Just how trustworthy are numbers from the government anymore? Since POSOTUS fires numbers people when he doesn’t like their output, aren’t the remaining staff apt to cook the books to keep their jobs?
My grocery shopping has increased by 20% since April! My budget is shot, cutting back is painful, but must be done wherever I can. Add to that medical bills for glasses, dentist, hearing aids, and I'm in the red for the rest of the year, indeed the rest of my life!
Good point, Babs. Where do all the medical and insurance bills play into CPI, and is there a different CPI for the older crowd than for the younger crowd? Justin, do they ever calculate CPI differently by age bracket? The younger crowd has housing and kids to pay for, and the older crowd has far more medical and home care or nursing home care to pay for. The two sets do overlap somewhat, as in both buy bread and gasoline, but is there a different COL and possibly.a different CPI for each of the two? How does that work in other countries such as Japan and Denmark compared to the US?
Warsh prefers the "central tendency" measures of inflation (median and trimmed-mean CPI and PCE) for a good reason -- they tend to be much better measures of underlying inflation (and future inflation) than the total CPI (and PCE) and a bit better than the core measures.
As Justin points out, there's not much difference today between the core, the median, and the trimmed-mean CPI measures (FRB Cleveland) for July. The 12-month trend rates are:
core CPI: +2.5%
median CPI: +2.7%
trimmed-mean CPI: +2.6%
total CPI: +3.4%
All are edging lower but remain above the Fed's long-term goal of 2.0%.
Before the September FOMC meeting, there will be another CPI report as well as another jobs report. Will those data convince the Fed to tighten, or to keep policy unchanged?
How do futures markets work? Your final graph on oil futures, does than mean that the investors who bought futures for oil in February 2027 (maturing say in Jan 2030 at 62-63/barrel) will have to pay the difference between the real oil price in Jan 2030 and 62-63 when their contracts come due in Jan 2030? So if oil is running say 83/barrel in Jan 2030, then are they guaranteed to lose 20/barrel? Who are the largest holders of futures contracts and what do they typically use them for? Other than gambling.
I learned something today! Thanks JW.
Just how trustworthy are numbers from the government anymore? Since POSOTUS fires numbers people when he doesn’t like their output, aren’t the remaining staff apt to cook the books to keep their jobs?
My grocery shopping has increased by 20% since April! My budget is shot, cutting back is painful, but must be done wherever I can. Add to that medical bills for glasses, dentist, hearing aids, and I'm in the red for the rest of the year, indeed the rest of my life!
Good point, Babs. Where do all the medical and insurance bills play into CPI, and is there a different CPI for the older crowd than for the younger crowd? Justin, do they ever calculate CPI differently by age bracket? The younger crowd has housing and kids to pay for, and the older crowd has far more medical and home care or nursing home care to pay for. The two sets do overlap somewhat, as in both buy bread and gasoline, but is there a different COL and possibly.a different CPI for each of the two? How does that work in other countries such as Japan and Denmark compared to the US?
With the national debt rising at astro rates, what effect will that have on inflation?
Warsh prefers the "central tendency" measures of inflation (median and trimmed-mean CPI and PCE) for a good reason -- they tend to be much better measures of underlying inflation (and future inflation) than the total CPI (and PCE) and a bit better than the core measures.
As Justin points out, there's not much difference today between the core, the median, and the trimmed-mean CPI measures (FRB Cleveland) for July. The 12-month trend rates are:
core CPI: +2.5%
median CPI: +2.7%
trimmed-mean CPI: +2.6%
total CPI: +3.4%
All are edging lower but remain above the Fed's long-term goal of 2.0%.
Before the September FOMC meeting, there will be another CPI report as well as another jobs report. Will those data convince the Fed to tighten, or to keep policy unchanged?
Thank you Professor Wolfers, that's one of the best explanations of CPI and its interpretation that I have read.
How do futures markets work? Your final graph on oil futures, does than mean that the investors who bought futures for oil in February 2027 (maturing say in Jan 2030 at 62-63/barrel) will have to pay the difference between the real oil price in Jan 2030 and 62-63 when their contracts come due in Jan 2030? So if oil is running say 83/barrel in Jan 2030, then are they guaranteed to lose 20/barrel? Who are the largest holders of futures contracts and what do they typically use them for? Other than gambling.