r/Economics • u/Technical_Ostrich_47 • 14h ago
News US inflation rises more than expected ahead of midterm elections (3.7%)
https://www.bbc.com/news/articles/cwy8lx3pg4k2o520
u/082426grateful 14h ago
I work in the 401k administration business. The amount of “hardship” distributions being requested right now by those actively employed is pretty concerning. I don’t deal much with IRA’s of people that are retired or not working, so no comment on how that’s going.
People are feeling the crush now of the rise in costs. Denial of this is simply political pandering or gaslighting your fellow Americans.
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u/Special-Reaction2029 14h ago
And yet the current admin/congress is still polling within a few percentage points of the opposition.
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u/AliveJohnnyFive 12h ago
Things have to get much much worse before we get a new FDR. Much worse.
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u/spunkychickpea 11h ago
I sincerely doubt we will get another FDR. The oligarchs hated the first one enough that they’ll do anything to prevent another one.
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u/Cdub7791 9h ago
They nearly attempted to coup the first one, so you're right. https://en.wikipedia.org/wiki/Business_Plot
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u/MTS122917 11h ago
No kidding, they took a lot of notes since then and have captured the media and ensured that their money allows them to have disproportionate political speech. The party system in itself is a great mechanism for allowing oligarchs to gatekeep by adding another layer of hierarchy where the party itself sees the ability of a candidate to fundraise as their key value.
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u/bchertel 12h ago
We’re not quite at Hooverville yet
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u/082426grateful 12h ago
But, we seem intent, collectively, on allowing society to decay to that level before we take action.
Always reactionary. Never pro-active. Always procrastinating, as long as the top seats are getting theirs.
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u/Gaius__Of__The_Julii 11h ago
Nobody can be a new FDR. This country is broke. We will need a total reset first.
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u/Miserable_Chapter252 10h ago
This is because there is no one to galvanize the Dems yet. I guess we'll see who rises after the midterms.
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u/Special-Reaction2029 9h ago
Talarico, El-Sayed, and Ossoff seem to be the highlights so far.
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u/thewimsey 4h ago
El-Sayed is polling well below where he should be (although still well enough to win).
He's not galvanizing the Dems; he's at +3 when the generic D is at +8.
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u/WowIfOnly 7h ago
That's basically what happens when domestic terror organizations like Fox News and Meta are permitted to literally lie and endorse blatant misinformation every single day to the US populace unchecked in favor of only Republicans.
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u/stevez_86 9h ago
Investing part of my annual raise of 4% is the only way to not see myself as taking a paycut. 4% basically means no raise after inflation is considered. Putting 2% of the raise into the 401(k) makes that money worth more when I need it. Except that the economy is getting bad and the 401(k) is hardly growing right now. But it is still better than having cash that is evaporating.
They are betting that there will be a ton of this generation or retirees' retirement accounts will be left over when they die. If that happens people that are beneficiaries can roll the funds into their own 401(k)'s. So any amount that can be saved now is even more valuable.
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u/energeticquasar 8h ago
How is your 401k allocated if it is hardly growing? The S&P 500 is up 14% since the beginning of the year. My target 2055 fund, which has more conservative allocations is up 5%.
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u/stevez_86 7h ago
It is, just not as much in the past quarter as before. It is set to be a little more aggressive. I enrolled in the professional management program because I don't want to have to be the one reacting.
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u/YouWereBrained 14h ago edited 13h ago
Do they keep statistics on this? I’d like to know, from an industry standpoint, how widespread it is. Would give an idea of how much debt and frivolous spending there might be.
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u/RIP_Soulja_Slim 12h ago
Fidelity releases a report with their internal data annually, hardships have definitely increased post covid - from around 3% in 2019 to 6% last year.
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u/thewimsey 4h ago
But surely most of that is due to the expanded availability of hardship distributions based on the 2018 change in law.
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u/082426grateful 14h ago
I have no doubt that consumer debt and lack of smart budgeting has a part to play in it. No question.
Americans just do what they see other Americans do, and they emulate the actions of their government and political leaders.
This is where Economics and Politics overlap with one another.
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u/jussyjus 13h ago
Social media has baked FOMO into everyday life. People overspend but I don’t blame them.
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u/SilencedObserver 4h ago
gaslighting your fellow Americans.
Americans are no longer our fellows.
