Keeping tabs on inflation -- and perceptions
Are people starting to catch on that government economic statistics are widely manipulated? After my post last week broaching this possibility, I just wanted to briefly keep score.
As Bill Bonner noted in Friday's DR,USA Today was prompted to run a headline, "Inflation may be worse than the consumer price index shows." Alas, I can't find the article online, but I'm going to chalk this one up in the "Perceptions are changing" column, along with the CNN Money piece I cited last week, and the Kevin Phillips article in Harper's that started this ball rolling.
On the other hand, in the "Power elite push-back" column we have a story from the Christian Science Monitor trying to explain away the gap between statistics and reality: "The short answer: [The situation is] bad enough, but don't judge the problem only by what it costs to fill a fuel tank." And, "Critics say the index has important flaws. But in general, economists
across the political spectrum say the system works pretty well." The story cheerily quotes Merrill chief economist David Rosenberg about how prices "for everything from clothing and furniture to toys and TVs" have fallen in the last year. Um, yeah, because demand for those items has fallen, because people are spending more on food and energy? I expect better of the sober, sensible Monitor, but this piece of journalistic bilge is right up there with the David Leonhardt column in the NYT I picked apart last week.
The Monitor story does note a CNN/Opinion Research
poll in which 47% of adults surveyed cite inflation as the biggest economic concern. Nothing else — housing, unemployment, you name it — scored even half that high. Bad news for the Fed, which cares not a whit about money supply (hence its decision to cease publishing M3 figures in 2006) but cares very, very much about inflation expectations.