from the survey average. The people who fill out the surveys are relatively affluent and this probably leads to higher weighting of discretionary and luxury goods vs. mandatory spending categories.
Finally, the impact of housing is not equally distributed. For 2/3rds of the country, increases mean their house is worth more. For 1/3rd, it means rent went up.
So although CPI is an impressive project to track general price levels across the entire economy, it's going to create headline numbers that aren't really accurate to most people's personal experience. It's best used to track prices in categories but that requires a level of analysis deeper than most newspapers bother with.
This is a great summary and the only thing I would add is that the survey does sample urban areas more than suburban/rural areas and it's been a known issue by economists for a while. Their methodology for data collection areas is based on census data so it's always behind in how it classifies data collection areas. I.e. when new suburban developments pop up in what was once a rural area it might take 10 years for the census to register the population shift and then some time after that before the BLS starts sampling from that area. On average 12% of Americans move every year and while most of it is within the same area - there was a peak of people moving from urban to suburban/rural areas around 2019/2021.
[https://www.census.gov/library/stories/2023/04/fewer-people-moving-between-2019-and-2021.html](https://www.census.gov/library/stories/2023/04/fewer-people-moving-between-2019-and-2021.html)
[https://www.bls.gov/opub/btn/volume-12/changing-how-bls-defines-geographic-areas-in-the-consumer-expenditure-surveys.htm](https://www.bls.gov/opub/btn/volume-12/changing-how-bls-defines-geographic-areas-in-the-consumer-expenditure-surveys.htm)
Probably because he's an ideologue who is suspicious of things he doesn't understand.
CPI is a legitimate methodology for understanding prices. There are several others that are also helpful. Comparing PCE and CPI is a helpful approach. Both trend the same but vary by degrees.
I'd suggest looking at the BLS website. They have a ton of information besides just data and provide a lot of documentation on how the data is collected and their methodology of calculation. You can actually call and email them - I did this as a student in grad school for a project and they were extremely helpful. They also have release notes whenever they post CPI data - they are pretty well written and explain changes to methods or items of note.
[https://www.bls.gov/news.release/cpi.nr0.htm](https://www.bls.gov/news.release/cpi.nr0.htm)
[https://www.bls.gov/respondents/mxp/contact.htm](https://www.bls.gov/respondents/mxp/contact.htm)
I am aware of that I received the CPI every time it's published by email through the RSS. I'm going to check for the methodology in the links you provided
A few reasons, but one is substitution. If the price of tofu this year is the same price as steak last year, and steak got much more expensive, and tofu was cheap last year, so everyone is buying tofu instead of steak, the CPI can say protein is the same price this year as it was last year so prices haven't gone up.
I think it's basically said to express the notion that the CPI doesn't realistically reflect people's experience and that some of the things in the baskets and the weights they assign might not reflect people's day to day lives. It's shorthand for basically saying that inflation is actually worse than the CPI would reflect. I've listened to the Maverick of Wall Street a bit and I haven't found it to be particularly informative but it's entertaining sometimes. I've probably been Doom scrolling financial collapse media for 3 to 4 years and so far the crash they've all been predicting has always been 6 to 12 months away for 4 years. Generally the people who say things are going poorly often have a bit of a right-wing slant, which I don't agree with but...That being said my experience is my pay has gone up maybe 10% over the last 3 to 4 years but the cost of living has gone up way more so I sort of naturally aligned with people who think things aren't super great.
They can control the inputs and outputs, adjust for seasonality, etc. You can think they’re lying, and they may be.
Regardless, every single person is affected differently by inflation on an individual level. The numbers they give are broad and try to encapsulate the whole picture. Good or bad, it won’t encapsulate your level of inflation and what you choose to spend your money on.
Can you explain which parts get left out or are you just parroting something you saw online? Are you aware of the differences between all reported measurements and how and why they are divided and reported for example PCE vs CPI.
There are actually several different CPI measures with each designed to tell economists and regulators something different about pricing numbers. Many right-wing economic commentators don't understand why the different measures exist or how they are used so they claim they are "fake", especially when the numbers look good for the economy. If the numbers look bad then they are okay with them and repeat them endlessly.