You can stop this, but you choose not to.
Do the thing.
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u/BillionDollarBalls 3h ago
Was doing a pros and cons about doing this to pay off my credit card debt.
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u/FreezingTemps 12h ago
I’m 41. This shit is getting out of control. It’s getting to the point where I am living like I am 21 years old again as far as financial flexibility. It doesn’t matter if I’m buying food, clothes, experiences, EVERYTHING has went up across the board, including medical insurance rates and yet employers aren’t giving annual raises.
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u/BillionDollarBalls 3h ago
Im 31. I feel like I have less money than when I was an absolute party monster in my early 20s. Ive been sober for 7 years.
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u/Unique-Egg-461 10h ago
Sorry i keep reading these article of "worse than expected"
what the hell was expected? Because laymen can see that shits fucked right now. Sure our wages are going up but it isn't close to outpacing the price of shit now a days
At the moment, food inflation remains subdued. It was flat over the month of September, and was 2.5% across the year.
I don't believe this for a second. My wife and I did an indepth budget because we just moved two months ago and we've seen prices jump throughout July, August, and September
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u/214ObstructedReverie 10h ago
Sure our wages are going up
Real average hourly earnings last month were down 0.5 percent from August.
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u/No_Plenty5526 8h ago
The only reason my wage has "gone up" is because I got a second job 🫠
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u/BillionDollarBalls 3h ago
Literally having to look for a 2nd job because apparently trying to land a better job to further my career is like asking to be the fucking CEO. Entry-level/junior level having 4 or more interviews is absolute horseshit.
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u/eye_of_the_sloth 9h ago
its like they fully removed the fuel cost increases across the board from their pretty little cart in fairytale land.
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u/Which_Drop_5877 7h ago
This is inelastic demand in action, last time we seen this was 1967. Typically inflation rate drops when cost of borrowing goes up.
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u/Extension-Finance179 14h ago
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u/frankie_donkiebrains 14h ago
If that's what they are releasing then it's worse than that, holy cripes.
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u/thefastslow 14h ago
Have you looked at the PPI? That's going to get passed along eventually.
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u/ICLazeru 14h ago
It's probably accurate according to the way they measure it, but it's a matter of knowing how it is measured and how that effects individuals.
Fuel and food are not included in every measurement, for example.
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u/thewimsey 4h ago
They are included in the CPI, which is what was just released.
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u/Hail_Zeus 14h ago
I ate at Taco Bell yesterday. I got Crunchwrap supreme, Mexican pizza and large fry. It was 19 fucking dollars. In what world is Taco Bell worth $19?!?!
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u/BrogenKlippen 13h ago
Every single day people prove that demand for bullshit like Taco Bell is much more inelastic than I ever thought.
Dude pull out of the drive thru. Don’t pay $20 for a shitty meal from Taco Bell.
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u/RIP_Soulja_Slim 12h ago
Yah I posted some numbers below but this ain't inflation anymore, it's straight inelastic demand. Their price increases far outpace fast food as a category, dining as a category, and inflation broadly. This is just good ol supply and demand, they have a supply of tacos, moderately buzzed people have the demand.
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u/funkymonk44 10h ago
That's what I'm saying. I no longer have sympathy for anyone that continues to pay these prices. I haven't eaten any fast food besides chick fil a once prices got out of control.
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u/the_new_hunter_s 12h ago
For 20 bucks I shouldn’t have to pull out
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u/AlcibiadesTheCat 11h ago
Spend the money you would have spent on Plan B on me instead, daddy-o
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u/Future311 13h ago
Taco Bell has a weird pricing strategy. If you buy single items like you did they're like $8 each, which is insane. But you can get a ton of food in one of their boxes for like $7.
It makes no sense. I guess they're just gouging the customers like you who want those specific items, but they still want something on the menu for the broke people
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u/getwhirleddotcom 12h ago
Not sure what’s weird about it. Seems to be working as evidenced by OP.
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u/RIP_Soulja_Slim 12h ago
Taco Bell's one weird trick; step 1: neurolinguistic programming for 20 years conditioning us to want it after a few drinks. Step 2: Print cash.
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u/AlcibiadesTheCat 11h ago
I dunno about that, I'm pretty hard-wired to want Waffle House after a few drinks.
