Showing posts with label BLS. Show all posts
Showing posts with label BLS. Show all posts

Friday, August 21, 2009

Why Slackers Are Right & The Entertainment Value of Snuffing Grandma

In a time of workplace suicides surging 28 percent last year,* Joe Bageant (I really love this take-no-prisoners guy) cuts us a new avenue for understanding why the health care finance reform bill will never contain any options that solely benefit the overworked and underpaid underclasses (and why unions and good education are a thing of the past for the 99% of the workforce who are work slaves). He also clears up why people are so interested in hearing (every five minutes on Faux Snooze) about killing their grandparents. (It's a long essay today with links to three others which are more than worth your while, so put on a pot and pull up your chair.) (Emphasis marks added - Ed.)

Eddie and his fellow underclass Americans are stuck here. They have no idea that industrialized people elsewhere as poor as themselves do not live in such fear. They have no idea that old people in Sydney or Stockholm do not, as Eddie does, have to cut their blood pressure pills in half doses because they cannot afford to refill the prescription, which requires a doctor visit for re-authorization, plus $40 for the prescription monthly. We're talking about a man here in his seventies, living on about $800 a month, who, according to national social policy and benefits, is supposedly protected by Medicare - but chose the wrong plan under the purposefully confusing plan C, which is just another way to shift more money and profits uphill. But what if the profits were distributed more equally among full time American workers? What if that one percent of Americans last year had not earned as much as the bottom 45 percent combined? Every working American would be earning $72,394 per year at the least (a 2007 calculation). And there would be enough left over to double all Social Security payments to boot. And this is allowing for necessary industrial social reinvestment, taxes, balancing of trade deficits. An excellent calculation table of this can be found in the appendix of Charles Andrews' book, "No Rich, No Poor." I've asked a couple of capitalism loving economists to refute this table. One admits he cannot and the other refuses to return my calls.

I'd like to believe that Joe is really doing us a favor by putting this in laymen's terms (and giving us the lowdown on why kids today look forward to working for the Mob when they grow up.)

The Entertainment Value of Snuffing Grandma

A nation of children roots for the Mafia By Joe Bageant Every day I get letters asking me to weigh in on the healthcare fracas. As if a redneck writer armed with a keyboard, a pack of smokes and all the misinformation and vitriol available on the Internet could contribute anything to the crap storm already in progress. Besides that, my unreasoned but noisy take on this issue is often about as welcome as a fart in a spacesuit. None of which has ever stopped me from making a fool of myself in the past. So here goes. There ain't any healthcare debate going on, Bubba. What is going on are mob negotiations about insurance, and which mob gets the biggest chunk of the dough, be it our taxpayer dough or the geet that isn't in ole Jim's impoverished purse. The hoo-ha is about the insurance racket, not the delivery of healthcare to human beings. It's simply another form of extorting the people regarding a fundamental need - health. Unfortunately, the people have been mesmerized by our theater state's purposefully distracting and dramatic media productions for so long they've been mutated toward helplessness. Consequently, they are incapable of asking themselves a simple question: If insurance corporation profits are one third of the cost of healthcare, and all insurance corporations do is deliver our money to healthcare providers for us (or actually, do everything in their power to keep the money for themselves), why do we need insurance companies at all?

Answer: Because Wall Street gets a big piece of the action. And nobody messes with the Wall Street Mob (as the bailout extortion money proved). Better (and worse) presidents have tried. Some made a genuine effort to push it through Congress. Others expressed the desire publicly, but after getting privately muscled by the healthcare industry, decided to back off from the idea.

For instance: \ Franklin Roosevelt wanted universal healthcare.

\ Harry Truman wanted universal healthcare.

\ Dwight Eisenhower wanted universal healthcare.

\ Richard Nixon wanted universal healthcare.

\ Lyndon Johnson wanted universal healthcare.

\ Bill Clinton wanted - well we can't definitely say because he made sure that if the issue blew up on him, which it did, Hillary would be left holding the turd. Is it any wonder that woman gets so snappy at the slightest provocation? First getting left to hold the bag on healthcare, then the spots on that blue dress.

