The Consumer Price Index for All Urban Consumers (CPI-U) increased 0.1 percent in August on a seasonally adjusted basis after rising 0.3 percent in July, the U.S. Bureau of Labor Statistics reported today.
- Over the last 12 months, the all items index increased 1.7 percent before seasonal adjustment. Increases in the indexes for shelter and medical care were the major factors in the seasonally adjusted all items monthly increase, outweighing a decline in the energy index.
- The energy index fell 1.9 percent in August as the gasoline index declined 3.5 percent. The food index was unchanged for the third month in a row.
- The index for all items less food and energy rose 0.3 percent in August, the same increase as in June and July. Along with the indexes for medical care and shelter, the indexes for recreation, used cars and trucks, and airline fares were among the indexes that increased in August. The indexes for new vehicles and household furnishings and operations declined over the month.
- The all items index increased 1.7 percent for the 12 months ending August; the 12-month increase has remained in the range of 1.5 to 2.0 percent since the period ending December 2018. The index for all items less food and energy rose 2.4 percent over the last 12 months, its largest 12-month increase since July 2018. The food index rose 1.7 percent over the last year while the energy index declined 4.4 percent.
CPI Month-Over-Month and Year-Over-Year
Falling Energy Costs Keep CPI Tame
Classic Late-Stage Inflation?
I understand all the negative-bond chatter today because of the additional pop in the core CPI. Let me remind you that this is classic late cycle. More often than not, core inflation peaks just as the recession starts or after it has already begun.
— David Rosenberg (@EconguyRosie) September 12, 2019
I disagree with Rosie’s assessment. If there was an energy surge I would be more inclined to accept his view. That’s not at all what’s happening.
Continued Surge in Medical Care Services
Hmm.
Somehow that looks like early-stage inflation, mid-stage inflation, and late-stage inflation.
Continuous Understated Medical Inflation
Medical care has continuous and understated inflation.
Understated?
You bet. Dramatically understated in fact.
Ask any of those buying their own medical insurance how much their costs have risen. It’s likely to be in the 50% to 200% range, not 4.3%.
The BLS averages that all in. The BLS also averages in the price of Medicare. But how much is the government paying doctors and hospitals?
How much costs are companies eating when they offer coverage?
Those are the real costs. The BLS just looks at the costs to the average individual, ignoring all the rest of the true costs.
Reported medical cares costs have soared even despite these huge distortions (lies if you prefer).
Role of Government
Eventually, the price of everything government touches soars out of control.
Consumers Not Struggling
Assuming one ignores rising credit card usage, increasing debt, bankruptcies, suicides, and the 68% of millennials who regret not buying a home ….
then consumers are not strugglinghttps://t.co/MPZObM2Hdc https://t.co/OpjGfTh5Oo— Mike “Mish” Shedlock (@MishGEA) September 12, 2019
Sure, if you ignore a whole bunch of things including bankruptcies, suicides, and rising credit card debt, consumers are OK.
Head-Scratching Logic
39% don’t have $400 for emergency expenses.
They would borrow it from friends or family, or charge it, keeping the $400 in the bank.
Supposedly, that makes the 39% figure “misleading”
WTF kind of logic is this? https://t.co/HdLabchpRD— Mike “Mish” Shedlock (@MishGEA) September 12, 2019
Assume a person needs to borrow $400 to cover an emergency expense.
Is it misleading to say that person does not have $400 if a friend would loan the person $400?
Choice #1: Not misleading, You either have $400 or you don’t.
Choice #2: Bloomberg article, UPFINA disagree.— Mike “Mish” Shedlock (@MishGEA) September 12, 2019
Finally, here’s one on the American Dream:68% of Millennial Homeowners Regret Buying a Home
Consumer stress?
You bet.
Mike “Mish” Shedlock
If you don’t want Government running your health system then look at Sweden. The Swedish system s free at the point of need but is unique in that it runs on a voucher system. The Swedes can use their vouchers with a doctor of their choice and hospital of their choice. Of course this is one socialist answer which is not, by any stretch of the imagination, part of a command economy.
Decline in energy prices?Where?Oh I see it’s moar big govt (bs)pretend,play make believe data,my bad……carry on!
