It clearly is the case that just voting in elections, as a citizen, is not enough, we all have to raise our game.   We cannot wait for the perfect solution to be handed to us. We have to work for it.  

1) What is this new index called?

Title: The Consumer Price Index Research Series Using Current Methods, 1978-1998.

Short title: CPI-U-RS

 

2) What is the CPI-U-RS and what does it attempt to do?

The CPI-U-RS attempts to estimate what the measured rate of inflation in the CPI for all

urban consumers (CPI-U) would have been over the 1978-98 period had the methods now

used been in effect since 1978.

The CPI-U-RS provides an annual inflation series that adjusts only for specified changes in

Bureau of Labor Statistics (BLS) methodology. It does not incorporate all possible

research results on past inflation. For example, no attempt has been made to reflect any

new information on trends in the safety or comfort of air travel, for which there is no

corresponding methodological change in the CPI-U.

 

5) Does the CPI-U-RS account exactly for the effects of the improvements BLS has

made to the CPI over the years?

No, the CPI-U-RS is an approximation. For some improvements–the use of the rental

equivalence measure for homeowner costs, for example–estimates of the effects are

reasonably precise. For other improvements–the use of hedonic quality adjustments in the

apparel component, for example–no such claims of precision can be made.

http://useconomy.about.com/od/economicindicators/p/CPI.htm

 

More important, the CPI does not include sales price of homes. Instead, it calculates the monthly equivalent of owning a home, which it derives from rents. This is very misleading, since rental prices are likely to drop when there is high vacancy, usually when interest rates are low and housing prices are rising. Conversely, when home prices are dropping due to high interest rates, rents tend to increase. Therefore, the CPI gives a false low reading when home prices are high (and rents are low). This is why it did not warn of asset inflation during the housing bubble of 2005.

 

Two measures of inflation are often reported: Core CPI, which does not include food and energy cost, and non-core CPI, which includes everything. Core CPI is important because this is what the Federal Reserve looks at to decide whether or not to raise the Fed Funds rate. The Fed uses the Core CPI because food and energy, specifically gasoline, are so volatile and the Fed's tools are so slow-acting. Therefore, inflation could be high if gas prices have increased dramatically, but the Fed won't react until those increases trickle through to the prices of other goods and services.

 

Historical CPI numbers can best be found on the BLS website. The agency provides a history of the Consumer Price Index for every month since 1912. The monthly history of the core CPI is available for every month since 1956. The history of CPI by city or by product category can also be selected. (Most Requested Statistics. CPI history is also available by monthly changes or year-to-year changes. (CPI website, CPI-U, US City Average, All Items: Historical Numbers)

 

 

 

 

 

http://www.shadowstats.com/article/no-325-cpi-ppi-production-household-income  plus grahes

 

The SGS-Alternate Consumer Inflation Measure adjusts on an additive basis for the cumulative impact on the annual inflation rate of various methodological changes made by the BLS (the series is not recalculated). Over the decades, the BLS has altered the meaning of the CPI from being a measure of the cost of living needed to maintain a constant standard of living, to something that no longer reflects the constant-standard-of-living concept.  Roughly five percentage points of the additive SGS adjustment reflect the BLS’s formal estimate of the annual impact of methodological changes; roughly two percentage points reflect changes by the BLS, where SGS has estimated the impact not otherwise published by the BLS.

 

The CPI-U (All Urban Consumers) is the headline consumer inflation number published by the BLS and the one most commonly used in deflating consumer-related dollars. The Census Bureau appears to have used the CPI-U in its data up until 2003.

The CPI-U-RS (Current Methods) is a special version of the CPI-U with its history restated so as to reduce earlier-year inflation by imputing what it would have been using today’s "advanced" CPI reporting methodologies. The CPI-U-RS is the index used by the Census Bureau in deflating income numbers in the Poverty Report since 2003. It also is the series reverse-engineered by ShadowStats.com for constructing the SGS Alternate CPI estimates.

 

The SGS Alternative CPI-U measures are attempts at adjusting reported CPI-U inflation for the impact of methodological change of recent decades designed to move the concept of the CPI away from being a measure of the cost of living needed to maintain a constant standard of living

 

 

 

The United States Consumer Price Index (CPI) is a price index that is based on the idea of a cost-of-living index. The US Department of Labor's Bureau of Labor Statistics (BLS) explains the difference:

"The CPI frequently is called a cost-of-living index, but it differs in important ways from a complete cost-of-living measure. BLS has for some time used a cost-of-living framework in making practical decisions about questions that arise in constructing the CPI. A cost-of-living index is a conceptual measurement goal, however, not a straightforward alternative to the CPI. A cost-of-living index would measure changes over time in the amount that consumers need to spend to reach a certain utility level or standard of living. Both the CPI and a cost-of-living index would reflect changes in the prices of goods and services, such as food and clothing that are directly purchased in the marketplace; but a complete cost-of-living index would go beyond this to also take into account changes in other governmental or environmental factors that affect consumers' well-being. It is very difficult to determine the proper treatment of public goods, such as safety and education, and other broad concerns, such as health, water quality, and crime that would constitute a complete cost-of-living framework."[2]

 

 

 

CPI for Urban Wage Earners and Clerical Workers (CPI-W): from Wikipedia

The urban wage earner and clerical worker population consists of consumer units with clerical workers, sales workers, craft workers, operative, service workers, or laborers. (Excluded from this population are professional, managerial, and technical workers; the self-employed; short-term workers; the unemployed; and retirees and others not in the labor force.[1]) More than one half of the consumer unit's income has to be earned from the above occupations, and at least one of the members must be employed for 37 weeks or more in an eligible occupation.The Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W) is a continuation of the historical index that was introduced after World War I for use in wage negotiation. As new uses were developed for the CPI, the need for a broader and more representative index became apparent.

[edit] CPI for All Urban Consumers (CPI-U)

The all-urban consumer population consists of all urban households in Metropolitan Statistical Areas (MSAs) and in urban places of 2,500 inhabitants or more. Non-farm consumers living in rural areas within MSAs are included, but the index excludes rural consumers and the military and institutional population. The Consumer Price Index for All Urban Consumers (CPI-U) introduced in 1978 is representative of the buying habits of approximately 80 percent of the non-institutional population of the United States, compared with 32 percent represented in the CPI-W. The methodology for producing the index is the same for both populations.

[edit] Core CPI

The core CPI index excludes goods with high price volatility, such as food and energy. This measure of core inflation systematically excludes food and energy prices because, historically, they have been highly volatile and non-systemic. More specifically, food and energy prices are widely thought to be subject to large changes that often fail to persist and do not represent relative price changes. In many instances, large movements in food and energy prices arise because of supply disruptions such as drought or OPEC-led cutbacks in production.

[edit] Chained CPI for All Urban Consumers (C-CPI-U)

This index applies to the same target population as the CPI-U. The same raw data are used, but a different formula is employed to calculate average prices. The chained CPI was developed to overcome a shortcoming of the CPI-U series, which does not account for the changes that people make in the composition of goods that they purchase over time, often in response to price changes. The alternative method of the C-CPI-U is intended to capture consumers' behavior as they respond to relative price changes.