There is an issue with the measurement of health care inflation within the PCE deflator, which is being held down by administrative forces or fiat. One could argue that the effect is artificial or that it will reverse at some point. For a non-insane take on this fairly minor issue, check with the recent work from Goldman Sachs.
But this truly is special and proves that people are extremely willing to lose money thinking that inflation is higher than it is.
According to Paul Ashworth, chief economist at Capital Economics, this presents the Fed with a problem. Using CPI’s method of tracking healthcare inflation, core PCE would be at 2.3%, over the Fed’s stated target.
Yes, if a chief “economist” uses the narrow measure of medical services inflation evident in the CPI and then applies the weight corresponding to the broader conception of medical services in the PCE deflator, then he gets the higher inflation rate that he clearly wants. Heckuva job.
Hell, why not skip the middle man? Just add a constant, like Shadow Stats does. I shit you not. They do that — or did until they got busted. And people buy it. Man.
The source of this “news” is Business Insider, inevitably. Maybe they do good work on tech or on what six shoes you should have in your closet or on which military thing is totally the coolest or on how to fool people into thinking you are smarter than you are. They cover the waterfront and make me think of a castrated ZeroHedge oddly interested in fashion.
On the few things I do understand, they are always trivially wrong – usually in the service of sensationalism. I would have thought Darwin would have selected out their gullible readers by now. Maybe it is masochism that sends people there, as in my case.