An article on CNBC.com citing the hyperinflationistas at ShadowStats.com claims that under old methodology, inflation would be running at 10%.Inflation, using the reporting methodologies in place before 1980, hit an annual rate of 9.6 per cent in February, according to the Shadow Government Statistics newsletter.
Since 1980, the Bureau of labour Statistics has changed the way it calculates the CPI in order to account for the substitution of products, improvements in quality (i.e. iPad 2 costing the same as original iPad) and other things. Backing out more methods implemented in 1990 by the BLS still puts inflation at a 5.5 per cent rate and getting worse, according to the calculations by the newsletter’s web site, Shadowstats.com.
This is pretty bizarre. Why would you back out “improvements in quality.’ If the iPad 2 does twice as much as the original iPad, but costs the same amount, then obviously for the consumer, things have gotten “cheaper,” at least by any meaningful notion of that word. Or to put it another way, you could always go back and buy the old obsolete version of something that’s cheaper.
Anyway, this is basic stuff. Unless we’re missing something, this seems like a non-story.