Open Source Economic Statistics

The government has every incentive to misstate and exaggerate economic statistics, if not lie outright. The CPI excludes food and energy.

One of the websites coming to prominence in this volatile era is John Williams' Shadowstats. While some tasty appetizers of data are available freely on the front page, you have to pay money to eat the entrees.

Has anyone ever tried to create an open-source website for economic statistics? I'm picturing a page where anyone can log their observations. For example, enter Date of 6/2/10 and Loaf of Bread for $2. Or Date of 12/4/10 and Gallon of Gas for $3.03. Some algorithm would process the data points into a coherent result.

Would something like this even work? Would it be useful?

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GasBuddy

I regularly use GasBuddy.com to chart gasoline retail prices with charts like this. I buy 100-200 gallons at a time for storage and use the chart to time my purchases. When I'm traveling, I'll print out a map to see which jurisdictions have lower taxes on fuel.

From the site:

The GasBuddy.com network is a grass-roots community effort to lower gas prices. In a typical city, gas prices vary by about 30-50 cents per gallon in the US (10-15c/L in Canada). If everyone buys gas at the lower priced stations, it puts pressure on the higher priced stations to lower their gas prices since their sales will decrease. In effect, it makes gas stations more competitive.

All gas prices on the GasBuddy.com websites are reported to the website by ordinary people. By combining the efforts of 700,000 national members (and growing), it makes it easier to find the cheapest gas prices. Much of the time, you can save 15 cents per gallon (7c/L in Canada) without having to drive for 20 miles.

The CPI excludes food and

The CPI excludes food and energy.

No, it doesn't, although that's a common misconception. The Bureau of Labor Statistics reports several different measures of inflation. One of these (the "Core" CPI) excludes food and energy, because those prices are more volatile and so somewhat less useful for predicting inflation ahead. But the CPI numbers that are reported and used for indexing definitely include everything. This is why there was no COLA last year in social security: Because the price of energy plunged compared to the spike in 2008.

This issue tends to bring out the crazies and I'm too busy to really get into it, but you might want to check out this from the BLS, which really (in my opinion) eviscerates some of the wilder claims of people like John Williams of Shadowstats. But you don't need to read it to understand why shadowstats cannot possibly be right. Just get out a calculator and see what it would mean for the CPI to have been understated by 7 percentage points a year. It implies things about the economy that are ludicrous. Does anyone seriously think that from 1998-2008, living standards dropped by vastly more than they did so during the Great Depression?

Core CPI is reported by the

Core CPI is reported by the manufacturers of consent, the "real" numbers that are used for indexing are not reported (in the journalistic sense) to the ever under-informed masses. Just because data exists, doesn't mean that it is the data that gets pumped through the propaganda pipeline.

Does anyone seriously think that from 1998-2008, living standards dropped by vastly more than they did so during the Great Depression?

Thats hard to say. 1 in 8 Americans are on foodstamps, that cannot be a good sign. High-tech soup lines for a new generation.

Tent cities and folks living in cars... thats prosperity, right? It may not be bad for you, or for those who rode the housing bubble or tech bubbles. What about those folks who had no board to ride the wave? They got pulled under and paved over. Sure, the world view may have looked rosey on the television, suburbs and in the gentrified urban areas, but thats not how it looked to the 8 hispanic men crammed into a single room apartment.

I have never been to shadowstats, but now I think I may need to pay it a visit to see if it jives with what I have seen.

Core CPI is reported by the

Core CPI is reported by the manufacturers of consent, the "real" numbers that are used for indexing are not reported (in the journalistic sense) to the ever under-informed masses. Just because data exists, doesn't mean that it is the data that gets pumped through the propaganda pipeline.

Let's see if this is true. Here's the NYTimes article on April's inflation (the last one that has been reported):

Consumer prices fell in April for the first time since early last year, and inflation rose at its slowest rate since the 1960s, a new government report said.

Energy prices led the decline, falling by 1.4 percent in April, the Labor Department said.

Consumer prices over all fell in April by 0.1 percent, the Labor Department said in its monthly report on Wednesday. The decline was the first since March 2009. Prices rose by 0.1 percent in March 2010.

The downturn was led by a decline in energy prices, especially for gasoline and natural gas, the report said. Energy prices fell by 1.4 percent in April, the department said.

Food prices rose 0.2 percent, mostly because of higher costs for meat, poultry, fish and eggs.

But without the volatile prices for food and energy, the core index for consumer prices remained flat, as they did in March. Over the 12-month period that ended in April, the core index rose 0.9 percent, which economists said was the lowest it has been since the 1960s.

So, they don't report core until the sixth paragraph. It's hard to claim they're hiding the headline inflation number when they discuss it for almost the entirety of the story. (And note, incidentally, that downturn in inflation was caused by . . . energy prices! That's because they aren't excluded.)

How about March?

A flurry of reports on Wednesday portrayed an American economy limping its way through a broad-based downturn, as consumer demand softens and the labor and housing markets continue to struggle.