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u/RIP_Soulja_Slim 11h ago
There's few things that hit better than their bullshit cheesesteak and eggs with an extra egg, chili on the hash browns, and a massive sweet tea when the hour is late.
Although I'm spoiled with a fair amount of great local 24 hour food spots by me as well.
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u/Hail_Zeus 12h ago
The place was empty at lunch time. Seems like their pricing strategy is working for a lot of people… I know I won’t be back
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u/Scrandon 11h ago
Dude, they have $3 burritos I CA where their minimum wage is $20. Maybe look at the prices when you’re ordering?
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u/SituationalPenguin 13h ago
All fast food is expensive. I live in Wisconsin and two McDonald’s meals are around $30.
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u/Hail_Zeus 12h ago
$30 for two at McDonalds is insane! It’s been years since I’ve eaten at fast food. Only reason I went yesterday was due to a very long shift at work. I won’t make that mistake again.
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u/chasew90 14h ago
I pine for the days of the $.59, $.79, and $.99 value menus. Tacos and burritos galore, you could live like a king for pennies.
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u/thewimsey 4h ago
I'm not sure that kings subsisted on 79c bean-and-cheese burritos. But I did.
The advanced move was to get extra onions!
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u/qualityinnbedbugs 13h ago
I tell my son when it costs $20 for me and him at Taco Bell, that in college $20 could easily feed me and 4 of my fat drunk friends at 2am
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u/RIP_Soulja_Slim 12h ago
I know we all went to college at different times but dude I think a grilled stuft steak burrito used to be like $3.50 or something. If they brought that shit back now they'd be charging $12 easily.
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u/popsicle_of_meat 9h ago
And at $12 I'd rather go to Chipotle or Qdoba where it's only like $10-11. Hell, even at $8-9 for taco bell burrito I'd rather go to Chipotle.
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u/Empty-Presentation68 13h ago
And the quality of food was better than what it is today surprisingly enough.
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u/Chronochrome 3h ago
They definitely changed something about the beef. It used to be much more flavorful.
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u/HauntingPlankton7189 11h ago edited 10h ago
Yup. Lived across the street from a TBell in college. It was cheaper for us to eat there than to go get groceries. 2 Cheesy Double Beef Burritos for $2 was impossible to beat.
Edit:
These were actually 89 cents back then. Yikes
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u/HodlStacker 8h ago
There was a place near where I went to college that, in the mid 2010s, for $20 4-6 of us could get a massive stack of nachos and probably have enough left over for each of us to have a snack/small meal later. And we were all pretty good size dudes.
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u/GuelphEastEndGhetto 14h ago
It’s worth what people will pay.
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u/RIP_Soulja_Slim 13h ago
It's true. General 10 year inflation is about 31%, specific to dining away from home it's around 50%, on average fast food has outpaced general dining increases and sits around 60% total inflation across the last decade.
Taco bell is over 80% total inflation in that timeframe. Significantly outpacing most other fast food chains.
But, unlike McDonalds who recently said they got too aggressive with price hikes and were dialing some menu prices back, Taco Bell continues to see same store growth that's around 7-10% lol.
People keep buying that shit, they're gonna keep raising the prices. That's not really inflation in the economic sense anymore, it's a single company understanding that demand for their product is inelastic enough to continue raising prices.
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u/brute-forced 12h ago
Hey man, planters nuts at walmart was $3.99 two months ago, now they’re $8.99. Thanks maga morons, I really appreciate you fucking our entire society. Helpful
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u/ProlapsedPuppy 12h ago
I got
meaning you didn't immediately scoff at the price and walk out when you saw it was $19, confirming to taco bell that people will pay these prices for food.
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u/LossDisastrous3782 11h ago
People have been crying about fast food prices for half a decade now and they just keep paying for it
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u/fuzzygoosejuice 14h ago
Dollar menu isn’t going to buy the CEO another yacht. I remember late 90’s/early 00’s we had a Taco Bell in the parking lot of the Wal-Mart I worked at. We could go get 5 soft tacos and a drink for $5 and be full almost all day.
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u/Kobayashi-Coffee-Co 12h ago
Bro a crunchwrap supreme and mexican pizza were always the most expensive items at taco bell. Even in the 90s you were the rich kids if you could order these.