Part of the problem is that Americans seem to believe that health care is a market…its many things but a market it is not, except for simple primary care, and even then, you pick your doctor and then do what he wants you to do.
The only way health care is a market is in basic primary care, thereafter the “cost” of changing your provider is prohibitive.
It is one of the many reasons that health care is so much more expensive in the US, despite a substantial portion of the population not being covered. The same is true for drug costs
Anyway, like a foreigners, I feel like Don Quichotte, Americans will never agree! It’s like your love for guns…
Inflation in healthcare is higher because none of it is “manufactured” in China…doemstic service costs remain high and are rising.
There is no one “heath care” any more than there is one “plumbing care.” If we had mandated insurance for government mandated levels of “plumbing care,” plumbing services would be just as dysfunctional and expensive as health services.
Free market providers of any good and service, specialize and divide all economic activity into ever finer atoms. Then relentlessly optimize each, smaller sub component. While continuing to split existing atoms apart. Everyone always looking to make one part of a current process a bit more efficient, in order to get any little edge for a second or two. Those who succeed, go on to live another hour. Those who don’t, are destroyed, freeing up resources for those still in the game, as well as new entrants who think they may have a shot.
Any dumb blunderbuss of a five year planner trying to “manage” any of it, at any granularity coarser than that, is so far behind the curve, he is in no way whatsoever, in any way, shape nor form, any different from the Soviets who went before him. ( link to mises.org)
Here’s an up-vote,@frozeninthenorth
I’m not sure I agree that the non-market aspect is necessarily built in, but I do agree that “health care” is … weird. Hey, there will always be a witch-doctor factor, what with placebo effects and general cluelessness about how bodies work. None of this is unique to the US.
Felix — unfortunately,, the US is unique and not in a good way either. It is the only country in the world that thinks health care is a market. and day in day out the cost of health care, the outcome of healthcare and almost every other metric for public health confirms that health care is not, in fact, a market.
As an example, aside from Walmart, how many businesses have thousands of “products”…
Stuki — thanks for proving my point about Americans and their view of healthcare. Thinking that “efficiency” is the solution. That’s actually not health care’s problem. America’s biggest problems are (1) excessive overhead costs and (2) you know what I don’t really care. Since I know that as a nation you will NEVER be convinced, its like tilting at windmills, it gets you nowhere.
As for Mish’s point; yep medical inflation is high and will continue to rise
frozen: It’s goods and services that people trade. Sounds like a market. What do you mean “it’s not a market”?
realist: Pushers of bigger government have been receiving a hearty finger from liberty-minded Americans for about 250 years. Hardly something to be surprised about.
According to two studies: one by Mayo Clinic and a second from Kaisser Permanente (approximate percentages):
30% of health outcomes is determined by genetics — not much anyone in any country can change about that in your lifespan
30% is determined by your diet (eating healthy food)
30% is determined by lifestyle (primarily stress and sleep)
… and onlyabout 10% is a function of medical care
Both studies reached the same conclusion, even though both are US based medical organizations. Less than 10% of your health outcome is determined by health care.
Other countries have better health outcomes because they eat better, they get more sleep and live with less stress. Even the fast food in other countries is very different from fast food in the USA.
Throwing trillions into single payer fraud is not going to address the biggest determinants of health care — and there is every reason to think the US congress will make matters much much much worse.
And I just found a third medical study that agrees with Mayo and Kaisser studies. The US medical journal “lancet” wrote:
“The chronic disease burden in the USA largely results from a short list of risk factors—including tobacco use, poor diet and physical inactivity (both strongly associated with obesity), excessive alcohol consumption, uncontrolled high blood pressure, and hyperlipidaemia—that can be effectively addressed for individuals and populations.”
In case you are too busy spouting political slogans, hyperlipidaemia is too much fat in the blood stream… so it is another factor related to exercise and diet.
Note that improving your diet and exercise has absolutely NOTHING to do with paying higher taxes to corrupt bureaucrats or higher premiums to insurance companies or higher charges to hospitals.
According to Mayo and Kaisser, addressing diet and exercise is at least 6x more effective than going to the doctor.
The differences in exercise and diet explains the differences in health outcomes between countries…. not the payment systems.