So why did American liberals believe Obama would bring home the healthcare bacon? Because they live in an ideological cupcake land. It's a big neighborhood, a very special place where "Your vote is important," and "by electing the right candidate, you can change our beloved nation." Most of America lives in that neighborhood, even though they've never personally met. It's a place where the shrubbery and flowerbeds of such things as "values" and "hope" bloom. Hope that our desires coupled with the efforts of a good and decent president can affect "change." Evidently these voters never heard the old adage, "Hope in one hand and piss in the other, and see which one fills up first." The slaughter of the innocents by the healthcare lobby has pretty much extinguished the political usefulness of the word hope. Nobody, especially Obama, uses it now. The first on-stage scuffle of the Obama administration, government assured healthcare, quickly settled down into the accustomed scenario of very rich and powerful people in expensive suits "finding middle ground," otherwise known as the status quo. Single payer healthcare soon became "a consumer government alternative to private insurance," and is now "a system of health cooperatives. Next comes "slightly better health insurance (but not medical services) than before, from the same insurance companies but at twice the price; don't worry though, we're increasing your tax load so you can afford it." The televised screaming matches, having served their purpose, are over now. The presidency and the nation have settled back into the normalcy of the officially sanctioned state consciousness and its curious non-language, one modified and shaped daily by corporate and government symbiosis. Over generations we've come to internalize this imagistic language, which is quite theatrical when heated up for public consumption and dully bureaucratic when attention is to be avoided. But always it is void of content and any sort of truth. In the corporately managed theater state, it's not whether a thing is true that matters, but how it sounds and looks and what you call it. Call end of life counseling a "death panel," and you've just turned mercy and choice into one more Great Satan. In the end though, healthcare American style comes down to the preferences of two elite castes, Congress and corporate powers, neither of which can exist without the other. Corporations need the government to sanction their methods of extracting wealth from the public. Congress needs corporations to finance its campaign chariot races. Right now members of Congress have an excellent chance of putting the arm on healthcare industry lobbyist for some real cash: Senator Smedley Heathwood: "Oh, I dunno, I'm sort of liking Obama's alternative." Godzilla Healthcare Inc.: "Here, take this suitcase full of gold bullion, call me if you run short. And remember, we've got that ‘Life is a pre-existing condition' bill coming up in the Senate soon." Siamese twins, joined at the hip, they share the same goal, preservation of control - the government's social control and the corporations' economic control. And you cannot have one without the other. Obama got elected on hope of reform, despite that one cannot reform a mafia, only pay increased extortion moneys.

