Consumer prices jumped a higher than expected 0.4 percent today according to the BLS Consumer Price Report for October, primarily due to energy.
Key Points
- The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in October on a seasonally adjusted basis after being unchanged in September, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 1.8 percent before seasonal adjustment.
- The energy index increased 2.7 percent in October after recent monthly declines and accounted for more than half of the increase in the seasonally adjusted all items index; increases in the indexes for medical care, for recreation, and for food also contributed. The gasoline index rose 3.7 percent in October and the other major energy component indexes also increased. The food index rose 0.2 percent, with the indexes for both food at home and food away from home increasing over the month.
- The all items index increased 1.8 percent for the 12 months ending October, a slightly larger rise than the 1.7-percent increase for the period ending September. The index for all items less food and energy rose 2.3 percent over the last 12 months. The food index rose 2.1 percent over the last 12 months, while the energy index declined 4.2 percent over the last year despite increasing in October.
CPI Items
I don’t doubt declining energy prices. Gasoline is easy to measure. I don’t doubt apparel prices are falling either.
For anyone wanting to buy a home, the CPI is grossly distorted but the latest figures would seem reasonable. The problem is the BLS does not factor in home prices so there has been massive understatement for years in shelter costs.
The same applies to medical care services. Anyone buying their own insurance will tell you what they pay has gone up 20% or more. For many, the cost of insurance is up 100-300% over the past few years.
The BLS conveniently averages all those on Medicare and Medicaid while simultaneously ignoring what corporations pay, and while also assuming the quality of care is up.
The whole thing is a joke, and a sorry one at that for anyone in school, anyone wanting to buy a home, or anyone buying their own health care insurance.
Sticky and Flexible Prices
The Atlanta Fed measures Sticky Prices (prices which move slowly) and Flexible Prices (which change fast). Apparel is an example of something that moves slow and energy is an example of something whose price changes frequently.
- The Atlanta Fed’s sticky-price consumer price index (CPI)—a weighted basket of items that change price relatively slowly—rose 3.3 percent (on an annualized basis) in October, following a 2.4 percent increase in September. On a year-over-year basis, the series is up 2.8 percent.
- On a core basis (excluding food and energy), the sticky-price index rose 3.5 percent (annualized) in October, and its 12-month percent change was 2.7 percent.
- The flexible cut of the CPI—a weighted basket of items that change price relatively frequently—increased 7.9 percent (annualized) in October, and is down -0.5 percent on a year-over-year basis.
Year-Over-Year Comparisons
- If you are a production and supervisory worker, allegedly you are 4.0 PP ahead of the Flexible CPI, 1.7 PP ahead of the BLS CPI, and 0.7 PP ahead of the sticky CPI.
- If you are a the average worker, allegedly you are 3.5 PP ahead of the Flexible CPI, 1.2 PP ahead of the BLS CPI, and 0.2 PP ahead of the sticky CPI.
Congratulations!
Congratulations are due because as noted in Labor Productivity Dives as Unit Labor Costs Soar, you are gaining despite your anemic productivity.
Unfortunately, the Decline in Profit Margins and Investment Suggests Recession Due Now.
Mike “Mish” Shedlock
For me – food prices barely change – up and down but slightly higher for 15 years or more.
People remember the ups – seldom the downs
One thing higher is the price off beef – but it has gone sideways for about 3-4 years
I compare sales prices to previous sales prices – for years no change on Beef then a huge jump 3-4 years ago but no further jump – If anything a small decline
If you eat organic vegetables and fish – your results will vary greatly
When CPI comes out BLS calculates real earnings.
Yesterday:
“From October 2018 to October 2019, real average hourly earnings increased 1.9 percent, seasonally adjusted. The change in real average hourly earnings combined with a 0.3-percent decrease in the average workweek resulted in a 1.6-percent increase in real average weekly earnings over this period.”
Do You Know Who Owns Your Debt?
How the debt-buying and debt-collection industries put the squeeze on Americans. link to gq.com
How the Fed Boosts the 1%: Even the Upper Middle Class Loses Share of Household Wealth to the 1%. Bottom Half Gets Screwed
Single payer in the US would soar out of sight.
Does anyone still remember the Democratic Presidential debate where every single candidate agreed to give government-sponsored health care to illegal immigrants?
I think that everyone knows exactly which combination of gender and ethnicity will shoulder the lion’s share of the cost of paying for all this ‘free’ stuff.
Six weeks after the last Presidential election, a co-worker who had two teen-aged girls was notified that his healthcare coverage for them was going to double from $500 to $1000 a month. He was working at two jobs. He had to switch his preferred job as a fitness instructor from full-time to part-time, and switch his corporate job from part-time to full-time, to get them coverage from his employer, as he could not afford a $6000 annual increase in the premiums. It was a parting ‘gift’ from Obama’s maladministration of the USA.