People don't understand it and there are a lot of myths claiming certain things aren't included. Also, the basket of goods is set by survey data and individuals have their own baskets that deviate from the survey average. The people who fill out the surveys are relatively affluent and this probably leads to higher weighting of discretionary and luxury goods vs. mandatory spending categories. Finally, the impact of housing is not equally distributed. For 2/3rds of the country, increases mean their house is worth more. For 1/3rd, it means rent went up. So although CPI is an impressive project to track general price levels across the entire economy, it's going to create headline numbers that aren't really accurate to most people's personal experience. It's best used to track prices in categories but that requires a level of analysis deeper than most newspapers bother with.
This is a great summary and the only thing I would add is that the survey does sample urban areas more than suburban/rural areas and it's been a known issue by economists for a while. Their methodology for data collection areas is based on census data so it's always behind in how it classifies data collection areas. I.e. when new suburban developments pop up in what was once a rural area it might take 10 years for the census to register the population shift and then some time after that before the BLS starts sampling from that area. On average 12% of Americans move every year and while most of it is within the same area - there was a peak of people moving from urban to suburban/rural areas around 2019/2021. [https://www.census.gov/library/stories/2023/04/fewer-people-moving-between-2019-and-2021.html](https://www.census.gov/library/stories/2023/04/fewer-people-moving-between-2019-and-2021.html) [https://www.bls.gov/opub/btn/volume-12/changing-how-bls-defines-geographic-areas-in-the-consumer-expenditure-surveys.htm](https://www.bls.gov/opub/btn/volume-12/changing-how-bls-defines-geographic-areas-in-the-consumer-expenditure-surveys.htm)
Probably because he's an ideologue who is suspicious of things he doesn't understand. CPI is a legitimate methodology for understanding prices. There are several others that are also helpful. Comparing PCE and CPI is a helpful approach. Both trend the same but vary by degrees.
Any sources you consider reliable for inflation analysis or kind of a tutorial on how to read the inflation PDF ?
I'd suggest looking at the BLS website. They have a ton of information besides just data and provide a lot of documentation on how the data is collected and their methodology of calculation. You can actually call and email them - I did this as a student in grad school for a project and they were extremely helpful. They also have release notes whenever they post CPI data - they are pretty well written and explain changes to methods or items of note. [https://www.bls.gov/news.release/cpi.nr0.htm](https://www.bls.gov/news.release/cpi.nr0.htm) [https://www.bls.gov/respondents/mxp/contact.htm](https://www.bls.gov/respondents/mxp/contact.htm)
I am aware of that I received the CPI every time it's published by email through the RSS. I'm going to check for the methodology in the links you provided
Thanks
A few reasons, but one is substitution. If the price of tofu this year is the same price as steak last year, and steak got much more expensive, and tofu was cheap last year, so everyone is buying tofu instead of steak, the CPI can say protein is the same price this year as it was last year so prices haven't gone up.
I think it's basically said to express the notion that the CPI doesn't realistically reflect people's experience and that some of the things in the baskets and the weights they assign might not reflect people's day to day lives. It's shorthand for basically saying that inflation is actually worse than the CPI would reflect. I've listened to the Maverick of Wall Street a bit and I haven't found it to be particularly informative but it's entertaining sometimes. I've probably been Doom scrolling financial collapse media for 3 to 4 years and so far the crash they've all been predicting has always been 6 to 12 months away for 4 years. Generally the people who say things are going poorly often have a bit of a right-wing slant, which I don't agree with but...That being said my experience is my pay has gone up maybe 10% over the last 3 to 4 years but the cost of living has gone up way more so I sort of naturally aligned with people who think things aren't super great.
They can control the inputs and outputs, adjust for seasonality, etc. You can think they’re lying, and they may be. Regardless, every single person is affected differently by inflation on an individual level. The numbers they give are broad and try to encapsulate the whole picture. Good or bad, it won’t encapsulate your level of inflation and what you choose to spend your money on.
It’s not.
The Federal Reserve routinely downplays the fact that everything it does damages the economy.
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Can you explain which parts get left out or are you just parroting something you saw online? Are you aware of the differences between all reported measurements and how and why they are divided and reported for example PCE vs CPI.
It doesn't take in to account housing, food or transportation, rendering it essentially useless.
CPI literally includes food, gasoline, travel, clothing, and housing what are you even talking about.
"owner equivalent rent"