He's fortunate that it was not a genuine demand for reform, just hope. We're fortunate we did not demand reform because we're not going to get it. Obama doesn't have to reform the healthcare industry mob. All he has to do is look like he took a shot at it, and hope it's convincing enough. What we've seen is probably his best shot, too. Why not? There is always the off chance it might work, in which case his "presidential legacy" would be assured. And if it doesn't, well, the serious progressives who are screeching mad at him now will still have to vote for him as the incumbent in 2012. Or learn to love somebody like Mitt Romney, Sarah Palin, Mike Huckabee, Jeb Bush, Rick Santorum (take your pick) or some as-yet-unknown the GOP drags out from under the hen house and ballyhoos as a "new face." Luckily, Dick Cheney is out of the question, barring a coup by the far right wing of the schizophrenic GOP. But still, after Palin, one shudders at the prospects. Whatever happens, we will not see Congress stand up against the extortion of its people by the healthcare industry. We will not see even the most ordinary kind of healthcare declared as a human right, as it is in so many other nations. We will see, however, greater access to the public treasury by the insurance corporations. Every nation in the world is now party to at least one treaty that addresses health as a human right, including the conditions necessary for the delivery of health services. Healthcare is a right under the Universal Declaration of Human Rights. Hell, even Saddam Hussein provided healthcare. That Americans cannot grasp this fundamental aspect of human rights (but then we cannot even get child nutrition, or limiting the number of times you can taser an old lady in an airport, out of the starting gate) and join the civilized world and assure its people of such things is testimony. Testimony that we live in a vacuum exclusive of the accepted standard of mercy and decency common to civilized democratic nations elsewhere. Testimony that even we the citizenry would rather maintain and spread lies than accept truths such as most people in countries with universal healthcare would not ever give it up in favor of the U.S. system. Most of all though, it is testimony that we live under an induced mass hallucination where spectacle replaces fact, information and common sense. In place of actionable information, we are served up screaming red faces - angry mobs manufactured for TV protesting "government interference in the people's healthcare choices." One must wonder what inchoate anger is really being tapped by the organizers of these strange "citizen protests." As usual, the straw boogeyman of socialism is once more invoked. "Oh my god! I'll have to give up my $1,100 a month insurance bill, which only pays 80% of my insurance costs AFTER I pay the initial $5,000 of those costs! If that ain't Joe Stalin all over again, I don't know what is!" We get the false media drama of "death panels." And being captives of spectacle and hyperbole, we friggin love it. The idea of death panels plays to our childish attraction to the extreme and entertaining. Killing Grandma is far more entertaining to our imaginations than say, guaranteed access to chest screens and blood pressure medicine. Two generations into this national infantilization, it's now the only national life we know - the ideological spectacle made real. To steal a page from Guy Debord, society has become ideology. We live in an antidialectical false consciousness, imposed at every moment on everyday life as spectacle. We are held in thrall. Our faculty of ordinary encounter has been systematically broken down. In its place we now have our unique social hallucination. Never do we encounter anything directly, yet we get the illusion of encounter. This includes encounter with each other. Anyone who lives in meatspace with his or her fellow Americans could not deny 57 million of them health. In this society no one is any longer capable of recognizing anyone else. Instead, we see others as the screamers at the town hall meetings, or as communists who want to give free healthcare to illegals and establish death panels. Or as Christian fundamentalists, or as liberals or conservatives. Or as celebrities or as nobodies. But most importantly, whenever we must reach any significant agreement as human beings, whether it be about something as globally insignificant as U.S. domestic policy (we are only 6% of the world population, and though it hasn't soaked in yet to most Americans, we're also broke and owe the Chinese loan shark a wad) or as significant as global warming, we immediately cede the field to ideology. We simply don't know how to do anything else. Ideology has utterly triumphed. It has separated us from ourselves and built itself a home inside our consciousness, from whence it operates now as our reality. There is no going back, only forward. Given that we are a nation of children who prefer to close our eyes and make a hopeful wish with Tinkerbelle, rather than give hope the piss test, then let us hope to high hell. We may as well go for broke. So let us hope that, in going forward, new and unforeseen developments in the national consciousness occur. Developments that offer an escape from this one so deeply colonized by the corpo-political machinery we created - and which in turn recreated us. One that will break us loose from enthrallment. Maybe collision with a giant asteroid. Or that Garth Brooks will be barred from making a fifth comeback tour. That's one hope. A consciousness shattering event by American standards. Another hope is for an absolute and total collapse of the system. At this point, I'll take what I can get.

And how did those slackers come up smelling like roses? Even though their children want to grow up and work for the mob (and not only as a last resort)? Joe Bageant explicates these lessons for us in an exchange with one of his correspondents.