And today are you not using the app? You can get both in a luxe box with drink and side for less than $10
Lastly, as a kid those two maybe came out to like $9-12 — 2 hours of median wage. Today, $19? Any amazon worker makes more than that
Taco bell is legit more affordable than ever
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u/RIP_Soulja_Slim 11h ago
Taco bell is legit more affordable than ever
Taco Bell's average menu inflation in 10 years is 81% compared with about 30% for CPI or about 51% for median earnings.
Mathematically you're just wrong lol.
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u/warfighter187 9h ago
Beefy crunch burritos were like $1.99 back in the day, and they were big as hell.
Taco Bell has experienced a ton of skimpflation and shrinkflation.
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u/Battle2Intense 8h ago edited 8h ago
Two tacos and a bean burrito filled me up when I was 19, 3 decades later and I'm still hungry.
All the new value items are just carb bombs of tortilla and rice.
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u/Gandalftron 8h ago
"Taco bell is legit more affordable than ever"
You sound young as fuck or have smoked too much weed to believe this. In the late 90s TB was $9 for 10 tacos and a soda.
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u/Hail_Zeus 12h ago
Not sure how accurate this is but based on this post, a Crunchwrap was $3.69 in 2019 and $5.79 last year. I think i paid $6.79 yesterday not including tax. That’s more than a 17% increase from last year and an 84% increase since 2019.
Have your wages increased that much?
And also why should I have to use an app? Why should I give them access to my information for them to sell so I can get a barely subsidized meal?
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u/BLT_Trade_r 9h ago
You always have to jump through hoops to get a deal. It used to be that the hoops were coupons; now they're apps.
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u/214ObstructedReverie 10h ago
Have your wages increased that much?
Real average hourly earnings last month were down 0.5 percent from August.
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u/breakfastburrito24 11h ago
You can get a Crunchwrap in the box but you can’t get a Mexican pizza in a box
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u/deceptinomonom 3h ago
And for those of us smart enough to not just hand over all the info on our phones including GPS data just for slightly cheaper shitty food, what then?
Fuck those apps.
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u/KetchupOnThaMeatHo 12h ago
Fuck having to use an app for fast food
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u/Kobayashi-Coffee-Co 12h ago
Then dont buy it or dont complain?
So easy to get MORE food for LESS money with Taco Bell
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u/hollowsoldier- 13h ago
Cheesy bean and rice burrito, add beef for 75 cents. My struggle meal go to!
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u/No_Aesthetic 12h ago
Lol I just did a check and it's €14 here, that's $15.56.
You guys are getting screwed.
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u/EconomistWithaD 14h ago edited 14h ago
This can, yet again, put to bed all of the various conspiracy theories that the numbers are faked.
Even core is trending up, and is still structurally higher than the target, which means that even if we were to end the insanity with energy right now, the Fed would still have to combat inflation.
Hopefully, this also helps the blue wave. While I think that leads to a lot of economic fiscal policy gridlock, at that point that’s preferable to…this.
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u/tombrady011235 14h ago
My dad is a right wing boomer and inflation numbers during a democratic president are fake and and inflation numbers during a republican president don’t get talked about
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u/Brundleflyftw 14h ago
It’s understated. Inflation is running at over 4%, more like 5-6%.
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u/EconomistWithaD 14h ago
It’s a possibility. More likely you’re talking about heterogeneous inflation, like at the NY Fed. This is an average.
But given Dallas and Cleveland trimmed mean and median inflation rates, you should probably provide something of substance instead of making up numbers.
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u/ktaktb 10h ago
Nice comment providing threads of research for people...
Like heterogeneous inflation
When people are pointed toward ongoing research and data that acknowledges or explains their feelings and experiences, it builds trust and also opens the door to building from that relatable foundation. From there it isnt too much of a leap to understanding why one might give more or less weight to various inflation measures, depending on the circumstance.
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u/HGpennypacker 13h ago
Truthfully I don't believe a single number on ANYTHING that this administration puts out. Jobs numbers, inflation, KIA and wounded service members, crowd size; everything is massaged in order to placate the ego of one man.
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u/RashmaDu 10h ago
On economic numbers specifically, the experts actually working with it are convinced they're not being cooked. Unless you think you know better, stop spreading disinformation.
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u/Stunning-Purpose9144 14h ago
I agree they have changed the basket so many times it’s laughable.
