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In the biggest flim flam ever foisted on the American people, the Commerce Department reported that the CPI rose only 0.1% in May. Now this number is ridiculous because this "core" rate excludes food and energy. If you have been gassing up your car lately, you know that gas is now pushing $3.00 per gallon.
Nevertheless, the government says "not to worry about inflation." Well if you look more closely you'll find that gas prices actually rose 3.5% in May with crude oil prices trading near $72.00 per barrel.
The government has announced that there is a great deal of slack in the economy and that will keep inflation low. These numbers also suggest that the Fed can maintain its relaxed monetary policy for some time longer.
Here is a separate but interesting report. The Commerce Department showed that the US current account deficit shrank by $101.5 billion in the first quarter, the lowest since the fourth quarter of 2001. Both imports and exports fell, but imports fell more sharply to $581.5 billion from $715.1 billion.
Should the CPI reflect the true measure of inflation by including food and energy?
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Reader Comments (Page 1 of 1)
6-17-2009 @ 4:31PM
Iridium said...
The CPI should be changed to the measured ratio of debt vs income. In the real world we have had massive inflation.
It is hysterical to count inflation as the lowest in 50 years when you price in the insanity that was the oil bubble of last year. We have the lowest level of inflation in 50 years, yet the price of oil is $75 which would count as the greatest increase in inflation in 50 years had it not been for last year.
I wish outlets would stop spreading the myth of low inflation when every real measure shows increased inflation over the past 10 years far higher than the historical average. Coupled with non existent wage growth and a net drop in personal wealth you have the makings of a financial disaster.
Here's the newsflash, it already happened and nothing has been done do change the outcome. We've actually made it worse by printing trillions of dollars. The big fall is about to happen just like the 1930's. It's like washington wants it to happen.
6-17-2009 @ 6:07PM
al coholic said...
The government couldn't calculate the correct level of inflation even if it wanted to, which of course it doesn't. There is no incentive for them to report anything but artificially corrected low inflation numbers lest they have to ante up for all the cost of living increases they would be liable for in Social Security, indexed bonds and the like if we knew the real numbers.
Over the years the mehods of calculating inflation have been "tweaked" so many times that no meaningful comparisons can be made.
All government numbers are suspect.