From the beginning of recorded history there have been slaves and other forms of cheap labor. For many centuries, most people were just subsisting. Whether they were serfs, owned a small plot or otherwise got by, they were effectively slaves to their work in order to survive. When serfdom ended with the industrial revolution, people were able to switch to the cheap labor jobs in factories. Then with workers uniting in unions, things got a little better, but we were still slaves to our job because even those of us who had a middle management job, were still only a paycheck or two from losing everything. I used to tell my wife that even though I had a job which I had some control over and could decide what I was going to do on a given day, I was still a job slave because we could only survive for about three months without at least a job that paid about the same as the one I had. We are all effectively job slaves even if we have what we consider a good job with good pay and we are never going to get rich working as we do. Now in the last forty years there has been a concerted effort by employers to take back our gains and put us in (what they think is) our proper place. And sadly even though we could control our government by changing our elected reps, we never do it. We are as bought and paid for as Congress is. David ------ David, Amen brother! American capitalism needs a laboring underclass to survive. It requires that all participants be wage slaves. At the present, American capitalism has little to fear. Americans are convinced that jobs are the object of the game, especially well paying jobs, are that jobs are the answer to all economic problems and moreover, the purpose of life. Oh sure, working class Americans' outrage over such things as $55 million CEO salaries has more to do with the fact that their corporations went bankrupt than that the CEOs looted the companies. Regular working class folks are pissed at them not because of their greed and criminality, but because, as my friend Eddie said yesterday at the Twilight Zone Cafe here in Winchester, "The CEO's didn't do their jobs, and so other people lost their jobs." They see corporations as the great givers of jobs. Jobs are everything. And so the looting CEO and the corporation cutting cuts jobs to make the books look good for the big guys on Wall Street, are not guilty of looting, or cooking the books. They are guilty of "not doing their jobs," as if their "jobs" in any way resembled what the rest of us do. Workers know only work and jobs, because they have been undereducated, misinformed, university indoctrinated and psychologically pistol whipped into submission. It is utterly ridiculous that any adult cannot figure out the obvious inequity of this nation and American capitalism, where an elite one percent of the people grab 45% of the national pie. Such a conditioned stupidity and powerlessness makes you want to cry for your country. Or just get out of the goddamned place for long periods of time, to keep some sort of perspective and your sanity. I do some of both. But Eddie and his fellow underclass Americans are stuck here. They have no idea that industrialized people elsewhere as poor as themselves do not live in such fear.

They have no idea that old people in Sydney or Stockholm do not, as Eddie does, have to cut their blood pressure pills in half doses because they cannot afford to refill the prescription, which requires a doctor visit for re-authorization, plus $40 for the prescription monthly. We're talking about a man here in his seventies, living on about $800 a month, who, according to national social policy and benefits, is supposedly protected by Medicare - but chose the wrong plan under the purposefully confusing plan C, which is just another way to shift more money and profits uphill. But what if the profits were distributed more equally among full time American workers? What if that one percent of Americans last year had not earned as much as the bottom 45 percent combined?

Every working American would be earning $72,394 per year at the least (a 2007 calculation). And there would be enough left over to double all Social Security payments to boot. And this is allowing for necessary industrial social reinvestment, taxes, balancing of trade deficits. An excellent calculation table of this can be found in the appendix of Charles Andrews' book, "No Rich, No Poor." I've asked a couple of capitalism loving economists to refute this table. One admits he cannot and the other refuses to return my calls. But the truth is that the $78,000 a year doesn't mean shit. The price of that, redistributed or not, still means the destruction of what natural resources remain on the earth, simply because of the capitalist system we use to generate a money-based wealth economy instead of a labor or social credit based economy. One of the most insightful things I've ever heard came back in the 1990s out of the mouth of the dumbest looking slacker kid you can possibly imagine, a kid named Chris B. "Dude," he said, "money IS slavery."

Read the rest here. And think deeply. Suzan ____________________________

* WASHINGTON (AP) - Workplace suicides surged 28 percent last year, the Labor Department said Thursday, as anxious workers dealt with a struggling economy and watched colleagues depart in a rash of layoffs.

At the same time, the agency's Bureau of Labor Statistics said the total number of workers who died on the job from any cause fell by 10 percent.

The 5,071 workplace fatalities recorded in 2008 was the lowest number since the agency began tracking the data in 1992. That number includes 251 suicides, the highest number since official reporting began.

Labor officials did not seek to explain the sudden rise in workplace suicides. A BLS spokesman said the agency plans to research it more extensively.

The agency says economic factors could be responsible for the overall decline in fatalities. Workers on average worked 1 percent fewer hours last year and the construction industry - which usually accounts for a major share of accidental workplace deaths - posted even larger declines in employment or hours worked.

Gary Chaison, a professor of industrial relations at Clark University in Worcester, Mass., said the numbers suggest the struggling economy taking a toll on worker morale.

"Those who are at places where there have been substantial layoffs are trying to cope with survivor's guilt," Chaison said. "I also think there's tremendous anxiety in the American workplace. It's not just being anxious, its being depressed."