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u/CompEng_101 13h ago
They have to change the basket regularly to reflect changes in what consumers buy. Otherwise we'd still have photographic film and LaserDisc rentals in the CPI.
Do you have specific examples of how the basket has been changed incorrectly?
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u/RIP_Soulja_Slim 13h ago
You're aware that removing substitutions would result in a lower CPI across the last several decades, no?
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u/thewimsey 4h ago
No, you just don't understand how it works. Probably because you don't want to. Possibly because you can't.
The "basket" has 80,000 price quotes in 200 categories.
Why do you think they should still be including prices for black and white TVs, VCRs, typewriters, film developing costs, and landline telephone answering machines.
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u/RIP_Soulja_Slim 13h ago
There's maybe 5-6 different measures of inflation, and a number of private attempts at doing it as well, of those CPI almost always runs the hottest. Meaning that if you ask any random who knows nothing about nothing, they'll tell you CPI understates inflation, if you ask anyone who's spent time learning about these things they'll tell you that the data supports the fact that CPI likely mildly overstates inflation.
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u/UnderstandingThin40 13h ago
The issue is cpi doesn’t take into account first time home ownership costs, it use to pre 1980 but it causes a spiral because inflation would be so high, which would cause higher rates which would raise inflation because now you’re taking into account the higher interest rate on a car payment or mortgage for example (two largest bills Americans have). So it’s not a conspiracy, it’s just not capturing the full picture.
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u/EconomistWithaD 13h ago
It’s not like alternatives aren’t calculated.
And it’s not an open and shut case. Based on the above, post COVID, the CPI both understated and overstated housing inflation.
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u/UnderstandingThin40 12h ago edited 12h ago
The government doesn’t use these alternatives for cost of living though. About 35-40% of people don’t own, for first time home buyers inflation is much higher (the paper even concedes that). But for people who already bought inflation hasn’t been that bad if anything they’ve benefited from it as they own assets.
I’m just saying I understand the disconnect, especially among younger people who the majority are first time home buyers or close to it. You essentially have two populations living in different inflation worlds. CPI doesn’t capture the costs for like 30-35% of the country. Harvard did a study and if you are a first time home buyer the shelter inflation rate would be 59% from 2021-2024, while the official shelter cpi rate is 21.5%. That would almost double the cpi inflation rating. So as I said, two different worlds.
Also this doesn’t take into account higher interest rates on cars, which probably ticks it up more.
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u/EconomistWithaD 12h ago
Yes. Inflation is an average. People experience higher and lower inflation.
And of course, the government uses statistics where the average is closer to the majority than the minority.
And that 30 to 35% is also an over estimate. Plenty of people will never become homeowners, or do not want to become homeowners.
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u/UnderstandingThin40 12h ago
About 35% of people rent, and that number is going to increase as home ownership rates are going down. About 70-80% of renters prefer to own. So yeah not all renters but a big majority. But even if it’s 25-30%, it’s still a huge subset of people. I’m just saying the average essentially doesn’t capture the increased costs for at least a quarter of the population, and that number will just increase as it’s heavily skewed towards younger people. CPI essentially doesn’t apply to about half of Gen Z and millennials. It’s never been this bifurcated because home affordability has never been this bad other than maybe a few years in the early 80s.
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u/EconomistWithaD 12h ago
Home ownership rates not at all near an all time low, higher than average, and still higher than a decade ago.
https://fred.stlouisfed.org/series/rsahorusq156s
Regardless, plenty of categories in the CPI (childcare, cars, …) that don’t apply to large subsets of the population
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u/UnderstandingThin40 12h ago edited 12h ago
I said they’re trending down, not that they’re at all time low. And they will continue to go down for a while because of home un affordability. We will probably be approaching all time lows in a decade.
Yes only 10% of us adults don’t have cars, and it’s 15% of inflation. That’s a lot less significant than about 25% of the population and shelter being 35% of cpi.
Childcare is .7% of inflation, so it’s not even comparable.
For around 25% of the country, and more than half of young adults, the largest weight of inflation (shelter) is essentially understated by 50%. That’s a much larger disconnect than it’s ever been. And it explains why millennials and Gen Z particularly feel that cpi isn’t reflective of their inflation, and they’re the ones online the most, so you’ll hear about it the most.