There’s no reason for perfectly healthy teenagers to cost $6000 each to insure. It’s a measure of the bloat in the system, and the government-required cost shifting from the people with no jobs to the people who actually work for a living.
Healthcare in the US is a hidden, and huge, tax on working stiffs to pay for the votes of the unemployed.
Americans citizens have dreams too, and it’s unfair in the extreme to make them switch from their dream jobs to corporate drone jobs so that they can pay for somebody else’s health care.
Will they demand that my co-worker must get a THIRD job to pay for health care for illegal immigrants?
Your real problem is that US health costs are out of sight anyway. If the US accepted a form, from the many European examples available, of socialised health care, it would be a body blow to the Republican party. No one anywhere would adopt the current American system, as such you and people who agree with you on single payer are in such a minority that the rest of the world shakes its communal head and says ” Only in America “.
There are systems (HMO)that are close to single payer in the US and costs are lower than having separate insurance, separate doctors and separate hospitals and separate pharmacies. The publicly traded private insurance companies who are for profit are the biggest cost to healthcare. Eventually there will be a national HMO that had negotiating power in a lot of states. Some states have banned HMOs but they are in the pocket of insurance companies. Not having an integrated system produces more cost and for the same or worse outcomes as a system like Clevland Clinic, Kaiser or Mayo Clinic.
In any monopoly, the one thing one can say for sure, is that the delta between what is put in (costs), and what is received in return (services) will always increase. Until eventually the whole charade become completely unsustainable.
Services can well improve, but only as long as costs increase faster (postwar European experience). And ditto, costs can be lowered, but only at the cost of services declining even further (Venezuela).
Absent competitive pressures, there will never be any reason for anyone involved in the monopoly to improve efficiency hence reduce the delta. So, the delta will always grow, until services hit a zero lower bound (or beyond perhaps, with organ harvesting etc…)
“Single payer in the US would soar out of sight.”
For comparison is a chart of countries spending on healthcare.
Despite spending the most on healthcare, the US system appears to be the most in turmoil, with rising consumer costs and coverage issues.
Living in Canada, I will see the occasional blurp about health care issues generally around provincial election time. Yet on this blog which I enjoy, it is rare to go a few weeks without a mention of the downcomings of the US healthcare system??????
I may be wrong in my assumption but it looks to me that people in the single payer nations appear to be much more satisfied with their systems. All healthcare systems have their issues but it is odd that despite spending nearly twice as much per capita, why there is so much turmoil with the American System???? One would think that the US system would be nirvana based on spending alone compares to others.
Why would the costs of single payer i the US soar out of sight? In Canada they have a single payer system and the cost of that system is significantly below that of the US with better outcomes. The difference being that each of provincial gov’t is the HMO and the lack of need to make an extortionate profit. And all of the shareholders of the provincial HMO (the gov’t) are ecstatic at the daily dividend they receive from this single payer system … healthcare on demand, no extortionate bills from the provincial HMO for accessing the system, no co-pays, and good outcomes.
Regardless of how it is funded, the most important thing is to apply existing anti-trust, racketeering, and commerce law and stop the racketeering. Post prices, estimates in advance, everybody the same price. Just like getting your car fixed.
This is total bullshit realist.
Healthcare only works elsewhere because they control education costs, doctor salaries, drug pricing, etc etc.
Where they do not do all of those things, like Canada, there are huge delays even for something as simple as an MRI.
Of course they control costs. Healthcare is not a market because of information asymmetries and a lack of pricing transparency. Otherwise you end up with our system. And I’d happily trade the time it takes to get an MRI for a non-threatening issue in Canada, for the time it takes to get one in the US when you do have a threatening issue.
I’m writing from India. We have a combination of Government health care (variable quality depending on state), hospitals run by (generally religious) trusts and purely commercial hospitals (usually small ones). Competition is pretty stiff, and one could reasonably call it a free market – there are no government price controls on hospital charges though essential medicines have price controls.
Some years ago my maid had open heart surgery. It cost about Rs.165,000/- including post operative care. That’s about USD 2300 today.
In the US, there is no way to know the cost until it is too late. The hospital has costs, the doctors havecosts the radiologists have costs You won’t know what you are going to get billed untilyou get all the bills, which can tke a year to come in. And you have no idea how those bills relate to the actual costs.
re: “for the time it takes to get one in the US when you do have a threatening issue.”
