Americans Not Fooled About Inflation

We bought a new heating and air conditioning system two years ago and have been keeping records of our energy usage and expenses ever since. Yesterday I got the latest gas bill. For the month ending May 15, 2008 the bill reported we used 35 therms worth of gas. That's exactly the amount we used in the same month in 2007. The dismaying thing was the bill itself: $53 this year compared to $41 last year.

$12 in a literal sense is not that big a deal. But the percentage increase of 29.3% in a single year is. It's astronomical. Evidence like this makes it hard to place any credence in "official" inflation estimates of 3.9% or even 4.8%.

I looked up some figures on food staples in the past year. Milk is up 26%, eggs 40%, flour 23%, ground beef 15%, chicken 13% and apples 18%. Commodity prices for corn are up 30% and wheat 270%.

I started today on energy, and it has been much in the news, of course. My electrical bill per kilowatt hour is up "only" 9%. Gasoline at the pump is up 28% this year, and the wholesale price of a barrel of oil has risen 400% in the past seven years.

Our health care provider, Blue Shield, is raising the rates by 12% for my employer this year. I'm grateful I'll be fortunate enough not to have to pay for that out of pocket, but it doesn't take a rocket scientist to understand those are funds that will not be available for raises.

The government has gamed the inflation calculations to exclude food and energy prices. It also modifies the figures based on "seasonal adjustments." These have the effect of understating the true impact for the obvious purpose of covering backsides in Washington. Such practices, combined with provisions that fail to count people as unemployed if they have lost their jobs and are no longer looking for work, allow those in power and their media defenders to contend that the economy is growing and that inflation and employment are low.

Faced with reality, however, the American people have caught on to the subterfuge. 82% tell pollsters the nation is "heading in the wrong direction" and nearly as many believe the country is in economic recession. It is no coincidence that "change" has therefore been the winning ticket in the presidential primaries this year. On the Republican side it has catapulted John McCain, who has a reputation as a "maverick" among Republicans, into position as the nominee. On the Democratic side it has brought the relatively poorly known Barack Obama, who ran from the beginning on "change you can believe in" against Hillary Clinton's "ready on day one" emphasis on experience to the threshold of his party's nomination.

Once this is over one can hope that the new administration, whose ever it is, will restore some economic honesty to the way the figures are compiled. You can, after all, fool all of the people some of the time, but you can't fool them forever.