The Government "Revises" 84 Years Of Economic History This Week
- Thread starter Tsing Tao
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Well, until I am offered some evidence that data is actually manipulated, permit me to remain skeptical. The general problem, you see, is that there's a lot of stuff that GDP and other econ stats are supposed to capture that ARE, in fact, intangible, in one way or another. Should we drop all these things, because there's some vague potential for "government manipulation"? And you're mistaken, like I said before, there's a lot of evidence from third-party, independent sources that CPI isn't such a poor measure.
Well, I dunno if it's bullshit. It's arguable and we can certainly argue about how it's done. The logic isn't obviously wrong to me. Moreover, it's done globally by everyone, not just the BLS. Even the Germans, who are obviously very particular about their inflation, do it. Finally, just to check, have you ever looked at how much of an impact hedonic adjustments have on the headline CPI?
Firstly, when you say "FED" you mean the Federal govt, not the Federal Reserve, right?
Secondly, in the US, smaller portion sizes? You must be kidding... Every time I come over to the US, I marvel at how much more massive portions are! To anyone from the outside, it's inconceivable that you could have people eat that much. Still, that's just my subjective impression.
As to the ownership period, that sounds like a legitimate concern. They should find a way to capture it, although it's mostly a matter of choice, IMHO.
Portion sizes are in decline. Ask around. Chocolate bars, potato chips, gum, burgers, fries, anything. This is common knowledge. Product life-cycle is a huge concern, and massively inflationary. Engineered obsolescence is the benchmark, and has been for quite some time. As for the FED, yes, I know, it's the BLS. Forgive me.
Intangibles....who cares? Pick one static measure of GDP and stick to it. Next, they'll redefine GDP to include the black and gray market. Afterall, this is economic activity too? If GDP is measured the same way over time, so long as it's close enough, it doesn't matter. If intangibles are ignored today, that's fine so long as they were ignored 30 years ago. Apples to apples. And yes, a vested interest exists to goose GDP up and cpi down. That's obvious?
Intangibles....who cares? Pick one static measure of GDP and stick to it. Next, they'll redefine GDP to include the black and gray market. Afterall, this is economic activity too? If GDP is measured the same way over time, so long as it's close enough, it doesn't matter. If intangibles are ignored today, that's fine so long as they were ignored 30 years ago. Apples to apples. And yes, a vested interest exists to goose GDP up and cpi down. That's obvious?
I dunno, man... Like I said, in the US, I just don't see it. Maybe it's the places I go to or the impression I get, because I am not used to it. Everywhere I go I see simply massive amts of food and I don't sense them getting smaller.
As to the revisions, I definitely see your point about consistency. But the world does change and people start doing different things. Is it wrong to account for things that people didn't do previously? Like, for example, the previous big BEA GDP revision (i haven't looked at the current one in such detail yet) was to account for software (engineering, development, etc). Is that a wrong thing to do, given that software has been getting increasingly significant to the economy? And, again, when they do this, it's normally done in arrears and shouldn't affect the politically sensitive current data a lot.
Portion sizes ARE decreasing.
Have you noticed a snickers bar?
At least 15% smaller than 10 years ago, and 30% more expensive.
And Martin - you say people do things differently today than in the past.
Fine.
Did you stop paying for food or fuel that would warrant such a change in information assembly?
Bottom line is that it's all parlour tricks.
Sleight of hand.
Most don't have a fuckin clue that the govvies are doing it and most don't care.
They wonder why they can't afford life on the same salary as 10 years ago.
Have you noticed a snickers bar?
At least 15% smaller than 10 years ago, and 30% more expensive.
And Martin - you say people do things differently today than in the past.
Fine.
Did you stop paying for food or fuel that would warrant such a change in information assembly?
Bottom line is that it's all parlour tricks.
Sleight of hand.
Most don't have a fuckin clue that the govvies are doing it and most don't care.
They wonder why they can't afford life on the same salary as 10 years ago.
