Pairing Prices and Actions
Terry H. Schwadron
Feb. 17, 2023
Though we already have several measures, maybe it’s time for a different monthly measure of the economy — one that targets a handful of the most direct costs to U.S. households and how effective the government policies meant to address those costs are proving in the marketplace.
We know that gas and heating fuel is higher than we all would like, but our measures show incremental variations that tell us little about whether our national energy policies are proving effective over time, for example. Rather than clarity in our measurements, we get new prompts for debate.
We got yet another set of consumer price measures on Tuesday that show that while prices are rising less quickly, they are still increasing. Indeed, we learned that inflation rates are down for the seventh month in a row — slowly, of course — even while prices for the things we care most about daily, like groceries, eggs, even gas, feel as if they are taking too much of weekly pay.
And so, to understand it all, we try reading the information closely only to keep tripping over words like “stubborn inflation,” as if that is useful. Among citations for rising prices month over month: pricier hotels, car insurance, vehicle repairs and pedicures; among goods dropping in price: used cars and clothing. Oversimplifying, services cost more, goods slightly less.
Just not eggs and milk or rent.
Why restaurant prices and hotels are more important measures than a shopping cart or shelter is unclear to me. It’s a lot easier to avoid resort travel than providing dinner.
A lot seems to depend on the position from which one is looking at “the economy.”
Who’s Using the Data?
For the Fed, policy thinkers and the financial markets, all this seems to mean more pressure on borrowing, higher financial rates, and more layoffs — predictions at odds with monthly figures from a week earlier showing strong hiring rates at the very same time some companies are off-loading employees.
If you’re the Fed rather than you or me, worker wages don’t seem a priority.
For our split government, the same information among Democrats is impetus to think about more aid programs or tax credits, and for Republicans to blame Democrats for inflation while arguing that we’re helping people too much.
The figures showed that food prices continued to grow slightly in January, reversing a gradual decline seen in recent months, as the price of eggs, cookies and citrus fruits all rose slightly — but significantly when projected for the year.
We know there is a poultry disease that is behind the price of eggs, as well as the high cost of transportation. The cost of meat, fish, cereal, and baked goods went up while fruit costs dipped. People report that they are choosing potentially unhealthy diets to match their available spending.
At the same time, over several months, food costs are down somewhat, but you’d have to persuade consumers of that, since companies are using other tricks like cutting quantities per package to keep costs looking even. The United Nations keeps a food index, but its global scope makes it a little hard to see how to gauge impact on your local market.
Of course, the politicians select only data that helps their partisan cases. None of that helps us.
Are we doing anything or the right things to help address food prices? How do we know?
Measuring Policies and Prices
It would be great if we could have a continuing independent assessment of how the variously promoted government policies have demonstrable effect on the prices we see as consumers. Linking the two seems a better approach to deciding whether policy seems appropriate or judging whether ideas seem worthwhile.
For months, we heard that backups in shipping and the unloading at our ports were the cause of high prices for goods. There must be a way to measure whether efforts at controlling covid is resulting in untangling those knots — and then to connect that with the price of a tee-shirt.
We’ve heard much from the Biden administration pushing the start of price caps on insulin for seniors, but there are dozens of expensive drugs. Again, it would be great to see a monthly measure for targets more specific than “health care” as a generic category to match government policy with prices.
Who knows, we might even be able to get politicians to use the same measures before blaming each other over completely divergent views about the health of our economy.
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