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Try the following back of the napkin calculation:
- Median income family of $60,000/yr (don't know the
real figure, I think it is a little lower)
- Disposeable income after taxes is approx. $50,000 (again
probably a little higher than actual).
- At old prices of $1.25/gal, and gas mileage of 20 mpg.,
total family driving of 1500 miles/month (prob. a tad
higher than average, but not remarkable). Totals to $93.75/month,
($1125/yr) or 2.25% of disposeable income.
- At 'new' prices of $2/gal., $150/month ($1800/yr), or an increase
to 3.6% of disposeable income.
"Mileage may vary" as they say. Folks higher up the
economic ladder will feel the impact less, and those with
lower incomes (driving older cars in poorer repair,
and perhaps further from work, to save money) will feel it
more. Still, the quick calculation above indicates if
gasoline prices stay at the $2/gal. level, then a 1% increase
in cost-of-living (as a direct cost) as a percentage of
disposeable income is not out of the question.
Yet, through the magic of "seasonal adjustments" the CPI
was up only 0.2%:
http://nypostonline.com/business/25545.htm
[...]
Buried deep in a footnote in the CPI report, under a section about
seasonal adjustments, is this statement:
"Effective with the calculation of the seasonal factors for 1990, the
BLS has used an enhanced seasonal adjustment procedure called
Intervention Analysis Seasonal Adjustment for the CPI series .... For
the fuel oil and the motor fuels indexes, this procedure was used (in
January) to offset the effects that extreme price volatility would
otherwise have had on the estimates of seasonal adjusted data for those
series."
[...]
John Williams, an economist who runs the Shadow Bureau of Government
Statistics in Hawthorne, N.J., was the one who brought this matter to
my attention. Williams did his best to estimate what inflation would
have been had the government not used Intervention Analysis.
His guess? Instead of a 0.2 percent jump in the CPI, the number would
have jumped a full percentage point for the month. And the producer
price index would have been up 2.5 percent instead of zero.
Williams is particularly amazed by the rest of the footnote that states
that "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."
"This is incredible. If only those people using heating oil had their
bills handled by the Bureau of Labor Statistics, they'd have no trouble
paying them."
[...]
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