Tuesday, July 14, 2009

Shadow Statistics (True or False: U.S. Economic Statistics Lie)

From Smart Money we are treated to "secret" (no, not really) information: the numbers are rigged (and they have been for a very long time) - unless you listen to the people working for the Bureau of Labor Statistics. (Some people prefer the U-6 definition of real unemployment statistics.) For an inflation calendar and a wise essay by a foxy penguin on stupid things promulgated by the rightwingnuts click here. My friend Utah Savage has a comment on our current situation that at first made me laugh (in astonishment), and then, cry. Thanks for the heartfelt, woman! (Emphasis marks added - Ed.)

How’s the economy treating you? Chances are, your answer is colored largely by three things: whether you’re working (if you want to), how much you’re making and how quickly your expenses are rising. Economists rely heavily on the same factors to judge the nation’s health. At last count, 9.4% of the workforce is jobless. Compared with a year ago, the goods and services we produce are worth 5.7% less while the ones we buy are 0.7% cheaper. Two bright people might see sharply different things in those numbers. To one, the shrinking economy is a healthy unwinding of past excess, for example, while to another it’s a dangerous downturn that calls for bold government action. But what if the numbers themselves are something we should be debating? In the alarming view of a vocal few, America’s economic measures are misstated -- rigged, really.

The accusation goes like this: Surveyors collect the nation’s data and statisticians compile and report it. Politicians naturally want the numbers to show improvement. Not being able to change the facts, they focus on the handling of facts, pressuring statisticians to change their measurements. It’s not quite one grand conspiracy but decades of minor ones compiled. Today’s reports are so perverted, the theory holds, that the numbers have detached from common experience.

Pollyanna Creep

If the theory has a chief architect, it is John Williams, a semi-retired grandfather of five living in Oakland, Calif. The son of a chainsaw importer, Williams sold the family business in the 1970s and began consulting for corporations, recalculating government economic data to arrive at what he says were more reliable measures, and with them, truer forecasts. Today Williams runs Shadow Government Statistics (ShadowStats.com) from his home. For $175 a year subscribers get economic data and analysis adjusted to back out the accumulated effects of what Williams has dubbed the Pollyanna Creep - Pollyanna being the orphan protagonist of the 1913 children’s book who learns to play the “glad game” to find cheery perspectives on life’s sorrows. In other words, he provides figures he feels are properly miserable, to offset government ones he says are too prettied-up.

If Williams is right, unemployment is over 20%, gross domestic product is shrinking by 8% and consumer prices are jumping by nearly 7%. His forecasts border on apocalyptic. The government is creating so much new money, he says, that the all but inevitable result is hyperinflation, where “your highest denomination, the $100 bill, becomes worth more as toilet paper than money.” Buy physical gold, he advises.

Whether we believe the forecasts or not, the possibility of a Pollyanna Creep has serious implications. Social Security payments are just one benefit adjusted each year for increases in the cost of living. If the figures hadn’t been corrupted, says Williams, checks might be close to double what they are.

Williams has managed to attract plenty of press. A year ago, Harper’s magazine featured a cover drawing of a grinning Uncle Sam fondling numeral-shaped party balloons, with the headline, “Numbers Racket: Why the Economy is Worse Than We Know.” The story centered on Williams’ data. The San Francisco Chronicle followed with “Government Economic Data Misleading." Last fall in the London Times: “Forget Short-Sellers and Manipulators, Pollyanna Creep Could Be the Culprit.”

Government statisticians are frustrated. “Economic Data Seems Accurate” doesn’t make for a catchy headline, so the press, they say, are too quick to give credence to conspiracy theories. “We go out of our way to be transparent,” says Thomas Nardone, who during 32 years at the Bureau of Labor Statistics helped implement many of the changes in calculating the unemployment rate. "We’d be remiss if we didn’t make changes,” he says. “I’ve never seen measurement changes that were politically motivated.”

Katherine Abraham served as commissioner of BLS during the Clinton Administration. Commissioners, unlike the statisticians who work for them, are political appointees. Now a professor at University of Maryland, Abraham says she did see political pressure, but rarely, and never with results. Once, she says, a prominent lawmaker told her the BLS might get more funding if it would agree to propose changes that reduce the appearance of inflation. Abraham says she rebuffed the offer.

