An Interesting Look At Inflation

[teejayevans]

Originally Posted by RockOn

Great chart

I find it interesting that my health insurance premium has gone up 10% a year for about 10 years now (it seems), and at the same time they raise my deductable and copays, yet an average of all 10 health catagories (not weighted) is 3.8%. Now explain that one to me Independent! I'm sure you can find some stats that show my premiums only went up 75.439% or so.

All of health care is 6%? Not at my house, my premiums alone are about 20% (I pay 1/2, I suppose that is what they count) of an average families income, not to mention all the other medical costs not covered which is probably another 5% (copays, deductables, dental work) on a typical families income.

Also look at the huge housing component. As house prices doubled and tripled, they use some obscure rent increase. It's obviously a rigged game and most of us know it.

Health insurance is 0.5% of spending

Maybe for those in congress it is.
TJ

[Johnphx]

Originally Posted by Want2retire

Wow! What a rip-off. I get the same cable - - "bare bones" basic TV and mid-level cable internet from Cox Cable - - for $58.47/month.

My most recent electric bill for my 1558 square foot house was $36.42 though it can be much higher in the late summer. Never anywhere near as high as yours, but then my house is smaller too.

Yeah, with regards to the cable I am getting ripped off for sure. My HOA fees include $25 per month for basic cable (just the network channels) and then I pay $30 for expanded basic. Internet is about $50 per month.

Living in Maricopa I don't get Cox (which I imagine would be cheaper) we have a smaller provider, Orbitel, and because cable companies have local monopolies I am stuck.

I could go with Satellite but I have been told that the $25 built into our monthly HOA dues is non negotiable and will not be dropped.

Our electric is also higher I suspect because we are forced to buy from a 3rd party broker, Electrical District #3. They don't produce any power themselves, they simply buy it from APS and SRP and then resell it to us (and naturally they need to cover their costs so the price is higher).

Lol, hindsight is 20/20.....

[cute fuzzy bunny]

Sounds like you need a new homeowner board and some revisions to your utility providers and costs.

[calmloki]

a very interesting interactive graphic on the CPI:
All of Inflation’s Little Parts - The New York Times

[Want2retire]

Originally Posted by Johnphx

Lol, hindsight is 20/20.....

Phoenix is probably an area with higher cost of living in general than what we have in Louisiana. That might have something to do with it. I have often suspected that utility/cable prices could be influenced by what the market can bear.

[RonBoyd]

Originally Posted by calmloki

a very interesting interactive graphic on the CPI:
All of Inflation’s Little Parts - The New York Times

Wow! What an impressive chart. (Now, I will look at the numbers.)

[Independent]

Originally Posted by RockOn

Great chart

I find it interesting that my health insurance premium has gone up 10% a year for about 10 years now (it seems), and at the same time they raise my deductable and copays, yet an average of all 10 health catagories (not weighted) is 3.8%. Now explain that one to me Independent! I'm sure you can find some stats that show my premiums only went up 75.439% or so.

All of health care is 6%? Not at my house, my premiums alone are about 20% (I pay 1/2, I suppose that is what they count) of an average families income, not to mention all the other medical costs not covered which is probably another 5% (copays, deductables, dental work) on a typical families income.

Also look at the huge housing component. As house prices doubled and tripled, they use some obscure rent increase. It's obviously a rigged game and most of us know it.

On the 0.2% spending on fuel oil, notice how "clocks, lamps, and decorations" were 0.3% spending. "Other Linens" were 0.2%. It's all a terrible joke.

College is up 6.1% but I paid a 12% (average) increase each of the last two years.

"Other Motor Fuel" gets 0.3% of spending ...tell it to the truckers.

I see the same thing here - "This is what I think I spend. The CPI says the average family spends their money differently. Therefore, the CPI is wrong. And not just wrong, but intentionally wrong."

You are skeptical of fuel oil, vs. "clocks, lamps, and decorations" and "other linens". But, judging from what you've posted here, you have done zero research to compare them. When d actually does some research, you ignore it.

I did some research on college costs that support the 6.1%. You said "nice data" but proceeded to ignore it an only look at your situation.

