Ronald Reagan, in his 1980 campaign for president, updated Harry Truman’s useful definitions of two key economic terms.
“It’s a recession,” Truman had intoned, “when your neighbor loses his job. It’s a depression when you lose yours.”
To which The Gipper appended, entertainingly: “And recovery is when Jimmy Carter loses his.”
These articulations sprang to mind in pondering the variations of inflation measurements advanced by economists to determine whether price growth is “easing,” as the counterfeit chief executive would have one believe.
Should the focus be the “headline” Consumer Price Index? The one the Bureau of Labor Statistics describes as “a measure of the average change over time in the prices paid by urban consumers for a representative basket of consumer goods and services” (listed on the chart below)? Should the guide be a CPI subset referred to as “core inflation,” which excises “more volatile” food and energy prices? And how about the latest craze: “super core inflation?”
According to Fortune magazine, super core “does not have an established definition” but “refers to price measures that exclude sectors that economists feel distort the broader inflation figure.” Economists like Paul Krugman (yeah, we know; kind of like discussing “military intelligence”) surmise that super core leaves out not just food and energy but also housing.
But wait! Krugman ups the ante to “super-duper core inflation,” which also dumps used-car prices over the side. We kid you not.
Yet others suggest zeroing in only on wage increases, especially in services, and not consumer prices at all, as upward pressure on compensation supposedly shows up later in costs of goods.
Well, this pundit doesn’t know about you, but he’s throwing the red challenge flag and calling a loud “bull” on all these pseudo-analytical acrobatics.
To channel the two presidents’ take on economic statistics, there’s only one consideration that matters when it comes to defining inflation, and here we’ll slip into the first person:
What I’m paying for the stuff I buy.
Or don’t buy, as prices become not core, super core or even super-duper core, but downright hardcore – as in utterly obscene.
Why did the chicken really cross the road? To “egg-scape”(groan) blame for the sticker shock encountered when acquiring my daily breakfast staple (two, hard-boiled) suddenly requires me to “shell” out (double groan) $6.67 for 1.5 dozen.
Or store-brand popcorn popped numerous times a day (low-cal but filling with no salt nor butter): once $1.57 for 32 ounces, then overnight $1.98, now $2.26.
Cottage cheese (last thing consumed before bedtime): previously $1.79, these days $2.58.
Cheap espresso brick: $1.48 until it jumped like the proverbial bean, also overnight, to $1.98.
Everything in a favorite haunt, Dollar Tree: no longer a dollar, but $1.25. Oh, wait. Numerous items are $3.00 and $5.00. McDonald’s beloved “Dollar Menu?” Uh uh. “$1/$2/$3,” and see if there’s anything on it in the first category.
Property taxes, insurance and HOA fees driven skyward by puffed-up home values.
And need one even discuss fuel and electricity?
So why would economists and policymakers be dallying in new measures that don’t even have you and me at the center of their considerations?
Because CPI was, in the phrase popularized by Twain, a (expletive deleted) lie all along – or at best an abstraction and even more so, a distraction. The most important price is not of consumer goods, wages or services. It’s of dollars, as measured in how much each one will buy in the hands of real people and businesses.
Even Mr. Krugman must understand that the more the government reproduces Benjamins like a rabbit warren slipped fertility drugs, the less each one is worth. Until the entire nation is schlepping around wheelbarrows of worthless currency to buy a loaf of bread (if there is any), like Weimar or Zimbabwe.
Yet both the spending and the inflationary outcome – a dragon that had been largely slain since the Reagan Administration – are now revived for one reason: provide another set of tools of power and oppression.
The spending is to get citizenry and businesses alike hooked on federal largess. Inflation is another means of weakening the populace and private institutions as their labor and investment yields less and, in yet another spiral, they get all the more dependent on Uncle Sam and its cohort of crony capitalists.
The cynical, midterms-oriented pause in the upward price of fuel, occasioned by further manipulation of energy markets in the form of petroleum reserve releases, is only a stall in this brutal power play.
No matter the Fed’s efforts to run twice as fast – and come up with new fictions when it comes to measuring the real price of the dollar – there is no way for the central bankers even to stay in the same place when Jerome Powell’s exertions are swept under by a continued flood of Inflation Reduction Act and Omnibus(t) largess and excess.
Meanwhile, this correspondent will continue to define inflation as what it is: the loss of his dwindling dollars’ buying power. And relief, again paraphrasing The Great Communicator, as the prospect of another loss of power: Joe Biden’s.
Bob Maistros is a messaging and communications strategist, crisis specialist, and former political speechwriter. He can be reached at bob@rpmexecutive.com.
If you ever again trust a Govt Agency AGAIN – SHAME ON YOU
Like NASA, right?
Yes like NASA, remember when NASA said the primary function was Muslim outreach?
“It’s not really surprising that President Obama told NASA administrator Charles Bolden that his highest priority should be “to find a way to reach out to the Muslim world and engage much more with dominantly Muslim nations to help them feel good about their historic contribution to science”
Then we had to count on the Russians to get us to the space station!
Yup that type of government agency!
oddly, the author cites ALL the things that he spends his money on as indicative for inflation and then chastises those who want to a measure other than CPI.
He obviously has no clue how CPI is actually calculated. CPI is not indicative of inflation.
I just had to add a side note when talked of popcorn being low cal and not using salt and butter, is this guy still living in the 80s?
Time to come into the modern era, amigo.