On the subject of Snickers, I have seen this, which is saying that the regular bar will be "downsized" for the first time at the end of this year:
http://www.esquire.com/blogs/food-for-men/snickers-smaller-6655856
The other version has been replaced with the 2 pack of smaller bars and this guy has done some calculations:
http://thebillfold.com/2013/02/how-the-snickers-bar-changed-over-time/
If we take the first case and assume same px, that looks like 11% less value. The other case is smth like 26% drop in value. If we take 15 years, that's annual inflation of, what, 0.69% and 1.06%, if I am not mistaken.
And I am not sure what you mean about the fuel and food. Hedonic adjustments are used only for some specific categories, where items in the basket change so quickly that they have to be substituted (like consumer electronics, apparel, etc). As a result, they are not applied to food and fuel.
As to sleight of hand and parlour tricks, I dunno. If you care to look, it's not like the information is hidden.
A 'personal' bag of chips used to be >95 grams at less than 80 cents (0.84 cents per gram).
The average chocolate bar used to be >85 grams at around 90 cents (1.05 cents a gram)
Now, a small bag of chips is around 60 grams, at 1.20 (2 cents a gram = 138% inflation)
Same chocolate bar is around 65 grams, at 1.40. (2.15 cents a gram = 105% inflation)
Everything is more expensive, at a smaller quantity. Sure, the sample period is probably 15-20 years. But that's like 5-6% inflation, yoy, no compounding.
Smaller portions/cheaper quality/higher prices. That's the new normal. All the while, the BLS says living standards are at all time highs. Made in China shit we buy at walmart that breaks after 2 weeks??? Average life 1 year. I buy a new power cord for my Tom Tom GPS once every three months. Sure it costs, 10 bucks, but power cords used to last YEARS. Im buying 40 bucks worth of cord, every year! Same with my blackberry charger cord...
The average family can barely get by on two incomes, while 30 years ago, one decent income was more than adequate. Living standards are in decline, dude. You're arguing against reality. Look at the welfare stats in the US. Over half the country collects some form of welfare. Nearly 100 million are on food stamps. 3 of 4 americans are close to the poverty line. This is all offshoring man. The jobs got up and left, and now, the pain is setting in. Same shit in the European periphery. Thank Germany. Germany is the Chindia of Europe.
I've always been sceptical of government provided inflation and CPI numbers, especially here in Thailand.
We have seen inflation numbers of 4% in 2011 going down to 3% and now 2% lately. Over this period, a microwaveable meal has gone from 55 baht to 69 or 74 baht, 25% to 35% up. A pack of ready to eat salad from 55 baht to 69 baht, 25%.
The standard refrain is that this is not typical of what the populace consumes, so they look at prices in local fresh markets and not supermarkets. Fine, but a single dish street food meal has gone from 20 - 25 baht to 30 - 50 baht. That's what lower paid workers and office staff eat daily and we're talking 50% here.
Spot on, the new normal is a smaller pack size at the same price, eg. Roasted groundnuts. As for snickers never reducing the size, I don't know if that is true in Asia. There was a gap of many years when I did not eat snickers, but when I bought one recently it was definitely smaller than what I recall. Used to be if you were hungry mid-afternoon, a bar of snickers could keep you going till dinner. Not the puny little one on offer nowadays.
Product quality is also down. I had a CRT TV which lasted 10 years before the power-on switch failed, so rather than repair it I finally decided to get a flat screen. My microwave is 11 years old, washing machine 10 years. Last year I bought a single plate induction hob. It failed a few weeks ago, so I dusted off the old single hob cooker I bought 11 years ago and that still works. So much for the new cheaper stuff.
when I first got here my health insurance was $50...it covered everything, no deductible, branded medication, $30 emergency room...$50 bucks.
a frita was .25 cents and it was made with real meat now its $4.00 and half the size with who knows what kinda meat, a mcd's burger had real meat...cmon marty Achilles is right on...peace
a frita was .25 cents and it was made with real meat now its $4.00 and half the size with who knows what kinda meat, a mcd's burger had real meat...cmon marty Achilles is right on...peace