First of all the comparisons are to 2019, not pre 1983 when those changes are made, so most of this is totally irrelevant to the point I was making. That’s also why all the real wage statistics are anchored to 1982-1984 dollars. Second a forever unchanging fixed basket of goods is not a good way to measure inflation. What people spend their money on changes over time. Cell phones are necessary now, didn’t used to be, shouldn’t they be in the consumer price index? Internet is necessary now, those costs should be in the index. The same things that were necessary in 1975 are not the exact same things people are buying now. Using the exact same basket of goods from 1975 would be ridiculous and not useful. Another frequent criticism is that housing prices aren’t included after 1983. The reasoning being that is an investment, not an expense that you will never get back. However rent is, and the increased housing cost ends up reflected in the rent. So that change doesn’t change the index nearly as much as you might think.
All this is to say, I’m highly suspicious of this sudden narrative across the entire media that the economy is in shambles and everyone is struggling, when almost all measures are to the contrary. I’m expecting migrant caravans and all sorts of other sensationalized non stories with only some kernel of truth on the way. And a headline “prices didn’t increase from September to October” gets nowhere near as many clicks as “inflation was 3.2% in October,” even if technically true, taking advantage of misconceptions about what an annualized rate is.
First of all the comparisons are to 2019, not pre 1983 when those changes are made, so most of this is totally irrelevant to the point I was making. That’s also why all the real wage statistics are anchored to 1982-1984 dollars. Second a forever unchanging fixed basket of goods is not a good way to measure inflation. What people spend their money on changes over time. Cell phones are necessary now, didn’t used to be, shouldn’t they be in the consumer price index? Internet is necessary now, those costs should be in the index. The same things that were necessary in 1975 are not the exact same things people are buying now. Using the exact same basket of goods from 1975 would be ridiculous and not useful. Another frequent criticism is that housing prices aren’t included after 1983. The reasoning being that is an investment, not an expense that you will never get back. However rent is, and the increased housing cost ends up reflected in the rent. So that change doesn’t change the index nearly as much as you might think.
Lots more details here if you’re interested:
https://www.nytimes.com/2022/05/24/technology/inflation-measure-cpi-accuracy.html
Or archived version
https://archive.is/zvtPw
All this is to say, I’m highly suspicious of this sudden narrative across the entire media that the economy is in shambles and everyone is struggling, when almost all measures are to the contrary. I’m expecting migrant caravans and all sorts of other sensationalized non stories with only some kernel of truth on the way. And a headline “prices didn’t increase from September to October” gets nowhere near as many clicks as “inflation was 3.2% in October,” even if technically true, taking advantage of misconceptions about what an annualized rate is.