Now, you're confusing producer costs with consumer costs. If I own a retail store, the money I spend stocking the shelves isn't directly part of the CPI. Remember, the "C" stands for consumers. If I own a trucking business, my cost for diesal isn't counted directly in the CPI. In both cases, the CPI will include the final impact on consumer prices, but the fact the business is a sole proprietorship doesn't convert producer costs into consumer costs.

I think the correct question at this point is "What evidence would be sufficient to convince you that the CPI is a reasonably good measure of average consumer prices in the US?" You have an opinion that the CPI is grossly wrong, I'm becoming convinced that your opinion is not "falsifiable"
Falsifiability - SkepticWiki

[RockOn]

Originally Posted by Independent

I see the same thing here - "This is what I think I spend. The CPI says the average family spends their money differently. Therefore, the CPI is wrong. And not just wrong, but intentionally wrong."

You are skeptical of fuel oil, vs. "clocks, lamps, and decorations" and "other linens". But, judging from what you've posted here, you have done zero research to compare them. When d actually does some research, you ignore it.

I did some research on college costs that support the 6.1%. You said "nice data" but proceeded to ignore it an only look at your situation.

Now, you're confusing producer costs with consumer costs. If I own a retail store, the money I spend stocking the shelves isn't directly part of the CPI. Remember, the "C" stands for consumers. If I own a trucking business, my cost for diesal isn't counted directly in the CPI. In both cases, the CPI will include the final impact on consumer prices, but the fact the business is a sole proprietorship doesn't convert producer costs into consumer costs.

I think the correct question at this point is "What evidence would be sufficient to convince you that the CPI is a reasonably good measure of average consumer prices in the US?" You have an opinion that the CPI is grossly wrong, I'm becoming convinced that your opinion is not "falsifiable"
Falsifiability - SkepticWiki

If being understated about 3% is "gross", then that is my opinion.

The evidence to convince me, if you could prove John Williams research on the CPI to be incorrect. I choose to accept that he is accurate in how the method of reporting has changed. Nobody has challenged him with any facts. You have said he is wrong but have not offered any proof of that. If his research is correct, there is no reasonable explanation for that other than fudging, I'm the one adding "intentional". You don't want to look into that anymore than I want to spend 1000's of hours researching how the fudging is accomplished. (I noticed how you ducked the healthcare numbers, you only see what suits your point of view. I discussed the truckers previously, it wasn't necessary to go there. FWIW there was a story on the NBC Nightly News just a few minutes ago about how independent truckers families are getting hurt by soaring fuel inflation.)

P.S So you would be happy if I researched "other linens"? Get real, why the heck would anyone care about the price of "other linens" and then give it the same weight as fuel oil? One is a need, other linens, who the heck even knows (or cares) what it is. Same goes for "clocks, lamps, and decorations", that get's 50% more weight than fuel oil. And then house prices, which is the largest expenditure, and where we put our "other linens, clocks, lamps, and other decorations", are not included. They fudge that away with some phony rent equivalents. I can hardly stand it.

Where do I put the cost of the plumber I just hired to fix my sink? Or my new roof. I don't see a catagory for those. But "other linens", wouldn't want to leave that out.

[ladelfina]

Rockon.. it's there..
under "repair" (also .1%) which is half of garden/lawn care's .2% (!),
and rivaling "tableware".. also at .1%
(not to be confused with "dishes" which are another .1%).

[RockOn]

Originally Posted by ladelfina

Rockon.. it's there..
under "repair" (also .1%) which is half of garden/lawn care's .2% (!),
and rivaling "tableware".. also at .1%
(not to be confused with "dishes" which are another .1%).

I can't believe I missed it, I'm going to have to get a higher grade of reading glasses

Let me see, we don't include house prices because we only move every 10 years or so and don't need to buy one every year, but we include tableware and dishes, with our other linens, clocks, and lamps. Now those are major annual shopping events at our house

[clifp]

Originally Posted by RockOn

I can't believe I missed it, I'm going to have to get a higher grade of reading glasses

Let me see, we don't include house prices because we only move every 10 years or so and don't need to buy one every year, but we include tableware and dishes, with our other linens, clocks, and lamps. Now those are major annual shopping events at our house

I'm with Independent I hate to confuse with data since it seems to have no impact. As I posted the total amount of money spent on fuel oil sounds exactly right going by the revenue of the largest company in the business.

