Lies, Damned Lies, And Statistics… And The CPI

Via Global Macro Monitor,

The first three of those words are attributed to the British Prime Minister,  Benjamin Disraeli, and also sometimes associated with Mark Twain.

You know our skepticism of most government data, especially the BLS calculation of inflation in consumer goods and services.  The data are so massaged by seasonal and hedonic adjustments, and even full-blown methodological revamps when the numbers do not fit the objectives of the government, they just don’t reflect reality.

Go back to 1982 when the BLS came up with the concept of “owner’s equivalent rent (OER),” a large component of how the price of shelter is calculated in the CPI.  This was in response to the government believing rising housing prices were distorting the true cost of housing.  Houses were then recategorized as capital goods.   The data for OER is not hard,  not a real world  data point that can be measured,  such as egg prices.

A friend pointed out the following in today’s Wall Street Journal today,

A monthly measure of what households pay for everything except gasoline and food rose a seasonally adjusted 0.349% in January – the strongest one-month increase since March 2005 – driven by broad-based increases in costs like rent, clothing and medical services. 

WSJ, February 15

We wonder out loud about the 0.349 percent print.  Round it down, Charlie Brown!

Just another 0.001 percent and the BLS would have posted a core CPI monthly change of 0.4 instead of the 0.3 percent.

The market response?

The headline number print of 0.5 percent was also very close to its rounding point.  

Going out three more decimals, the number was .5448 percent.  Another 0.0012 percent, headline CPI prints at 0.6 percent.

Could they have?

Bureaucrats day trading (the data not securities) the monthly economic data?  The word comes down from on high not to kill Goldilocks with RoundUp?

You decide.

File this one under all things rigged and don’t cry for me, Argentina!

The post Lies, Damned Lies, And Statistics… And The CPI appeared first on