The typical American mom (and dad) must think government economists have rocks in their head.
According to the number crunchers at the Labor Department, over the last year, prices were up only 1.2 percent, and for the month of November, inflation was zero, nada, zilch!
Surely economists don’t eat, or at least shop where moms do. Sliced bread and hamburger, staples in her family’s diet, were up a lot last month. And she faces higher health insurance costs and co-pays, thanks to ObamaCare.
The government’s Consumer Price Index tries to measure gains in prices across the entire economy, but that statistic is only an average. Most Americans simply need some items more than others, and sometimes it is those necessities that rise the most.
For example, average consumer prices were flat in November largely because gasoline prices were down, but most of everything else was up. For the mom in Brooklyn who rides the subway to work, lower driving costs are not much help. Heating oil, which many families who live in New England must purchase rose at a nearly four percent annual pace.
Back to the food aisle. The price of steak was down but most moms (and dads) don’t buy much sirloin these days, and must purchase about the same amount of hamburger each month.
It may be great that restaurants catering to hedge fund managers got a break on bovine protein, but mom can’t mix a porterhouse to fashion a meatloaf to feed her hungry family.
Over the last decade, many Americans have not had much in the way of pay raises, and some who lost their jobs have new ones that pay less or no job at all. Even if inflation had been zero, they would be worse off.
The bite of state and local taxes has increased, even as community services have declined and more children are required to pay for school supplies. All that leaves moms with less to spend on rent and groceries, but the CPI misses all that.
Also, the CPI does not consider new products that have become necessities, unless a mom wants her children to be grossly disadvantaged.
Internet, smart phones and tablets were not in the family budget at the turn of the century. All that technology is great, but kids don’t eat fewer peanut butter and jelly sandwiches now that they have iPads.
Prices of some essentials -- or things that should be -- never fall, no matter what!
During the financial crisis many Americans put off treatment for less than urgent medical conditions, and some health care providers were less busy than they would have liked. Still, when was the last time your dentist sent a flier announcing “inventory clearance on kids checkups and crowns -- 30 percent off”?
Times have been tough for most Americans, and it is natural to focus on the rising price of hamburger and ignore the falling price of chicken, but in 2013, families were asked to endure more than $200 billion in higher federal taxes.
The bigger tax bite left mom with less to buy what her family needs yet the government doesn’t include its take of the Consumer Price Index -- even though it could.
You can bet that the gang at the White House or on Capitol Hill will never publish data on the skyrocketing cost of government.
Politicians don’t struggle on a budget quite the same way a mom does. They can always print money, or borrow and never repay, in ways she can’t.
Politicians can simply tax mom, as she wends her way down the supermarket aisle and doesn’t adequately appreciate how great it is to live in a nation without inflation.
Peter Morici served as Chief Economist at the U.S. International Trade Commission from 1993 to 1995. He is an economist and professor at the Smith School of Business, University of Maryland, and a widely published columnist. He is the five time winner of the MarketWatch best forecaster award. Follow him on Twitter @PMorici1.