michaeledward
Grandmaster
Arnold reported last night that the government numbers say everything is swell when it comes to the economy. The Wall Street Journal has a different look at that information. Do you have any thoughts on this?
http://bigpicture.typepad.com/comments/2004/09/inflation_data_.html
http://bigpicture.typepad.com/comments/2004/09/inflation_data_.html
excerpts said:Favorable inflation numbers should be giving President Bush a boost in his re-election campaign. But while official figures show inflation remaining in check, consumers are being pinched by higher prices and that could affect votes in November. At the Sam's Club warehouse store here, Jim Long now buys food in bulk and complains he can no longer afford steak.
Recently, everyday expenses seem to belie government statistics. The Labor Department's July inflation report found prices rose 3% over the previous 12 months, down a bit from 3.3% in June and still low by historical standards.
Because food and energy prices can be volatile, economists often look at a gauge that excludes those categories to measure underlying inflation trends. The index, which includes prices for goods such as housing, furniture and cars, has increased at an annual rate of 1.8% in the past year.
The Federal Reserve in July pronounced "underlying inflation" to be "relatively low" and said that some of the recent rise in prices "seems to reflect transitory factors."
For consumers who have been paying about $2 a gallon for gasoline, $5 or more a pound for steak and $3 for a gallon of milk, inflation seems to be a lot higher than the government numbers indicate.
...
"The problem is, the everyday citizen still doesn't feel like there's a recovery. They judge it by the price of a quart of milk, a loaf of bread or a gallon of gasoline," says Robert Denton, a professor of political communication at Virginia Polytechnic Institute and State University in Blacksburg, Va.
Lower-income voters say they are worried about increased commodity prices, although consumers overall think inflation will remain at an annual rate of about 3% over the next 12 months, according to the University of Michigan consumer survey. Consumers also believe housing prices are too high, and there is widespread concern among older Americans about rising out-of-pocket health-care costs, says Richard Curtin, director of the university's consumer surveys.
But prices are only part of what is driving consumer unease. Some feel a pinch because their wages have risen less than prices. In July, average weekly earnings of production and nonsupervisory workers in the U.S., adjusted for inflation, were down 0.7% from a year earlier.
That is little comfort to consumers who seem to pay more attention to higher prices for food and gasoline. Prices of meat and poultry are 9.2% higher than a year ago, dairy products are up 14%, and gasoline has jumped 26%, according to the Labor Department.