US consumers remain unimpressed with this progress, however, because they remember what they were paying for things pre-pandemic. Used car prices are 34% higher, food prices are 26% higher and rent prices are 22% higher than in January 2020, according to our calculations using PCE data.
While these are some of the more extreme examples of recent price increases, the average basket of goods and services that most Americans buy in any given month is 17% more expensive than four years ago.
Americans are right now at some of the best economic times, so that’s surprising
There is a disconnect between the statistics and reality. I am not sure where, but I suspect inflation is not being calculated correctly. It may be that lower cost items rose at a higher rate, so even though it averages out, it’s harder to reduce spending. 17% doesn’t seem to match the numbers I’ve seen for take out and home prices for example.
At the end of the day, it doesn’t matter what’s on a chart it matters how many things people had to choose to not buy or do because they couldn’t afford it.
Didn’t they just adjust the whole inflation index again to not count a bunch of significant things? It’s a joke.
Same with unemployment. It only counts “able individuals who are actively searching for a job”. A lot of people aren’t included in those numbers when they should be.
Rent/housing is like a third of CPI, it’s already being taken into account. Remember, CPI already talked into account these numbers, including higher food costs. But it also takes into account that energy costs did not increase as quickly. Even if some things went up 30%, if other things go up 10% the average can’t possibly be 30%
Also consumer spending is very strong in America right now, so even if some people can’t afford things, other people are way outspending them
The CPI only takes rental prices into account, not home purchases or rental values. Additionally, it only captures active rentals, not asking prices, meaning that it has significant lag and is a poor indicator for trends in rental prices.
Food goes up 20%, Consumer electronics go down 20% and they’ll call it zero inflation. Not an exact example but an illustration of why things dont feel right. The things you have to buy most often are rising faster than the luxuries. Education, Healthcare, Housing it’s a similar story there.
Correction: Food goes up 20%, housing prices go up 80%, Consumer electronics go down 20% and they’ll call it negative inflation. The things most important to people and their biological survival are intentionally not part of the CPI so, they get ignored in most inflation reports.
EDIT: To be clear, the CPI tracks “in-place” or active rent paid by tenants plus utilities (and subsidies, where applicable). It does not track current asking prices or purchase price as it considers purchasing a home to be an investment. This means that it is a very poor way of measuring the housing situation.
There is a disconnect between the statistics and reality.
No, there is a disconnect between statistics and perception.
The statistics are reality.
That is a shocking take in my opinion, one that borders on delusional. Statistics are the result of specific metrics collected by people who chose what specific data points to collect, the methods of collecting those metrics and chose the methods of presenting the data. They can reveal interesting aspects of reality that aren’t otherwise obvious and can depict a fairly accurate representation of reality as a whole if they are created in ernest using sound data collection techniques, but I’m pretty sure that the most qualified data scientists will disagree with the statement that “statistics are reality”. Especially if anyone in control of any part of that process has significant motivation for them to depict something specific.
Statistics are only meaningful when you put them into context of their intent, limitations and error rate.
Lies, damn lies, and statistics
And even if the statistics hold true in aggregate, it’s not the full picture and can’t accurately describe or predict individual experiences. Perception is anecdotal, so it is not a perfect depiction of reality either. But if perception does not match the data, it’s an indicator that the data might be suspect.