But you think fuel oil is too low (.2% ) and linens (.2%) is too high. Guess what based on my anecdotal evidence the exact opposite is true. You see my lifetime expenditure for fuel oil is $0. Not only that but no one in my extended family (sisters, cousins, nephews nieces,) has ever spent a dime on fuel in their life. This include the cousin who lives in Ohio, and the various years the rest of the family has lived in the east/midwest. (We are primarily a west coast family). My estimate is that our dozen households who $0 expenditures allows you to expend $3,000- $4,000 on fuel oil a year and still maintain a .2% expenditure on aveage. In contrast, I just priced sheets at Costco $80 for good queen sheets, throw in beach towel (for us West coast folks) that is $100. .2% of average family making $50K = $100. So a set of sheets a year and few towels and there you go. Only a small percentage of the households buys fuel oil every year, but everybody buys linens. I certainly spend more .2% on linen and the several girlfriends I dated that though nothing of forking over $200-$300 for nice sheets with 800+ thread count easily exceeded the average.

Your basic problem is you think your family is average. You guys aren't even close. I am sure you make more than $100K and based on your comments that 200K a year isn't that much I wouldn't be at all surprised if you make 150-200K+ a year.

Here is the reality check <16% of households make over $100K. Anybody over that is stretching the definition of middle class. 150K is top 3% and 200K+ is top 1%. There is only one word to describe people who make more than $150K/year wealthy. I don't want to hear about how you really aren't rich because it is so expensive to live... It is insulting to all of the households trying to get by on less than 40K

Essentially you are applying the cost increases you see as wealthy person and saying they apply to the average American, they don't. You are no more average than I am as single retired guy in my 40s living in Hawaii.
Every time you say this crazy, the government is lying. Independent or myself or somebody else, say well not according to this study; we provide you data and you just ignore it.

I'm done with this.

[kcowan]

The thing about CPI is that it does not represent the costs of any single consumer. So when you do retirement planning, you cannot use it with any confidence to forecast your future budget for living costs. You can use it to forecast income and anything that is inflation-adjusted. I have developed a personal index based on my actual expenses during the last 5 years. It is about 2% higher than CPI.

[RockOn]

Originally Posted by clifp

I'm with Independent I hate to confuse with data since it seems to have no impact. As I posted the total amount of money spent on fuel oil sounds exactly right going by the revenue of the largest company in the business.

But you think fuel oil is too low (.2% ) and linens (.2%) is too high. Guess what based on my anecdotal evidence the exact opposite is true. You see my lifetime expenditure for fuel oil is $0. Not only that but no one in my extended family (sisters, cousins, nephews nieces,) has ever spent a dime on fuel in their life. This include the cousin who lives in Ohio, and the various years the rest of the family has lived in the east/midwest. (We are primarily a west coast family). My estimate is that our dozen households who $0 expenditures allows you to expend $3,000- $4,000 on fuel oil a year and still maintain a .2% expenditure on aveage. In contrast, I just priced sheets at Costco $80 for good queen sheets, throw in beach towel (for us West coast folks) that is $100. .2% of average family making $50K = $100. So a set of sheets a year and few towels and there you go. Only a small percentage of the households buys fuel oil every year, but everybody buys linens. I certainly spend more .2% on linen and the several girlfriends I dated that though nothing of forking over $200-$300 for nice sheets with 800+ thread count easily exceeded the average.

Your basic problem is you think your family is average. You guys aren't even close. I am sure you make more than $100K and based on your comments that 200K a year isn't that much I wouldn't be at all surprised if you make 150-200K+ a year.

Here is the reality check <16% of households make over $100K. Anybody over that is stretching the definition of middle class. 150K is top 3% and 200K+ is top 1%. There is only one word to describe people who make more than $150K/year wealthy. I don't want to hear about how you really aren't rich because it is so expensive to live... It is insulting to all of the households trying to get by on less than 40K

Essentially you are applying the cost increases you see as wealthy person and saying they apply to the average American, they don't. You are no more average than I am as single retired guy in my 40s living in Hawaii.
Every time you say this crazy, the government is lying. Independent or myself or somebody else, say well not according to this study; we provide you data and you just ignore it.

I'm done with this.

