r/Economics • u/Technical_Ostrich_47 • 17h ago

News US inflation rises more than expected ahead of midterm elections (3.7%)

https://www.bbc.com/news/articles/cwy8lx3pg4k2o
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u/303uru 16h 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 16h 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 16h 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 16h ago

Then why would this print put the conspiracy theories to bed?

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u/EconomistWithaD 16h ago

A hot number before the midterms? Hmmm….

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u/burnthatburner1 16h ago

You literally just acknowledged that people can’t make the correct inferences from stuff…

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u/keynoko 14h ago

Emeff right here trying to intellectualize the numbers now coming up with conspiracy theories lol what a dotsrd

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u/EconomistWithaD 14h ago

Oh, look, the shallow end of the gene pool with some quasi-English pearls of wisdom...

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u/keynoko 14h ago

Lol you're all over this sub frantically carrying water to and fro for actual pedos who've tanked the economy. It's as hilarious as it is sad.

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u/EconomistWithaD 14h ago

Oh, that's adorable.

Is it nature or nurture that causes you to struggle to read?

Did your parents mean to repeatedly drop you, or was that their goal?

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u/keynoko 14h ago

It's always nature and nurture don't you know. It's how I retired a few years ago at 38 and live off investment income alone. Now I have lots of time to dunk on billionaire dicksniffers

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u/EconomistWithaD 14h ago

By retired, do you actually mean no one will hire you?

Because someone who is retired and doesn't understand the comment that "Hopefully, this also helps the blue wave" is a Trump dick-riding billionaire dicksniffer is touched in the head. A lot.

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u/schmellthat 14h 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 14h ago

  1. Data access and availability have improved since the 1970's.

  2. Econometric analysis has massively improved since the 1970's.

  3. Why are modern methodologies "massaging", rather than correcting issues decades ago?

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u/schmellthat 14h 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/EconomistWithaD 14h ago

Except energy efficiency has massively improved since the 1970's, domestic production is high, and the impact of Middle Eastern oil is much less.

And that's a very long winded way of saying that averages are averages. You do realize the NYFed publishes heterogeneous indicators (not available in the 1970's), we have the Dallas Fed and Cleveland Fed publishing trimmed mean and median inflation (not available in the 1970's), that's all much more representative of lower income inflation than the 1970's...

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u/schmellthat 14h ago

In regard to oil, somewhat true, yet a combination of the market being tight globally and US supply being mis-matched to US refinement capacity causes me to disagree.

I do realize heterogeneous indicators are published, with the same inclusion of the adjustments I mention in my last reply. Why do you believe trimmed measures of inflation are any better than non-trimmed, as lower-income inflation measures?

What I’ve been essentially saying is that cpi was previously calculated as a cold Cost Of Goods measure, and that methodology has incrementally changed to become an abstracted Cost of Living measure. Further, it seems according to other measures such as consumer sentiment, consumer credit metrics, and broad agreement in anecdotes, that modern CPI does not as accurately measure the actual rise in goods prices throughout the economy.

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u/EconomistWithaD 12h ago

  1. Sure, we are facing an oil shock. But it's nowhere near the magnitude of the 1970's because of the reasons I've listed. Numerous articles have talked about this.

  2. Because trimmed mean and median exclude outliers, and more represent baskets that are more indicative of what low income individuals purchase. https://www.bls.gov/spotlight/2022/inflation-experiences-for-lower-and-higher-income-households/home.htm and https://www.clevelandfed.org/publications/economic-commentary/2022/ec-202205-adjusting-median-and-trimmed-mean-inflation-rates-for-bias-based-on-skewness.

  3. I'd like to see any rationale for proclaiming that economic statistics, including CPI, are better in the 1970's than today. That's a dubious claim; for one, data quality is much better. Statistical analyses are improved, etc.

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u/schmellthat 5h ago

It’s not that the means of gathering data is worse now than it was then, I have been saying that the 1970s methodology (which measured inflation in a cost of goods index) is better for understanding actual consumer inflation than the modern, which tracks a cost of living index. The three original examples as follows:

OER accurately measures what homeowners report what they would pay to rent their home. It does not track the actual price of housing plus mortgage rates.

Hedonic adjustments and substitution do not account for the fact that a large population has already made such substitutes and has a low degree of discretionary spending. This causes a degree of exponential compounding variance between actual COG and the reported COLI (CPI). When you have this occurring, and modern CPI is used to determine real wages, you also get distortion of real wages vs COG inflation, and this divergence between wage growth and COG

These three changes made over time imo contribute in large part to people claiming CPI prints are “fake” when they come out. CPI doesn’t feel like a proper average to a large number of Americans because it’s tracking a synthetically derived COLI, when the actual COG price escalation is immediately apparent on shelves, realty sites, etc. This is why I mentioned in my first comment why I believe the trend is still every bit as important. Also, core cpi as such today is actually more accurate in the FED predicting future interest rate changes, as there isn’t the circularity in home costs including mortgage rates like in the old method.

I’m not citing sources but they are widely available online, see Boskin Report in particular for hedonic adjustments and substitution.

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u/EconomistWithaD 5h ago

“I’m not citing sources”.

I’m not paying attention, then. Adios.

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u/JTuck333 13h 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/NormalOfficePrinter 12h ago

Maybe he could start another war, maybe then prices will come down

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u/JTuck333 12h ago

What does that have to do with the accuracy of the data?

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u/NormalOfficePrinter 12h ago

What does a war have to do with the economy? Idk

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u/JTuck333 12h ago

We’re not arguing over the impact of the war. We are discussing if the data is accurate.

If 3Q26 GDP is high, nearly every Reddit comment will just be calling it fake.

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u/NormalOfficePrinter 12h ago

Every single bank and economics firm is saying things are terrible. Every. Single. One.

If the government tells you that what you're seeing is a lie and they are The One Source Of Truth, then, well, that sounds like communism

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u/furMEANoh 16h ago

You seem to be the one with point to prove. Provide evidence.

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u/303uru 15h ago

The premise is de facto illogical.

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u/thewimsey 6h ago

A premise can't be illogical.