I’m not sure whether you were trying to imply good things, or bad with this comment. I can relate my personal experience. I needed an MRI once. I had been going to a physical therapist for sciatica. At noon, I went in and before beginning treatment he, as always, checked my reflexive responses. When there was no foot kick when he hit my achilles tendon, he told me, “I can’t treat you anymore. You need to see your doctor ASAP” and scheduled an appointment at my doctor for 2pm. At 2pm, my doctor said “you need an MRI immediately”, and scheduled an appointment for me at 5:30AM the next morning, adding that in order to get me in immediately, the MRI tech would be coming in an hour earlier than usual. By 9AM the next morning I was in the office of the orthopedic surgeon. He looked at the time stamp on the MRI and said “They sure got you in fast”. A moment later, after looking at the MRI he said “Oh, I see why! When was the last time you had anything to eat or drink?” Since no one told me not to have breakfast after the MRI, the surgery had to wait until the next day, but the surgery was successful and was fast enough that I had no nerve damage.
Whatever else you want to say about the US medical system, it can move incredibly quickly in urgent situations.
And yet they would not change to a US style healthcare system if given the opportunity. National healthcare in CA is such a failure that the Canadians voted the politician who instituted the program as the most popular politician in CA history. Also please explain why the crappy CA healthcare system blows away the US system in healthcare outcomes.
And the free market still produces better and cheaper alternatives when it is allowed to work.
I give you the Christian Sharing plans we have previously talked about, that per capita, are cheaper than any European plan (like 75% cheaper) and cover more.
Capitalism and free enterprise works when it is allowed to. Health care in the USA is anything but that.
As some who has worked in the Canadian healthcare system, I can tell you from experience that any person with life threatening issues will have an MRI the same day if needed and anybody who does NOT have life threatening issues will have to wait. SO WHAT. I will gladly, and have done so, have an MRI in the middle of the night week two or three weeks after the MD orders than cause a critically ill person to wait because I deem myself too important to wait.
“Healthcare only works elsewhere because they control education costs, doctor salaries, drug pricing, etc etc.”
As well as, traditionally, de facto controlling salaries of every other profession Doctors in particular would compare themselves to. While doctors as a rule don’t chose medicine for the money, they do expect to be able to live where their children have access to not obviously inferior schools, as well as in reasonably safe and convenient-to-their-work neighborhoods.
Western Europe, especially Scandinavia, has experienced much less economic stratification than the US post war, making it feasible to “control” doctors’ salaries to a degree which simply isn’t viable over here. It’s becoming increasingly difficult in Western Europe as well, as they are following the Anglo world down the drain into unconstrained, the-dumber-and-more-useless-you-are-the-higher-you-get-paid financialization.
It’s easy to control costs such as doctor’s salaries. Just add supply…
Not only that, increasing supply is one of only two possible ways of lowering costs. The other is reducing demand. All prices are set by the intersection of supply and demand. Whenever some don’t seem to be, it is only due to demand reducing hidden costs making people effectively poorer enough, to not demand so much.
You can get an MRI done in Tokyo 3× (including air fare and hotel costs) for the price of one done in the US (and appliances are made outside the US anyways).
As for waiting, if you count the infinite waiting times that people without medical insurance have in the US, the waiting times are far greater than anywhere.
“You can get an MRI done in Tokyo 3× (including air fare and hotel costs) for the price of one done in the US ”
And that in a country with demographics making the boomer heavy US seem positively youthful…
Japan is lucky enough to have gotten their credit bubble done with three decades ago. The BOJ may have done their best to prevent it, at the behest of their own class of Tokyo based FIRE leeches. But, lucky for the Japanese, even the BOJ’s best efforts haven’t had nearly the effect the leeches was hoping. Leaving productive people comparatively unrobbed, compared to in The West, where the bubble is still inflating.
“You stop explaining yourself when you realize people only understand from their level of perception.” Jim Carrey
I find it interesting that almost all of the comments about healthcare stress controlling the costs. None of them have talked about the lack of financial profits made
in the Canadian style system. Do none of you think that most of difference between the US style system and that of Canada might be the lack of HMOs and their need to extract a profit at the expense of the person needing to use the system?
You make a very important point, soupcan, our for profit model is definitely POTP (part of the problem.) In Minnesota we have had only non-profit health insurers for many years and our healthcare is among very best in the US. Non-profits don’t really stop the enormous price gouging by the various providers – and it is gouging – but it does take freaking “shareholder value” and 8 digit pay for exec’s out of the equation. I worked for ten years for the largest health insurance company by revenue and I can tell you the shareholder value – and 8 digit pay was our driving concern.
All “economic” “statistics” is a joke. Or at least would be, if the result of their employ were not so tragic. They are simply served up as an attempt to justify intervention of one form or another. Always with the same goal: Rob the rest for the benefit of those closest to those with the power to intervene.
Economics never has been, never will be, anything even remotely resembling an empirical discipline. As there simply can never be any expectation of constancy at all. People’s preferences, which is where all of supply and demand come from, is 100% dependent on decisions made as a result of every new published, and even unpublished “measure.” Immediately, and with 100% certainty every single time, rendering any measure irrelevant even before it is undertaken (before, because even the act of planning a measure, changes the behavior of those you intend to measure.)