Taking mortgage rates and first time home owners mortgage payments as part of inflation isn’t unheard of, that’s what we use to do before the 80s. It just causes an inflation spiral, so I understand why they canned it. Owners equivalent rent is useful when buying isn’t as outrageously unaffordable as it is now, which was most of the the last 40 years. But now with the huge delta between the two you’re going to get more and more people it essentially doesn’t apply to.
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u/thewimsey 4h ago
The issue is cpi doesn’t take into account first time home ownership costs,
Why would it? It's trying to calculate how much people's regular expenses have gone up over a specific period. Most people don't buy a house at all until they are in their early 30's, and then buy a house every 11 years or so.
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u/Fxwriter 14h ago
I feel inflation metrics are not the full picture, what I mean is, the cereal I used to buy not only went up in price, I noticed a big change in quality to the point I stopped buying it.
There is another face to inflation and that is in quantity and quality of goods, probably it will result also in variety as consumers cut spending15
u/EconomistWithaD 13h ago
CPI adjusts for quality and quantity.
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u/gravescd 13h ago
Seriously curious if anyone knows: how does CPI adjust for subscriptions displacing purchases?
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u/CompEng_101 13h ago
The BLS details the CPI methodology here: https://www.bls.gov/opub/hom/cpi/
Largely, it is based on Consumer Expenditure Surveys, which track where people are spending money. For movies and games, they track 'Prerecorded video discs and permanent digital downloads' and 'Subscriptions and rentals of video and video games' as two separate categories. For music, it is one category (Music media and audio content), but the underlying products include both purchases and streaming.
It is tricky because 'quality' is difficult to compare - a DVD gives you permanent access to one movie, but a streaming service might give you temporary access to thousands of movies. But, the goal of the CPI 'basket' is to reflect the underlying consumer spending as shown in the Consumer Expenditure Surveys.
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u/Fxwriter 13h ago
Thanks for clarifying!
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u/EconomistWithaD 13h ago
To be even more thorough, quantity is rather easy to adjust for in real time. Quality lags.
It’s why, I think, they are trying to revise source and methodology with a bit more frequency. We have a lot of data. Just need to use it.
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u/BrogenKlippen 13h ago
I say this not being a smartass, but to learn. How is quality assessed?
My wife works in “value engineering”, which is essentially seeing how much you can shittify something before anyone notices or stops purchasing it. Every single quarter they find ways to make something (I won’t reveal what she works with) cheaper by using either less or cheaper material. How is this assessed?
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u/EconomistWithaD 13h ago
Something called a hedonic adjustment. Basically, you control for every observable feature of a good. Size, labeling, packaging, namebrand, recognition,…
So long as you have adequately controlled for everything, the only difference will be quality. It’s the residual.
Below is the CPI explanation, along with every place where they do these adjustments.
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u/Stunning-Purpose9144 14h ago
I think we are well aware of that. Anyone looking at housing costs could also deduce we are heavily inflated vs wages. It literally would take a 48% increase in wages to get housing moving again if interest rates and prices stayed equal.
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u/EconomistWithaD 13h ago
Can I see how you got to this 48%, given EPI celebrated low income real wage growth from 2019-2025?
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u/Stunning-Purpose9144 13h ago
I stand corrected it’s a lot higher. I used BLS average US wages and then compared to Census home sale prices for August 2026. It’s actually closer to 96%.
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u/EconomistWithaD 13h ago
That’s not a calculation. Do you understand how to show your math? Especially when you’re just making up numbers?
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u/303uru 13h ago
This can, yet again, put to bed all of the various conspiracy theories that the numbers are faked.
This is an absolute pipe dream. Why? Because the numbers aren't great? Just because they put out a number that isn't good, doesn't mean they aren't hiding how bad it actually is. This is just piss poor logic.
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u/RIP_Soulja_Slim 13h ago
I think their biggest logical failing is the hope that the room temp IQ inflation troofers would ever go so far as to read an inflation report or bother trying to understand it before proudly proclaiming it to be all fake. There's just a lot of low intelligence people out there, and they have keyboards too.
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u/EconomistWithaD 13h ago
No, because people who actually do this for a living, and have paid attention to this data for decades, understand it’s not faked.
We get it, most people see a shiny object but don’t understand what’s going on because they don’t have the intellectual horsepower to derive meaning.
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u/burnthatburner1 13h ago
Then why would this print put the conspiracy theories to bed?
