[hope_full]

Listening to the news reports, it appears that prices on consumer items are not rising that quickly. Now I know that the CPI doesn't reflect increasing costs of food or fuel, but I do not understand how the economic news still looks so dandy.

In fact, last month when numbers showed that our economy was still growing, my husband said, "See, here's proof that things will keep chugging along. I don't know why you think there's a depression on the horizon."

Last week, we had our civic leagure meeting with 75 people and two councilmen in attendance. Several people reported that they're now riding their bikes to work. Another man stood up and said, "When are you going to reduce our property taxes? We're getting squeezed to death between taxes and fuel. We can't take it anymore."

He was *angry* and upset and several people agreed with his comments. (The crazy thing was the response. A councilman said, "We'll we're looking at ways to build new low-income housing." I thought, why not let the middle-income just KEEP their homes, rather than trying to build new homes for low-income people?")

The other thing that happened was a long-time councilman said, "We're in the most difficult economic times this country has seen since the 1930s..."

And the third thing was I talked with my daughter. She and her boyfriend have worked at restaurants for the last two years, putting themselves through college.

She said, "Mom, I don't know what's happened but our restaurants are dead. We have some patrons but even at the lunch hour, the place is quiet as a tomb. Do you think it's the cost of gas, because I can't make any money when the lunch crowd is six people."

So, help me understand. Every report I hear from people and business acquaintances and friends is that business is way, way down. Why don't Washingtons' economic reports reflect this?

HF

[Jack]

There are two levels to your question.

1) Why are the reports distorted. And (2), Why are they not reported on the news.

As to the first, the federal government does not want the voters - who are also consumers - upset. Let us suppose that dire economic reports come out. People would be less likely to spend, hence economic activity would decline. Thus, the truth would lead to a more negative outcome than the existing distortions and lies.

Regarding the second, the media are owned and operated by large corporations. They gain nothing by reporting negative news. They enhance profits by encouraging consumption.

Expect the disparity to grow.

[pup55]

Washingtons' economic reports

This is problem #1. These economic reports, at least the ones that are publicly stated, have been tinkered with and watered down over the past few years so that the numbers will look good in the media. This is like doing a beautiful landscape painting on your car windshield. Looks good, but does not help you steer, and does not help you do any future planning.

Listening to the news reports

Here is problem #2: Who writes these news reports? Journalism never really did pay very well, and so it used to only attract the most dedicated people, who felt it was their duty to report on what was happening, challenge officials, seek out in-depth stories, etc. Nowadays, this field is populated with less dedicated people, a lot of whom do not have a technical or economic background, and do not get paid squat. Therefore, they do not do a good job at all of explaining these numbers, and so the public does not understand the ramifications. To make it even worse, a lot of these people show up to work and/or get hired with a political agenda, which makes the "interpretation" of these stories slanted in one way or another depending on the editorial policies of the news organizations.

See, here's proof that things will keep chugging along.

Here's problem #3: Lack of the ability to do critical thinking. Far be it from me to criticize, but about half of the population is oblivious to the big picture, and so do not know the difference. Of the remaining half, about half of them get their "news" from talk radio, (which is not news) and cannot look at the data themselves to understand the ramifications. About 1/4 of the remaining half do not take the time, and the remainder, which is only about 1/8 of the people, can do the critical thinking and actually understand what is happening.

But guess what, we live in a democracy, so this 1/8 is going to get outvoted.

When are you going to reduce our property taxes?

Problem #4: People sitting around waiting for the government to do something for them and/or get something for nothing. News flash: The government can't provide services without either taxes, which is charging the people that benefit from the service, or borrowing, which is charging the future generations for the services that are being received now. So, people either need to back off of their expectations, or expect to pay for them more or less out of pocket. The notion that "the government" is going to do anything about this fuel problem is just silly.

[SoylentGreen]

The American economy is so huge and diverse compared to 80 years ago. Therefore, It's just going to take longer.

