Mike (Mish) Shedlock | Nov 14, 2019 01:19AM ET
The BLS released its measure of the CPI today. The Atlanta Fed also released its "Sticky Price" CPI. Let's analyze.
Consumer prices jumped a higher than expected 0.4 percent today according to the BLS Consumer Price Report for October, primarily due to energy.
Key Points
CPI Items
I don't doubt declining energy prices. Gasoline is easy to measure. I don't doubt apparel prices are falling either.
For anyone wanting to buy a home, the CPI is grossly distorted but the latest figures would seem reasonable. The problem is the BLS does not factor in home prices so there has been massive understatement for years in shelter costs.
The same applies to medical care services. Anyone buying their own insurance will tell you what they pay has gone up 20% or more. For many, the cost of insurance is up 100-300% over the past few years.
The BLS conveniently averages all those on Medicare and Medicaid while simultaneously ignoring what corporations pay, and while also assuming the quality of care is up.
The whole thing is a joke, and a sorry one at that for anyone in school, anyone wanting to buy a home, or anyone buying their own health care insurance.
Sticky and Flexible Prices
The Atlanta Fed measures Sticky Prices (prices which move slowly) and Flexible Prices (which change fast). Apparel is an example of something that moves slow and energy is an example of something whose price changes frequently.
Year-Over-Year Comparisons
Congratulations!
Congratulations are due because as noted in Labor Productivity Dives as Unit Labor Costs Soar, you are gaining despite your anemic productivity.
Unfortunately, the Decline in Profit Margins and Investment Suggests Recession Due Now.
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