Decide for yourself. Here’s a roundup of measurement changes at the heart of Williams’ claims, along with responses from people who work closely with the measurements. I’ll focus on unemployment and inflation, but not GDP, since the chief flaw with it, according to Williams, is how problems with the inflation measure overstate real, or after-inflation, growth. (There’s a different case to be made - that GDP measures some fairly undesirable things, like the cost of war and divorce lawyers, and so isn’t a great proxy for economic well-being -- but I’ll save that subject for another day.)

Disappearing Jobless?

About 13 million people were unemployed during the Great Depression, or around 25% of the work force, but those are fairly recent estimates. At the time, the government simply didn’t track data like it does today, which made it difficult to judge whether things were getting better or worse. Two main developments in the 1930s made tracking unemployment feasible. The first was an improvement in the way statistics are used to turn a relatively small sample into a faithful representation of the larger population.

That allowed for the use of surveys. The second was the notion of basing one’s status as part of the unemployed work force on actions. Whether someone wants to work, after all, is a subjective thing. Whether they’re looking for work is not.

Today the BLS reports six measures of unemployment, called U-1 through U-6, for which the definition of unemployment gradually broadens. For example, 4.5% of the work force has been unemployed for 15 weeks or longer and is actively looking for work (U-1), while 15.8% is unemployed if we count those who say they want work but aren’t looking, and those who work part-time for lack of full-time options (U-6).

Williams takes issue with a 1994 change that coincided with a shift to computerized data collection from pencil and paper. Until then, a discouraged worker was someone who wanted to work but had given up looking because there were no jobs. The BLS tightened the restrictions with additional questions, which reduced the ranks of discouraged workers by half. As Williams puts it, “The Clinton administration dismissed to the non-reporting netherworld about five million discouraged workers.” Add those in, he says, and unemployment approaches Great Depression levels.

Nardone, the longtime BLS economist who today serves as assistant commissioner for current employment analysis, says the 25% unemployment rate often cited for the Great Depression is based on research that corresponds with today’s U-3, the unemployment rate most commonly reported by the media. It stands at 9.4%, recall - not close to Depression-era levels.

The 1994 changes did reduce the ranks of discouraged workers, but also introduced a new category: the marginally attached, who want jobs but aren’t looking for reasons like transportation problems and child-care requirements.

The most commonly watched measure (now U-3, before the change U-5) is mostly unaffected, since it doesn’t include discouraged workers. The benefit of the changes, explains Steven Haugen, a BLS economist, is a less subjective measure of discouragement, and some additional ways to judge whether the nation is not only working, but working up to its ability. Williams says the change reduced the broadest measure of unemployment in a way that “doesn’t match with public perception, and for good reason.”

For a BLS paper describing changes to its unemployment measure, see here.

Rent, Geometry and Hedonism

The same agency that reports unemployment, the BLS, also reports the consumer price index. It tracks changes in the prices of more than 8,000 goods and services, from apples in New York to gasoline in San Francisco. There are several variants of the CPI index. For example, CPI-W weights things like fuel more heavily to better reflect the commutes of workers, and is the basis for Social Security adjustments. CPI-U, the measure most often reported in the media, includes items a typical urban consumer might buy, and determines adjustments to inflation-indexed Treasury bonds. Note that “core” inflation, which excludes food and fuel, isn’t used as the basis for any federal spending program (and isn’t called “core” by the BLS, which reports but doesn’t seem to especially prize the measure).

Most CPI criticism is based on three changes that affect all indexes. In 1983 the BLS replaced house prices with something called owners’ equivalent rent to measure the cost of shelter. Williams and other critics say it understates the cost, since house prices, until recently, had outpaced rents.

John Greenlees, a BLS economist, says the new method is the most widely used among developed nations and is meant to fix a flaw in the old one. The CPI is supposed to measure things people buy to use, not things they invest in. For many people, houses are a little of both. The new measure attempts to isolate the portion of housing expenditures that best reflects the cost of living.

Williams says the purchase price of housing is an important factor in determining a constant standard of living, and he doubts the ability of “the government to accurately calculate how much a person would pay to rent his own house.”

Another change: In 1999 the BLS adopted a geometric mean formula to replace its arithmetic mean one. The new method weights goods less as their prices rise, and is supposed to reflect patterns of consumer substitution.

