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by nixon_why69 5 days ago
Because the basket of goods for inflation doesn't separate optional from mandatory consumption.

If housing, healthcare and education are outpacing the topline inflation number, a lot of marginal families will be squeezed. The cheap LG TV doesn't really make up for it.
1 comments
ch4s3 5 days ago
Nevertheless if you lump those costs into an inflation number it won't be a lot higher, the Total Living Cost calculated for 2023-2024 showed 4.4% inflation vs 3% CPI. There are a lot of ways to slice and dice this, which is why people stick to the classic CPI.
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hnfong 5 days ago
If you factor in an extra 1.4% inflation per year into the numbers, you're not going to see any "real" wages growth over the 40 year period.

So the 1984 income is 60,420, if you calculate 60420 * (1.014)^40, which is assuming there's a 1.4% difference between the two disputed methodologies, you'd get about 105k. But the actual 2024 income is 83,730. Which I think means that if you take the non-CPI methodology to calculate real income growth, it's actually negative.

I'm not saying one method is more correct than the other (I don't know enough about economics to judge), but 1.4% annual difference matters a lot when you're talking about four decades.

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nixon_why69 5 days ago
Yes, if I ignore that point then the top line number is the same. But it's a choice to compute top line CPI the way they do.

I'm explaining why people are still squeezed despite the top line number saying they shouldn't be.

When data and anecdotes disagree, then double check the way you compile your data.

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ch4s3 5 days ago
The data shows that inflation inclusive of housing, education, and healthcare isn't that much higher than CPI, which is because CPI already includes shelter, which accounts for ~36% of CPI.

You assertion that CPI doesn't include housing is just wrong.

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nixon_why69 5 days ago
I'm not asserting they don't include housing. I'm saying housing is non-optional, so having low inflation on flat screen TVs is cold comfort if you're struggling to pay rent. The basket of goods isn't the same for everyone.

It's been like 5 years now of low consumer sentiment and increasing consumer debt while people who don't feel it are flabbergasted, the top line CPI number is fine, why aren't people happy?

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ch4s3 5 days ago
> I'm saying housing is non-optional, so having low inflation on flat screen TVs is cold comfort if you're struggling to pay rent.

You're missing the point, rest is included in that top line low inflation number.

> the top line CPI number is fine, why aren't people happy?

secular stagnation? Cultural malaise? Expectations formed by ZIRP.

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