Yes,I believe Government reported current economic data is spun at relatively high velocity.

[Obi-Wan_Kenobi]

Those who ask "why does {any large organization} do [or not do] _________ (insert whatever action is appropriate)" probably have not heard of Pournelle's Iron Law of Bureaucracy.

The Iron Law states:
In any bureaucratic organization there will be two kinds of people: those who work to further the actual goals of the organization, and those who work to preserve the survival of the organization itself. Regardless of any conflict between organizational stated goals and organizational survival, in all cases, the second type of person will always gain control of the organization, and will always write the rules under which the organization functions.

When I first read the Law, it explained so much that had not been clear to me, and made effective action in dealing with bureaucracies more feasible. When dealing with large organizations, always consider the Iron Law.

[aahala2]

Listening to the news reports, it appears that prices on consumer items are not rising that quickly. Now I know that the CPI doesn't reflect increasing costs of food or fuel, but I do not understand how the economic news still looks so dandy.

What would be considered the "main" CPI index, Consumer Price Index for All Urban Consumers (CPI-U), does include the changes
in the price of food and fuel. There are additional subsets of the
main index, and other inflation indexes as well, which might
exclude food and/or fuel in some way.

As far as the growing inaccuracy of modern media, the current
motto is "Never sacrifice speed for accuracy". That is, be first.

Here's a link to what I believe to be the ACTUAL changes in
the CPI:

http://www.bls.gov/news.release/cpi.nr0.htm


Another media motto:
If we make mistakes, let someone else correct them later. And
if the mistakes aren't noticed, that's better still.

[turner]

I think in a way you have answered your own question. If you can't convince your own husband ( I have same problem) of the issues then why would the government and the media bother informing the mass public of the scale of the problems. It's giving people news they do not want to hear. Nobody wants that when they are used to long term growth in the economy and house prices. They want to believe in a never ending 'up' cycle. It doesn't get votes or sell newspapers or help the economic and real estate commentators who usually have some affiliation with a bank, mortage house, realtor group etc. It also doesn't necessarily help the economy because sentiment has a huge influence on how the economy operates (despite economic theories to the contrary). If you think its going to shit then you spend less and invest less and therefore it does go to shit.

Having said all that it is true that there is a lagged effect in statistical gathering and reporting and also in the timing of the impact that a change in sentiment will have on the actual economy. I guess that is why some economic commentators are still predicting that the worst is yet to come.

One final point is that much of the media is rubbish and I am sorry to say particularly in the US. You probably need to google eco news each day and choose to read articles from reputable news organisations. I also often google the author to see who and what they are affiliated with. It's sad but that is life in the global economy where the media is controlled by few.

[Serial_Worrier]

Remember in ancient Greece, the bearer of bad news was invariably killed.

[TheDude]

This is problem #1. These economic reports, at least the ones that are publicly stated, have been tinkered with and watered down over the past few years so that the numbers will look good in the media. This is like doing a beautiful landscape painting on your car windshield. Looks good, but does not help you steer, and does not help you do any future planning.

Was unsuccessful in posting that to the Suggest Quote thread unfortunately.

GDP includes some really ludicrous things as positive, like lawsuits and car wrecks.

2. GDP treats all transactions as positive.

Crime, divorce, pollution, and depletion of natural resources are all treated as gains. Thus GDP treats the breakdown of the social structure and the natural environment as gains. If someone buys a car, GDP goes up. If the car gets into an accident and requires major repair, GDP goes up. If the driver is hospitalized, GDP goes up. If a lawsuit follows, GDP goes up again. GDP makes no distinction between activities that contribute to well being and those that diminish it. It's like keeping accounts using a calculator that has an "add" function but no "subtract" function. So long as money changes hands, GDP increases. Any business that kept its accounts this way would never know where it stood. Such a business would have an exceedingly rosy picture of its condition, but it would be a false picture. So it is with countries that rely on GDP to measure well being.