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u/schmellthat 12h ago
Define “faked”? This same CPI print, had it been calculated with methodology in place in the 1970s, would have come out to 7.5-8.5%.
I agree with you as you’ve stated in other comments that the overall trend is of greater importance, but I disagree in that I believe modern methodologies are doing a lot of massaging downward of the headline numbers.
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u/EconomistWithaD 12h ago
Data access and availability have improved since the 1970's.
Econometric analysis has massively improved since the 1970's.
Why are modern methodologies "massaging", rather than correcting issues decades ago?
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u/schmellthat 11h ago
Thanks for the reply and I do agree on points 1 and 2. Some examples in regard to number 3: OER as opposed older home purchase price methodology, geometric weighting as opposed to fixed index, and hedonic adjustments all contribute to the ‘’massaging” I’m speaking to.
Why do I think this matters, and why did I pick the 1970s for comparison? Because these changes to methodology have all contributed to a cpi that is less reflective of the experienced inflation of consumers in the bottom half, or so, of income. A degree of discretionary spending is actually built in to the calculation. Thus, people claim the print is “fake” when they’ve diligently followed their budget and tracked their spending, only to find their personally experienced inflation rate is much higher than the benchmark.
Why 1970s? Similar environment in terms of energy shocks and cost-push occurring in tandem with a shift in rates, major differences being in the ways that inflation was measured vs now.
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u/JTuck333 10h ago
You can’t convince Reddit and this is with a report that is bad news for Trump. 3Q26 GDP will be released right before the election and looks to be coming in high. Reddit will go ballistic. Please make the same comments and see how it goes!
For the record, you appear to be completely nonpartisan. You just support the data coming from the bureau, confirmed by the private sector. Should be ice-cold takes here.
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u/Qeltar_ 13h ago
This can, yet again, put to bed all of the various conspiracy theories that the numbers are faked.
I'm not saying that there is such a conspiracy, but this absolutely does not prove anything.
Things are pretty bad, and it would not be surprising at all if they were even worse than the number that was released.
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u/OddlyFactual1512 14h ago
Sadly, I think we will need to see wheelbarrows of cash before R voters will realize those they continue to elect are not good stewards of the economy or the federal debt. The facts don't lie, and if you compare debt/gdp addition by presidential administrations since 1981, you will see that if they all grew the debt at the same rate as the average under Democrat presidents that the debt would have grown < 5% as a percentage of GDP.
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u/0bfuscatory 9h ago
There was a time when I was on the fence on economic policies. So I spent all night reviewing the results. It’s not just debt/GDP where the Dems have done better. They do better on every metric I could think of.
GDP growth, Jobs growth, balanced budgets, crashed economies, wealth disparity.
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u/amopeyzoolion 7h ago
More than expected by whom?
The president is still conducting an illegal, unnecessary war that’s causing gasoline and diesel prices to skyrocket while also placing illegal, unnecessary tariffs on allied nations that are causing the price of other goods to skyrocket.
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u/CreLoxSwag 6h ago
Exactly. This was all part of the plan for them...and if it wasn't we all saw it coming anyways. Heckin idiots.
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u/Cre0na 47m ago
Honestly, I'm not sure it was the plan for Trump. I really think he just misunderstands economics (and all money really(how the hell do you bankrupt multiple casinos)) badly enough that he thought tariffs would be a good thing and that the war with Iran would have minimal impact.
His handlers I have no doubt wanted this though.
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u/tombrady011235 14h ago
This is incredibly frustrating and avoidable with a fiscal policy that reflected the goals of monetary policy until inflation was brought down
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u/RandomlyHere25 13h ago
Ugh, it’s never ending these days. Getting hit from all sides. Wouldn’t be surprised to see this number growing, not seeing any signs of relief.
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u/ThePensiveE 13h ago
It's like, have you even thanked a billionaire today???
You should be thankful you live with all these health care advancements rich people get routinely but you can't afford.
You should be thankful that things are abundant everywhere because only the rich can afford anything more than good and gas!
You should be thankful that it costs you 3x more to live now because of the forever wars and the tariffs!
It's like y'all aren't even thankful to the hard working billionaires out there. It's disgusting. Such ungrateful poors.
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u/EconomistWithaD 14h ago
The numbers aren’t cooked.