I will note, though, that in evaluating the efficacy of single payer systems, you can’t leave the US out. We have such a system.
What might be difficult to many people on this site is explaining how a gigantic monopoly – a legally enforced monopoly, at that – is the right way to go. Consider the effects of such a monopoly in the US. I’m not talking about Medicare here. I’m talking about the AMA.
US system is heavily regulated and distorted by government. It barely has the thinnest trappings of “a market.” Arguing that single-payer works better than the US system is like saying socialism works better than fascism. Who cares. All statist and semi-statist systems are dysfunctional, failing, unjust, and immoral. Those who don’t grasp this (the 99%) are still brainwashed with statism: they take it as axiomatic that guns need to be a part of civilized human relations.
“I don’t care about “isms”. I’m not talking socialism, fascism, idealism. I just deal with reality.”
That’s a perfect statement of Pragmatism. Dewey would be proud. Let’s not think about principles of political philosophy, forget about archaic notions of “Truth”, let’s look for what works.
This is a very popular anti-intellectual approach in modern times, especially in America. It is the primary epistemological mode that has led to the US mixed economy over the last 100 years, in health care and everything else.
Pragmatism is the primary philosophical trend that allows conservatives to talk about how much they love capitalism and free markets while simultaneously promoting the welfare and regulatory state. “Let’s just deal with reality” is the attempt to act without identifying and applying abstractions and principles. It is intellectually stultifying. It leads to people using the stale ideas they have absorbed (like the premise that free markets are evil) uncritically, without reflection. It leads to contradictions and a freaking mess in reality. It is anything but practical or realistic.
@bradw2k — @realist isn’t worth debating. He has his personal “ism” and came with a solution (single payer fraud) without even listening to the question. He continues to confuse health care with payment systems, and doesn’t seem to know much about the mess in the US other than the political talking points.
Yes, it costs way too much. That doesn’t mean Congress can’t make it cost 1000x more. He doesn’t grasp that, and doesn’t want to listen.
Please correspond with him directly if you want to waste your time — if you ‘reply’ here, I get a notice and I have already wasted too much time on him
Your post is pure lies. I am familiar with the entire healthcare payment system including Medicare. They pay promptly and I am not aware of any phsicians in my area, Michigan who refuses Medicare. You may be confusing Medicare with Medicaid which pays very poorly. Many physicians refuse Medicaid.
You are a waste of time.
Medicare itself says it takes an average of 15 months to pay doctors
Again it is an outright lie you are telling. Stop bloviating this nonsense. No insurance states that you idiot.
I am going to send this story from USAToday yet again
link to usatoday.com
The fraud known as Obamacare supposedly solved this. What really happened is Obama and Pelosi and Reid made a terrible system a 1000x worse. And then they exempted themselves like the corrupt cowards that they are.
I have no idea where some incompetent idiot came up with 4.3% annual rate. I know Mish is quoting the BLS numbers, he isn’t the source. The BLS needs to stop lying.
Doctors and hospitals need to be sued for price gouging. And doctors need to be publicly dragged away in handcuffs for fraud. Plenty of Doctors bill for services that never even happened. Its fraud, stop pretending otherwise.
Medical prices charged have nothing to do with actual costs. Way too much fraud gets worked through the medical system. A corrupt Chicago politician then wanted to force the public (but not Washington DC!) to finance this fraud under penalty of jail time??? Are you f’ing kidding me?
These poor people. They went for months, and didn’t bother applying to have the bills reduced, and didn’t bother setting up payment plans, and imagine that, they got sued. My ex-wife used to collect hospital bills, and I don’t have much sympathy, sorry.
The point is that Obamacare was supposed to end all this insurance fraud. Everyone would be covered. If you like your current doctor, you can keep your doctor.
Turns out that Obamacare made every aspect of health insurance worse and more confusing.
Given the US government’s track record on everything from Amtrak to military spending to farm subsidies to Government Motors and bank bailouts… I think its fair to say Obama lied on purpose.
Everyone knew Obamacare would make things worse. That includes Pelosi and Obama himself, which is why they exempted themselves.