ET 12/96: Measuring progress

There are more sophisticated benchmarks that actually chart human wellbeing, like the Genuine Progress Indicator.

[AgentR]

The news media exists to sell advertisements for luxury soap, Lunch at Benis, and sexy new cars...

If they go on the air and say... "folks... fuel and food prices are rising, and will continue to rise to unprecedented heights, buying luxury items might not be a good idea." The folks selling those luxury items will take their money elsewhere to another news organization that will discretely ignore food and fuel prices; while talking about the stable price of luxury soap and the horrors international terrorism.

[bodigami]

(...)
GDP includes some really ludicrous things as positive, like lawsuits and car wrecks.

2. GDP treats all transactions as positive.

Crime, divorce, pollution, and depletion of natural resources are all treated as gains. Thus GDP treats the breakdown of the social structure and the natural environment as gains. If someone buys a car, GDP goes up. If the car gets into an accident and requires major repair, GDP goes up. If the driver is hospitalized, GDP goes up. If a lawsuit follows, GDP goes up again. GDP makes no distinction between activities that contribute to well being and those that diminish it. It's like keeping accounts using a calculator that has an "add" function but no "subtract" function. So long as money changes hands, GDP increases. Any business that kept its accounts this way would never know where it stood. Such a business would have an exceedingly rosy picture of its condition, but it would be a false picture. So it is with countries that rely on GDP to measure well being.

ET 12/96: Measuring progress

There are more sophisticated benchmarks that actually chart human wellbeing, like the Genuine Progress Indicator.

Or the Happyness Index in Bhutan (cann't remember the actual name).

[TheDude]

Gross National Happiness - Wikipedia, the free encyclopedia

The Happy Planet Index

Etc.

[burtonridr]

The news media exists to sell advertisements for luxury soap, Lunch at Benis, and sexy new cars...

If they go on the air and say... "folks... fuel and food prices are rising, and will continue to rise to unprecedented heights, buying luxury items might not be a good idea." The folks selling those luxury items will take their money elsewhere to another news organization that will discretely ignore food and fuel prices; while talking about the stable price of luxury soap and the horrors international terrorism.

Yea they walk a thin line between being truthful journalists and being counter productive.....

[AgentR]

And I present a linki just to demonstrate my very point:

CNBC Friday June 13, 12:11 pm ET

What Inflation? Some Items That Actually Cost Less

[Tyler_JC]

(Just to play the contrarian).

The CPI applies to urban consumers. The people MOST hurt by increasing fuel prices are rural consumers. No?

They are automatically excluding the most oil dependent 20% of the population right off the bat.

There are many members of this forum who live in areas counted as "rural" and thus are not included in the survey.

Secondly, the data including food and energy shows a much higher inflation rate. Money creation and food prices are not as closely linked as money creation and TV prices (or so the theory goes). Would higher interest rates stamp out the rise in wheat?

Also, we haven't seen a wage/price spiral. This indicates that workers are too weak to demand higher wages and gives companies more flexibility to absorb higher energy prices. Making money more expensive wouldn't improve that situation (again, so the theory goes).

(back to my reality)

Beef now costs $12 a pound. Butter is a dollar a stick. Milk and gasoline are $4 a gallon. My favorite restaurant has hiked the price of The Usual by a buck.

If this keeps up, I'm going to have to start buying whole milk and watering it down to 2%...then 1%...then I'll just start buying the powdered crap.

Oh and the Honey Nut Cheerios to go along with the watered down milk? They're up 20 cents since January. I know this because I still have the box with the price sticker.

It's getting ugly out there.

[Denny]

And I present a linki just to demonstrate my very point:

CNBC Friday June 13, 12:11 pm ET

What Inflation? Some Items That Actually Cost Less

They are grasping at straws in that article, when they got to the point that aan average hotel room and ladies shorts are a few cents cheaper, and plastic cutlery is 25 cents cheaper for a pack. They are really scratching.