Inflation!! No wait...

[Francesca R]

this is interesting..

Papers posted on the FRB section on "discussion" don't mean they are adopted by the FOMC in setting policy.

Moreover, in that article, in the period after 2009 the personal consumption expenditure price index reports significantly lower inflation than the CPI does. Seems to me that if the "desired conclusion" was to show that inflation was lower then that would have been included rather than excluded, no?

So it is not clear what you are trying to show here.

 

[kevsta]

Papers posted on the FRB section on "discussion" don't mean they are adopted by the FOMC in setting policy.

Moreover, in that article, in the period after 2009 the personal consumption expenditure price index reports significantly lower inflation than the CPI does. Seems to me that if the "desired conclusion" was to show that inflation was lower then that would have been included rather than excluded, no?

So it is not clear what you are trying to show here.

well, presumably if they had in mind switching to it, reporting sudden large divergences from the previous methodology (in their favour) when some people already doubt the current readings, would not be very desirable?

 

[Francesca R]

So they pulled a "double-bluff" but you're so sharp they'd have needed a triple one to fool you?

 

[kevsta]

So they pulled a "double-bluff" but you're so sharp they'd have needed a triple one to fool you?

lol, I didn't say that. I'm clearly not as sharp as you young lady.

so why do you think he left the last 2 years off the report?

 

[Francesca R]

Well I can't see your chart very well but well enough to see that the PCE price index is plotted as % change year/year and the CPI and core CPI are index levels.

So why the smoke'n'mirrors? How about you get an honest graph (that's legible)

ETA:

 

[kevsta]

Well I can't see your chart very well but well enough to see that the PCE price index is plotted as % change year/year and the CPI and core CPI are index levels.

So why the smoke'n'mirrors? How about you get an honest graph (that's legible)

ETA:

[qimg]http://www.internationalskeptics.com/forums/imagehosting/127464f23fcfced907.jpg[/qimg]

its neither my graph, nor would I know where to get an "intellectually honest" one.

I will attempt to do just that, but if you can pull one off your Fundie Bloomberg terminal in the meantime it would be much appreciated.

 

[Francesca R]

I'll consider that "evidence" thrown out for now then . . .

 

[Sceptic-PK]

I particularly loved kevsta's conflation of a research paper with official FRB policy. And what a shock to find him guilty of the very same figure-fiddling he's accusing the Fed of!

I'm clearly not as sharp as you young lady.

That goes without saying.

 

[Francesca R]

<yawn>

(CPI vs PCE price index %y/y since 1980, no smoking gun)

 

[Puppycow]

so why do you think he left the last 2 years off the report?

One reason could be that economic numbers keep getting revised for a few years after they come out before they get finalized. Numbers for 2010 and 2011 are probably still subject to further revisions.

 

[kevsta]

<yawn>

(CPI vs PCE price index %y/y since 1980, no smoking gun)

[qimg]http://www.internationalskeptics.com/forums/imagehosting/127464f2405789abda.jpg[/qimg]

thank you, I knew this would be easier for you than me. and yes, evidence discarded.

I particularly loved kevsta's conflation of a research paper with official FRB policy.

not mine, Krasting's. and how is the research paper not relevant when the FRB then decide to use that metric in future calculations going forward?

do we know that the decision was in no way related to that research paper?

That goes without saying.

I am under no illusions about this with Francesca. you, are an entirely different matter

 

[Sceptic-PK]

not mine, Krasting's.

You spread it around. Take some responsibility for propagating nonsense.

and how is the research paper not relevant when the FRB then decide to use that metric in future calculations going forward?

do we know that the decision was in no way related to that research paper?

In its "Monetary Policy Report to the Congress" ("Humphrey-Hawkins Report") from February 17, 2000 the FOMC said it was changing its primary measure of inflation from the consumer price index to the "chain-type price index for personal consumption expenditures".

Now I see why we need a full audit of the Fed! Those sneaky devils built a time machine!

you, are an entirely different matter

Well, be sure to point out when I suffer a humiliation as bad as you just did.

 

[kevsta]

I do take responsibility for questioning this, and for misunderstanding that the CPCE metric is not new along with the stated inflation figure.

I heard Bernanke speaking the other day (whilst frontrunning gold at the time so he didn't have my full attention) and he was babbling on about PCE in response to this question from a reporter.

Scott Spoerry: Scott Spoerry, sir, from CNN. My head is full of questions, but I'm going to try and limit it to two related questions.

You're linking your inflation target of 2 percent to the PCE. The PCE is something that hundreds of millions of Americans have no idea what it is, they do know what the CPI is.

Can you explain in layman's term, something that regular folks might understand why they should not worry too much when inflation by the--if the CPI is different than the PCE. And the second question is related also to inflation and to the targeting because—Feds always been a little bit vague in terms of what sort of inflation it would accept and this is a marked change.

Because criticism of the Federal Reserve, criticism of you, but the institution itself has been so intense this year because it's a political year. There are people out there who are going to say the Federal Reserve have finally just admitted it. Their policy is to destroy 2 percent of the value of my dollars every year. How are you going to respond to those people and also could you answer the question about the CPI and the PCE. Thank you.

I do however consider this response from Krasting to De(b)tmeister on his blog valid, whether his chart was inaccurate or not

I want to thank Alan Detmeister for contributing to the comments on this piece. I did not anticipate that someone from the Fed would respond. I have many articles on the activities of the Fed, this is the first time a Fed official has contributed to the process.