Critics say that treats consumers as if they’re no worse off when they switch to hamburger from steak. Greenlees says the analogy is flawed; the methodology allows substitution only between similar goods in the same region - from steak in Chicago to a different type of steak in Chicago, and not to hamburger. The old measure was really an overstatement of price increases, one that assumed consumers don’t react at all to higher prices, he says. Also, the impact is relatively small. The BLS has continued to calculate prices under both methodologies and says over five years ended 2004 the new measure reduced CPI growth by 0.28 percentage points a year. Williams says geometric weighting has moved the CPI away from measuring a constant standard of living. He says that when the effects are combined with those of other changes, like increased price surveying among discount stores (which he contends offer poorer service and thus a lower standard of living than the shops they replaced) the overall impact is larger than the BLS states.

Finally, in 1999 the BLS began using what it calls hedonic adjustments. Williams explains the approach with a dash of sarcasm: “That new washing machine you bought did not cost you 20% more than it would have cost you last year, because you got an offsetting 20% increase in the pleasure you derive from pushing its new electronic control buttons instead of turning that old noisy dial.” He calls the impact on CPI “substantial.”

Greenlees says the name “hedonic” was an unfortunate choice, since the technique has little to do with making judgments about pleasure. It’s designed to measure the quality difference between goods when one is discontinued and must be replaced in the index with another that’s not quite the same. Adjustments can push the index in either direction, but Greenlees says the overall impact since the change has been a tiny increase in the CPI -- about 0.005% a year. Williams says some hedonic adjustments are indeed necessary, like when the size of a box of crackers changes from 12 ounces to 10 ounces. But more theoretical adjustments, he says, “overstate the quality of what the public is buying."

The BLS has published a 17-page paper countering what it calls misconceptions about the CPI. Find it here.

Williams suspects his charges motivated the paper, and has issued a response — a rebuttal to the rebuttal, if you like — here.

Wanna job in this economy? Click here for the truth about the military occupation of high schools and where most of the jobs are to be found today. Suzan ______________

Friday, May 15, 2009

Mish Reports "Wholesale Prices Post Largest 12-Month Decline Since 1950"

You can't get better information about the future of your pocketbook than to keep up with Mish (Mike Shedlock).

Inquiring minds are investigating the Producer Price Indexes For April 2009. The Producer Price Index for Finished Goods increased 0.3 percent in April, seasonally adjusted, the Bureau of Labor Statistics of the U.S. Department of Labor reported today. This rise followed a 1.2-percent decline in March and a 0.1-percent increase in February. At the earlier stages of processing, prices received by producers of intermediate goods moved down 0.5 percent following a 1.5-percent decrease a month earlier, and the crude goods index advanced 3.0 percent after declining 0.3 percent in March. The index for finished goods less foods and energy edged up 0.1 percent in April following no change in the previous month. In April, higher prices for light motor trucks, pharmaceutical preparations, and consumer plastic products slightly outweighed lower prices for civilian aircraft, tobacco products, electronic computers, primary batteries, and non-wood commercial furniture. Finished Goods PPI (click here for table). Although the above table shows an increase of .3% compared with last month, year over year comparisons have been negative for 5 consecutive months. Moreover, prices of light duty trucks were up in April. That will not last long because dealers must cut prices to liquidate inventory. In turn, 2009 inventory liquidation will negatively impact demand for cars and truck in 2010. Intermediate and Crude Goods PPI (click here for table). The table shows that in spite of crude prices rising from $35 in December to over $60 in May, that year over year comparisons are very favorable. Those comparisons will remain favorable for many months to come judging from energy prices. $WTIC Light Crude Weekly Chart (click here for chart). The above chart shows that year over year energy prices are going to be increasingly favorable at an accelerating rate for 3 months, then favorable at a decreasing rate for another 4-5 months. Thus I expect to see finished goods, intermediate goods, and crude goods prices to drop every month (year over year) for a full year. Gasoline Prices - Where To From Here? Inquiring might be asking about gasoline prices in the short term. Let's consider some technical and fundamental factors starting with the following daily chart of crude prices. Click here for rest of article.
Wake up! Suzan ____________________