Dear John: I was wondering: With a 0.4 percent rise in food prices and a 1.1 percent rise in energy, how did they come up with a 0.1 percent rise in the Consumer Price Index? G.S.
Dear G.S.: You are a month behind. But your question is valid anyway.
How did they do that?
For March, the Bureau of Labor Statistics reported an increase of just 0.2 percent in consumer prices (CPI-U), despite a rise of 0.4 percent for food and a whopping 7.5 percent hike in gas-utility prices, as well as a 7.8 percent jump in energy services.
What declined? Not much. The BLS said gasoline prices were down 1.7 percent (not at my pump), and energy commodities dropped 2 percent in price.
John Williams, who writes a newsletter called ShadowStats, says, “For the third straight month, energy inflation was suppressed sharply by seasonal adjustments that had been warped by non-seasonal, irregular and highly volatile swings in oil prices since the 2008 panic.”
I broke this same story a few years back.
The consumer price index at the time looked to be understating energy inflation. So I called up the guy at the top of the CPI press release and asked him about what seemed to be a discrepancy. He told me — to my utter surprise — that the energy numbers were wrong and were being thrown off by bad seasonal adjustments.
I wrote the story, the markets reacted, and everyone has since forgotten that this sort of thing happens.
The problem with seasonal adjustments is that they adjust. They come full circle. So if inflation is being understated in the spring because of bad adjustments, the error will automatically be corrected sometime later in the year. Seasonal adjustments — unless they are tampered with — always neutralize before the 12 months are finished.
So, as I discovered during that phone call, you can expect inflation to pick up sometime in the months ahead. And all of those people who are blindly cheering today’s low inflation will be ignorantly wailing when prices pick up statistically.
Dear John: My interest in writing this e-mail is your commitment to this Census “scandal.”
Not sure if I buy into it — there indeed might actually be something there, but [why hasn’t] the right-wing sound machine made this a “front page” call to arms?
Usually they find a scintilla of truth and run with it. But with this, they have remained relatively quiet.
I am a registered independent and open to many different viewpoints, and I must say I have learned much from reading your work. J.S.
Dear J.S.: Look, I’m happy you read my column. But I’m following a story, and I really don’t care which political factions “run with it.”
The truth is the truth, and it doesn’t come in Republican red or Democrat blue.
I’m also an independent. Never been registered with a party. Another truth is that I don’t like Democrats much. And I don’t like the Republicans either. In fact, if there were third and fourth major political parties, I’m sure I wouldn’t care for them.
It’s quite simple. The fact that Census workers were falsifying data goes beyond any political argument. Our elected and appointed officials already do their jobs poorly enough. If they are being given bad statistics because a group of people — for whatever reason — have decided to fudge the numbers, our misguided leaders will get further lost and take us down the wrong path with them.
If the statistics were fabricated because people thought it was their political duty to do so, those folks should be jailed.
Let’s see where this story goes.
What we know so far is that some people fabricated enough data to have affected the economic statistics being given to officials and the public. Now we are only waiting to see what investigators — and I — turn up on how widespread this fraud was.
In other words, stay tuned. I think I know where this one is going.