Though consumer prices stayed elevated last month, there were signs that inflation has started to recede, welcome news for the Federal Reserve as it tries to avert a prolonged recession while keeping prices in check.

“A credible case can be made that inflation is behaving as expected in a recession and starting to moderate,” Bernard Baumohl of the Economic Outlook Group wrote in a research note. “The healing process has begun.”

The Consumer Price Index, a bellwether inflation gauge that includes prices from a basket of common consumer goods, rose 0.3 percent in March after staying flat in February.

There were slight increases in the cost of housing, with rent, utilities and the price of heating oil accelerating from February. The cost of gasoline also stayed high, as the price of oil hit triple-digit record highs last month.

But some economists said the numbers could have been worse. Food and beverage prices, which soared last year, have decelerated slightly in 2008. They declined again in March, as consumers paid less for dairy products and alcoholic beverages. The cost of fruits and vegetables has also fallen over the last two months.

The cost of clothing, automobiles and personal computers also declined. The closely watched core index, which excludes the volatile costs of food and energy products, rose less than 0.2 percent.

February?

The price of consumer goods held steady in February, the government reported Thursday, the latest sign that near-zero interest rates and billions of dollars in stimulus money had yet to set off inflation.

Prices showed no movement over all last month, the Labor Department said, but when volatile food and fuel costs were excluded, costs as measured by the Consumer Price Index rose 0.1 percent.

The index also indicated that the price of cars rose last month, with used vehicles rising 0.7 percent and new vehicles climbing by 0.4 percent. Medical care costs increased 0.5 percent, and food prices rose 0.1 percent. But the increases were offset by a 0.5 percent drop in energy costs, tied to a drop in gasoline prices.

OK, there they do mention core early in this one. But they hardly hide the real number; it's still vastly more prominent in the article than core. So I truly do not understand where the idea that the true CPI is somehow not discussed is coming from.

NYT readership is in decline.

NYT readership is in decline. Also, the attention span of those who are reading may not extend to every paragraph of every article. Considering you had to do research to find it, leads me to believe that the average daily reader would not be aware of the facts that it took you some (despite how little) energy to find.

I do not claim some cabal exists that edits out the papers for any facts that do not favor the empire. Just that the numbers are not discussed nearly as much as other things of far lesser importance. It is safer to hide inconvenient facts in plain sight, surrounded by flattering opinion and crass media of the most base variety.

Tent cities and folks living

Tent cities and folks living in cars... thats prosperity, right? It may not be bad for you, or for those who rode the housing bubble or tech bubbles. What about those folks who had no board to ride the wave? They got pulled under and paved over. Sure, the world view may have looked rosey on the television, suburbs and in the gentrified urban areas, but thats not how it looked to the 8 hispanic men crammed into a single room apartment.

Ignore the current recession for right now. Even if you looked at the ten years prior to the recession, a annual seven percent misstatement of inflation (like on this graph from shadowstats) would imply a massive collapse in living standards. Real GDP per capita growth (by government figures) was almost exactly 2% from 1997 to 2007. Then take (1.02^10), and you see that total growth is ~22%. But what if inflation was understated by 7%? Then living standards would be going down by 5% a year. So then (0.95^10) ~59%. In other words, a 40% decline in GDP. And that's PRIOR to the recession.

Come on, folks. I think I'm fairly accepting of out-there beliefs, but that's simply insane.

And the current recession (which is nowhere near the Great Depression) doesn't change that conclusion at all.

Even if you looked at the ten

Even if you looked at the ten years prior to the recession, a annual seven percent misstatement of inflation (like on this graph from shadowstats) would imply a massive collapse in living standards.

The declared recession is simply the unveiling of the real state of the economy for the last 10 years. The artificially lengthened/heightened bubbles are simply hiding that fact from economists and the population at large. I still have yet to visit shadowstats, and I am not about to start at this very moment.

Real GDP per capita growth (by government figures) was almost exactly 2% from 1997 to 2007. Then take (1.02^10), and you see that total growth is ~22%. But what if inflation was understated by 7%? Then living standards would be going down by 5% a year.

For about 3 years I was getting a measly 1% wage increase a year. According to my math I was slowly losing my wage increase in addition to getting a 3% wage decrease a year because of inflation. In the early part of that 10 year period I was homeless and saw an ever increasing ammount of homeless people migrating west. Toward the end of that same period even the main stream media had been squawking about the increase in homeless and the number of folks on foodstamps. It may not be scientific, but I seem to trust my eyes more than the government numbers which are routinely admitted as fake.

The fed has increased the money supply over these 10+ years at a rate and volume greater than it ever has. That must have some sort of effect on the numbers and perception of this depression. I am not trying to debate you or defend shadowstats (it appears I am anyway) I am simply saying that I cannot agree with your position because of what I have seen most of my adult life, the 22% growth is simply bubble BS.