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u/EconomistWithaD 14h ago
What do you mean without transparency?
It occurs every year, and the methodological change is ALWAYS posted online.
And no, inflation numbers don’t get revised down. That’s GDP and employment, because those are surveys and respondents are given 3 months to return it.
Learn basic facts then engage. These are basic things anyone who has taken a Intro to Macroeconomics course should know.
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u/OrangeJr36 14h ago
Yes, economists are always concerned that methodology changes could result in mistakes, it's their job to worry about that.
That doesn't mean the numbers are "cooked."
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u/RIP_Soulja_Slim 13h ago
Should probably apply that advice to yourself. You clearly have no idea what’s going on.
This is a hilariously overconfident reply, to an actual economist no less.
Your article is about PCE, not CPI. Moreover, the adjustments made to the PCE methodology effectively bring it closer to how CPI has always performed this calculation. So, you know, given that CPI came in hot it's kinda evidential that what you thought was being done isn't what actually happened.
My suggestion would be that you maybe read the links you're tossing out to understand them, rather than just tossing them out hoping to push conspiracies.
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u/EconomistWithaD 14h ago
- How is that not transparent?
That happens annually; not quarterly. And it’s not a revision. It’s a change to the methodology.
Revisions are going back in time to change the numbers. Not tweaks that will alter future ones.
So, yeah, stop acting like a child, and read from people who do understand this stuff.
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u/MisinformedGenius 13h ago
That's the PCE price index, not the CPI price index this article is about.
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u/furMEANoh 13h ago
Yet again, I appreciate you out here fighting the good fight.
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u/EconomistWithaD 13h ago
Finally finished 2 papers and it’s exam week, so time to provide a public duty about data misinformation :-)
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u/ILoveTheAtomicBomb 14h ago
If this is the number they’re using to make it look good, I fear what the actual number is at this point lol. I wonder how bad MAGA is doing out there with how rough it’s getting. Ideally, they’re struggling in the economy they chose to have with all that “winning”
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u/Memitim 12h ago
And those are the numbers that made it through the constant Republican attempts to cover up the reality of the harm that they've done. The reality is undoubtedly much worse and we've barely started sliding down the hill into the chasm that they've created.
The systemic failures are piling up more and more while trade partners around the world continue to uncouple from the US and seek alternatives. Domestic business failures will continue to rise, the cost of living will continue to increase, and then the real fun will begin as people get priced out of essentials more and more. But hey, we made it to 250 first, so I guess that's an arbitrary age to brag about in lieu of a nation with a future.
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u/CremedelaSmegma 14h ago
Right. This should have surprised nobody. And the lived experience is worse than that calculated number.
The core PCE release for August (was misframed (likely willfully) to give the Fed air cover to not raise rates before an election.
On an annual basis it was reported to “only” have come in at 3% in a 3.3% market estimate.
However, the BEA made several adjustments to it methodology for that release. legal services, software and computer accessories, and some other stuff. Which took off about 0.36% points.
That is, the measuring tape changed. If you use the same measuring tape annualized core PCE actually came in a wee bit hotter than expectations at 3.36%
They sold an apples and oranges comparison as an apples to apples because that is the narrative the system needed. Or more accurately the narrative they needed the system to hear.
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u/EconomistWithaD 14h ago
Or because they do minor methodological changes almost annually around August/September? Bigger revisions are less frequent but not abnormal.
Plus, everyone interpreting the numbers know the change wasn’t “deflationary”.
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u/Tribe303 12h ago
The inflation rate here in Canada is only 3.0% but new numbers are not out yet and its expected to rise to 3.2% this quarter. We ARE affected by the oil price spike, but we are not affected by the Trump tarrifs. (as far as inflation is concerned that is) Lastly, historically the US has ~0.5% lower inflation.
laughs in Canadian
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u/DeActionBrunson89 14h ago
It doesn’t matter when the rich is keeping the economy afloat apart from the fact that people are spending more than ever. It’s just a fact people have to come to terms with
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u/Low_Ability4450 1h ago
Higher fuel costs can feed into transportation, production and eventually food prices if the shock persists. Tariffs add another source of pressure. With core inflation at 2.6%, the key variable is whether these increases remain concentrated in energy or spread across the wider economy. That distinction will matter for the Fed's next decisions on interest rates.
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