I don’t disagree on Obamacare. That has nothing to do with the fact that these people had bills. They got offers from the hospital to reduce the bikks, if they filled out paperwork, or to work out a payment plan. Instead, they ignored the hospital bills and seemed surprised when the inevitable happened.
“Eventually, the price of everything government touches soars out of control.”
Well, I wouldn’t use the generic “government”. I’d use the US federal government. Many governments at the state and local level and even foreign governments are quite capable of having well-managed governments.
As for medical insurance, the price might not go up of the policy, but what if the co-pays/deductions/max out of pockets go up? I’m betting that is not included and insurance is going up by leaps and bounds.
Redbook yearly same store sales growth in the past 3 weeks.
August 24: 5.7%
August 31: 6.5%
September 7: 6.4%
….
I would be very hesitant to use same store sales to prove anything. Some 8000 stores already closed this year. Even healthy chains routinely close under performers … making remaining store numbers look better. Kudlow babbled about same store sales earlier this year … didn’t want to talk total sales, I suppose.
It is inevitable that medical care must continue to rise faster than inflation due to governmental involvement. Even though we don’t have socialized medicine, governments do mandate what must be included in policies, which prevents lower cost options from being offered which exclude certain things.
Second, and more onerous, you have to remember that there is always a question, “How much medical care is a person entitled to?”. Socialized medicine answers the question “a committee will decide what you can have, and what you can’t have”, and then no one can have the things it deems to be too expensive. In the US, the answer is very different. The answer has always been “everyone is entitled to the absolute best care, regardless of price”. The enforcement arm is the plaintiff’s bar, and if a doctor or hospital gives anything other than the absolute best care, he is at risk of being sued.
The advantage of the US answer is that over the last fifty years we have had amazing medical advances. Massive amounts are spent on medical research because if something new, and better, is developed, everyone will buy it, and they can make a profit. The disadvantage, however, is that the cost of infinite healthcare is also infinite. Since we are unwilling to consider other answers than “everyone is entitled to the absolute best”, the inevitable result is that healthcare must continue to rise faster than inflation, until it eventually breaks the economy, and forces a different answer.
Since the only possible answer for a system broken by governmental involvement is more governmental involvement, there is no reason to consider free market solutions, as they are impossible. Thus, eventually we have no choice but to go to socialized medicine. It could be “medicare for all”, or some all new system, such as what they have in Canada, but in the end it must have a different answer, and that will be that a committee of some kind will decide what healthcare we can have, and what we can’t have. As a side casualty, medical research will have to dramatically slow, and drop to a more sustainable level.
Until we get to that point, we may additional interim solutions that, like Obamacare, do nothing to reduce costs, and instead try to fund the upward spiraling costs by changing who gets stuck with the bill.
“Massive amounts are spent on medical research because if something new, and better, is developed, everyone will buy it, and they can make a profit.”
The reason “everyone will buy it” is that there is government involvement. In other words at the end of the day government pays for it.
“”a committee will decide what you can have, and what you can’t have””
Gee that is exactly what insurance does today.
No, when a new drug comes out, if it is better than the prior one, doctors have to prescribe it, and insurance companies have to pay for it. Government does pay for it, when the patient is “insured” by medicare or medicaid, but the reimbursement is most likely much lower, so the bulk of the profit for the drug research comes from the ever increasing insurance costs.
Insurance companies wish they could decide what you can have and can’t have, but the government prescribes what must be covered, so they don’t have a choice. They best the insurance companies can do is to decide for which patients the treatment is medically necessary. By contrast, in Canada, there are procedures which are not available at all.
“Since the only possible answer for a system broken by governmental involvement is more governmental involvement, there is no reason to consider free market solutions, as they are impossible.”
Do you mean politically impossible? There’s no metaphysical reason government can’t be extracted from the economy. People would have to want it, however.
Exactly. But, people believe that government solves problems, rather than causes them. Therefore they always want more government involvement. Can you think of any instance, ever, of the reverse?
Yes, nearly the whole world takes it as axiomatic that the only way to solve problems is with government guns. This wasn’t true during the American Enlightenment, but that may as well be ancient history. IMO the flaws and failure of the recent Tea Party movement provides indisputable evidence that there is no significant cultural or intellectual movement supporting individual liberty today.
In other words, about half the population is one medical event away from a financial emergency.
