[JumpCrisscross]

> if the unemployment rate was as low as is advertised we would be seeing wage growth

Median usual weekly real earnings for Americans 16 and over were 5% higher in Q1 2018 then they were Q4 of 2007 [1]. From Q1 2014 to Q1 2018, we've seen that statistic grow at about 1% per year (CAGR).

[1] https://fred.stlouisfed.org/series/LES1252881600Q

[markkanof]

But that increase in wages does not seem to be keeping up with inflation, which translates to a net loss for the average person.

http://www.inflation.eu/inflation-rates/united-states/histor...

[JumpCrisscross]

> that increase in wages does not seem to be keeping up with inflation

In economics, the "real value of a good or other entity has been adjusted for inflation" [1]. The statistic above is thus inflation adjusted. Nominal wages (i.e. those not adjusted for inflation) are up close to 30% between May 2007 and May 2018 [2], or 2.3% per year [3].

[1] https://en.wikipedia.org/wiki/Real_versus_nominal_value_(eco...

[2] https://fred.stlouisfed.org/series/CES0500000003

[3] (26.9 / 20.84) ^ (1 / 11) - 1

[lifty]

Are housing, healthcare and education costs included in the inflation numbers?

[JumpCrisscross]

> Are housing, healthcare and education costs included in the inflation numbers?

Yes, CPI includes housing, healthcare and education. The only measures commonly stripped out are food and energy, to exclude commodity volatility; that measure is presented as "core inflation" and is more useful when considering things like interest rates than real wages.

[vivafrance]

You’re wrong. House prices aren’t included anymore in CPI. Imputed rents are. These are very different things.

Anyways, I’m sure all this falls on deaf ears. If you used the same calculation the Fed used in the 80s to measure inflation we’d currently be at 10%. You can pick and choose and weight whats in the cpi basket to get any number you want and the government is incentivized to make it appear lower.

[JumpCrisscross]

> House prices aren’t included anymore in CPI. Imputed rents are

CPI calculates something called "owners’ equivalent rent of residences" [1]. This is reasonable as nobody purchases a new house every year; instead, one "uses" a portion of the home value over time. When house prices go up, this measure goes up by a similar measure.

Housing was put into CPI in 1954, when it was included as a user-cost item. It was replaced in the early 1980s because user-cost methods include "ex ante expected gain" while usage pricing "includes actual ex post realized capital gains on the house" [1].

> If you used the same calculation the Fed used in the 80s to measure inflation we’d currently be at 10%

Well, yes. You'd be excluding everything invented since 1980, e.g. all modern technology. We don't spend the same fraction of our budget on hams and eggs, as the 1980 definition measured, and most people have health insurance costs now.

If someone insists on living like it's 1980, I suppose observing the old metric would be perfectly valid.

[1] https://www.bls.gov/opub/hom/pdf/homch17.pdf page 104

[2] https://www.brookings.edu/wp-content/uploads/1980/06/1980b_b... page 558