Nice article, Dan. Let me translate the key footnote
for ease of reading:
"We remove from consideration significant price increases (whether due to labor, weather, demand, supply, credit, etc.) because such actual inputs would be inconsistent with the price stability in our model."
The feds actually said:
"Extreme values and/or sharp movements which might distort the seasonal pattern are estimated and removed from the data prior to calculation of seasonal factors... For the fuel oil, natural gas, motor fuels, and educational books and supplies indexes, this procedure was used to offset the effects that extreme price volatility would otherwise have had on the estimates of seasonally adjusted data for those series. For the Nonalcoholic beverages index, the procedure was used to offset the effects of labor and supply problems for coffee. The procedure was used to account for unusual butter fat supply reductions, decreases in milk supply, and large swings in soybean oil inventories affecting the Fats and oils series. For the Water and sewerage maintenance index, the procedure was used to account for a data collection anomaly and dry weather in California. For Dairy products, it mitigated the effects of significant changes in milk production levels and higher demand for cheese. For Electricity, it was used to offset an increase in demand due to warmer than expected weather, increased rates to conserve supplies, and declining natural gas inventories. For New vehicles, New cars, and New trucks, the procedure was used to offset the effects of a model changeover combined with financing incentives."
Dense and obfuscatory phrasing in significant, purportedly factual communications to the public is a key element of government's strategy for keeping the borrow/tax/spend/confidence game going. I doubt it fools many pros, but it discourages JQP from even reading this stuff and tends to keep media faces/voices from understanding what they're reporting.
AI