A bit touchy. Some of what you say I agree with. The main point of my arguement is that the way inflation is calculated changed from the 70's to today resulting in a significantly lower reported rate today. I haven't heard a resonable arguement against that. It affects many things. I view this as some more of the slick new financial engineering. Inflation is inflation, inflation in the 70's is the same as inflation today, it hasn't changed. I lived in the 70's, I think prices are going up faster today than they were then. Yet we are being told " dont' worry, it's all under control". Two months ago the BLS told us there was no inflation at all, come on now, get real.

Until we can just call a spade a spade, I'm not interested in the details you guys use to justify the reported numbers. When you make a cake the same ingredients can be put together in many ways resulting in a quality cake or a non-quality cake. The BLS has revised how they put their ingredients together in a way it that benefits politicians, the spenders, and the "don't let the markets fall" supporters, in the government. The ingredients are very complicated. When you only want to look at the basic elements and ignore the complications like hedonics, your arguements may be ok. When you look at the total cake, and report zero monthly inflation in a time of high inflation, you have no credibility. If the BLS is the quality outfit you guys claim, why have they changed the rules several times? Are people so smuch smarter today than they were in the 70's? The BLS might think they have much better ideas on the CPI today, I think about CDO world when I hear about new and better ideas.

[Marquette]

We spent $225 in February to heat our townhome... natural gas heat.

We also spent $300 on, I think, 20 yards of organic cotton to make sheets and a blanket... and $2000 on a wool mattress and topper.

Cable + Internet was $58

Gas is way up but we were driving a lot more.

Next month, gas will be almost zero. Heating / cooling will be zero. Cable + Internet will be zero.

And housing costs will drop from $2200/month to $500/month.

AGI will probably hit $240k this year.

I've never considered myself average or normal... especially when it comes to spending patterns.

[Independent]

Originally Posted by RockOn

If being understated about 3% is "gross", then that is my opinion.

The evidence to convince me, if you could prove John Williams research on the CPI to be incorrect. I choose to accept that he is accurate in how the method of reporting has changed. Nobody has challenged him with any facts. You have said he is wrong but have not offered any proof of that. If his research is correct, there is no reasonable explanation for that other than fudging, I'm the one adding "intentional". You don't want to look into that anymore than I want to spend 1000's of hours researching how the fudging is accomplished.

How does someone prove that John Williams is wrong? I would normally compare Williams' calculations to the BLS calculations. I'd try to identify which steps are different, by how much, and why. But Williams doesn't provide any calculations.

(I noticed how you ducked the healthcare numbers, you only see what suits your point of view.

What would you like me to do with the healthcare numbers? My approach would be to try to find some non-BLS statistics and see whether they are close to your numbers or to the BLS numbers. But I already did that with college and gasoline costs and you said I was "lying with statistics". Okay, what would you believe?


I think other people have already covered linens, plumbers, etc.

[cute fuzzy bunny]

You two must have some very yellow shoes by now.

[RockOn]

Originally Posted by Independent

How does someone prove that John Williams is wrong? I would normally compare Williams' calculations to the BLS calculations. I'd try to identify which steps are different, by how much, and why. But Williams doesn't provide any calculations.



What would you like me to do with the healthcare numbers? My approach would be to try to find some non-BLS statistics and see whether they are close to your numbers or to the BLS numbers. But I already did that with college and gasoline costs and you said I was "lying with statistics". Okay, what would you believe?


I think other people have already covered linens, plumbers, etc.

My shoes are yellow, sometimes it the price you have to pay.

The lying with statistics is in how the total cake is made, not whether each ingredient is correct.

On Williams, you'd have to do what John Williams (supposedly) does, find out how it was calculated then compare it to how it is done now. Not an easy task. You might find Williams is actually accurate, more than you give him credit for. How can you dismiss his data without knowing if he is correct? If he is correct, how can that be explained? Is the world different now than it was in the 70's, 80's or 90's?

On healthcare, explain why my premiums (I am not the only one paying health premiums, am I?) are up way more in percentage terms, than the 3.8% average for all items in the chart, and have been for years. Also throw in a factor for my higher deductibles and copays, and other recently non-covered medical costs. Are the insurance companies that greedy? Maybe premiums are really the reverse equivalent rent of health care.

I just heard oil is $122 now, that's about 20% in what, 2 months. Inflation is out of control right now, if you haven't heard.