I suspect it is a lot more than half.
In addition to paying crazy prices for “insurance” you have to pay a deductible and co-pays. Deductible and co-pays can easily wipe out a lot of people.
When hospitals are legally allowed to charge $30 for one pill of aspirin (a bottle with 50 pills is maybe $6-7 at most drug stores?), its price gouging. Even Goldman Sachs would be embarrassed by such a markup. But no state AG, no federal DoJ attorney has ever thought to question this fraud.
You also must factor in the secondary fraud– out of network pricing. You got sick? Yeah, that is out of network. You were unconscious and an out-of-network doctor was called in by the supposedly in-network hospital? Somehow that is your responsibility for a decision you didnt make and were in no condition to agree to.
Just because you have GOOD employer insurance does not mean your out of pocket charges won’t send you into bankruptcy.
I just paid $2,730 for an hour visit to the emergency room at Kaiser for a bag of IV fluid when I became dehydrated. I pay $790/mo for health insurance as a self-employed individual. I am healthy. I was unable to make a same-day appointment to see a physician and thus had to go to the emergency room. I also had to pay $525 plus a $75 copay to check benign growths in the dermatology department. Our health care system is a complete scam. I can imagine that others may not be able to pay out-of-pocket.
Where in the CPI is insurance? It keeps going up in leaps. It sure must be a major cause of all local sourced inflation.
Millenials shouldn’t be buying homes. Who made them do this ?
Seemed like the thing to do. Their parents, grandparents, great grandparents did…. on a single income. Are you suggesting that something fundamental has changed?
Millennials are buying homes. Or at least working to pay for them. It’s just that the ones they are buying, belong to the idle, connected leeching classes, not themselves.
Go back perhaps another generation or two beyond your great grandparents, and at least colored Americans were in a similar situation: Working hard to help pay for spectacular plantation homes. Of course, nowadays “we” are “enlightened” enough to no longer restrict access to that fate, on racial grounds.
Touche!
Remember the days when a last mortgage payment block party was celebrated with the burning of the last statements? This occurred at about the time the dads were nearing retirement and the kids were moving out and starting their lives. A begone era indeed!
Yes L.Ron. That is exactly what I’m suggesting. When my parents bought their current home, interest rates were at 17%. It was easier then because mortgage interest was completely deductible thus meaning most of the loan was deductible. It use to take only one medium income to afford a house. Now it takes two real higher incomes in many metro areas. We have high home prices across most metro areas now and interest rates at all time lows with a limited mortgage interest deduction even for upper-middle income levels. We also live in a globalized economy now where industries and labor forces are globalized. The idea of holding down a job for 30 years and retiring and saying bye bye to your mortgage payment doesn’t exist. Welcome to the rental generation. Also the whole idea of a buying a home on a loan is fraudulent. Loans are just a way for banks to make money. Over time homeownership becomes a loss if you actually include maintenance. Prices of all things that have loans tied to them would fall if there were no loans. And they would fall in line with SAVINGS rates. The biggest lie of the American dream is homeownership.
At least the socialised NHS here in the UK gives you an equal share of the misery for less money.
That’s the problem for those of us not in that sinking boat is having some libtard drag you into it.
Except that that sinking boat provides for better outcomes that the US system. Go figure.
We rank 38th in health care outcomes/quality. Behind Equador. One thing we excel at is cost. We are double the world average in health care costs per capita. Its funny how conservatives are as deaf to the facts on national healthcare as the liberals are deaf to facts on gun control.
Not to worry I understand that Trumps wants your NHS once you do Brexit. Win-win
If you think the royal household or Parliament gets the same level of crappy service that UK citizens do, I would like to sell you Big Ben.
And for the record, as the North Sea oil fields dry up and the royalties thereon dry up with them — Brits will all be paying a LOT more for your misery. You have been living in a fantasy world for decades.
I won’t even mention the part that your doctors are mostly indentured servants — persons from India working off school loans. Go ahead and deceive yourself that indentured servants isn’t very pleasant to think about, but I would imagine the indentured servants are not happy either. They tend to return to India to practice as soon as they can.
British medical students go into concierge medicine for the wealthy, they do not mess around with public housing medicine NHS.