The year end number for PCE was 2.3%. The Core PCE was 1.6%. The Fed will use the core number. If they did not, they would already have to tighten based on Bernanke's pledge to keep "inflation" at sub 2%.

So core it is, and I maintain that this is the most favorable metric that the Fed could have used to justify its monetary policy.

I think we will see CPI (includes food and energy) at 4% while core CPI lags at less than 2%. In other words, most of the 300mm citizens will pay the price.

Well, be sure to point out when I suffer a humiliation as bad as you just did.

a) I dont really consider questioning something that looks dodgy and getting better information from someone with a better understanding (and charting tools) of it than I, humiliation, although I can just imagine your glee at what you perceive as such.

b) like this? ok, if you insist

 

[kevsta]

http://www.guardian.co.uk/money/2012/jan/25/family-finances-debt

UK family debts up by almost 50% in a year

Aviva Family Finances report 2012 says the typical UK family owes £7,944 in unsecured borrowing, as inflation takes its toll

The typical debt owed by a UK family has soared by 48% since January 2011, as rising inflation has taken its toll on household incomes, according to the latest Aviva Family Finances report.

Research by the insurance company found that the typical UK family owes £7,944 in unsecured borrowing on credit cards, loans, overdrafts and other forms of credit, compared with £5,360 in January 2011. The figure represents 32% of a typical net annual income and suggests families are falling further into debt as financial pressures grow.

and all this at the lowest interest rates in history, its not looking good.

when I bought my first house, interest rates were at 14%

 

[The Don]

It's interesting that the measure of debt they chose to use was unsecured debt. I'm never quite sure how that is calculated, in particular the Credit Card portion.

Mrs Don and I probably have an average balance of £1,000 each on our credit cards but the amount owed is paid off in full every month. The balance is due to the interest-free period on last month's spending and the sending to date this month.

From the perspective of unsecured debt, is this counted as a debt of £ 0, £1,000 (the average balance) or £2,000 (the maximum balance) ?

Our largest debt is our homeloan. When we bought our house three months ago this stood at £150,000 - we now have it down to a much more manageable £30,000 and should have it paid off* in the next couple of months. At the same time our credit card spending has increased as we've bought things for the house so, assuming that as yet unpaid current and previous month credit card balances are treated as unsecured borrowing:

• By the measure used in the Aviva study (Aviva, an insurance company, could they possibly be looking to sell Payment Protection Insurance (PPI) ?), our indebtedness has increased.
• Overall however, including secured borrowing, our indebtedness has reduced by £120,000 in the last three months

* - actually, because we have an offset account, our indebtedness has remained the same, it's just that we've offset £120,000 of the loan with savings.

 

[daenku32]

The typical debt owed by a UK family has soared by 48% since January 2011, as rising inflation has taken its toll on household incomes, according to the latest Aviva Family Finances report.

That's not inflation. That's sucky British economy. They wanted austerity, and that's what they got. Stagnant wages and lack of jobs.

 

[MinnesotaBrant]

Milk prices went up here in MN because they slaughtered a half million milk cows. I did notice my Velveta slices are now about 12 bucks.

 

[Puppycow]

Huggies Price Cut Shows Why Bond Market Backs Bernanke QE3

Procter & Gamble Co.’s failure to raise the price of Cascade dishwashing soap shows why investors are buying Treasuries at the lowest yields in history, giving the Federal Reserve more scope to boost the economy.

The world’s largest consumer-products company rolled back prices after an 8 percent increase lost the firm 7 percentage points of market share. Kimberly-Clark Corp. started offering coupons on Huggies after resistance to the diapers’ cost. Darden Restaurants Inc. (DRI) raised prices at less than the inflation rate as patrons order more of Olive Garden’s discounted stuffed rigatoni than it anticipated.

. . .

Companies can’t raise prices because wage growth remains stunted, even though unemployment has started to recede. Average hourly earnings rose 1.9 percent in January from a year earlier, the smallest increase since April, and down from 3.2 percent in 2008 and 3.7 percent in January 2009, the Labor Department said Feb. 3. The jobless rate fell to 8.3 percent in January, the lowest level in three years, compared with a high of 10 percent in October 2009.

“This recovery has not been a great recovery with regard to income gains, and income gains are a function of both growth in wages and jobs,” Jeffrey Rosenberg, the chief investment strategist for fixed-income at BlackRock Inc., the world’s biggest money manager, said in a Feb. 1 interview in New York. “Why can’t you pass price increases through to consumers? It’s because consumers aren’t seeing income gains.”

 

[oggiesnr]

Retaillers are caught between the devil and the deep blue sea. They have to have product to sell and so manufacturers have some freedom to put up prices (strange but it often seems that all manufacturer prices rise in step). The issue for the retailler is haow to pass that on (if at all). Over the past few years the big retaillers have been trying to take out costs where they can (the rise of self scan for example), in the UK they take the hidden job subsidy by keeping wages low and knowing that benefits will kick in.

However there comes a time when, even with a crappy economy, something has to give or we get the wave of administrations that we've had recently. That's the point I thimk we're now at and it's not going to be pretty.

Interesting the one area where there seems no problem in putting up prices is commercial rents, landlords are still acting like there'sa boom out there!

Steve

 

[The Don]

Interesting the one area where there seems no problem in putting up prices is commercial rents, landlords are still acting like there'sa boom out there!

Steve

Not here in the UK, commercial landlords are hurting badly, rents are falling and so is occupancy