While releasing the news that official consumer price inflation in the United States was pushing 7% in a year in November (at 6.8%), the Labor Department made a curious announcement: Starting in January 2022, it would use a new method to compute the rate of inflation in consumer goods and services! This is a game that BLS has played repeatedly since the 1980s. President Biden chimed in with the equally curious claim that “price and cost increases are slowing, though not as quickly as we would like.”
But the Labor Department’s current distortions are already displaying a much lower inflation rate than Americans are experiencing. For household shelter costs alone, simply replacing the unreal and absurd “owner-equivalent rent” measure (up 3.5% this year) with a combination of house prices (up about 18%) and actual rents for new leases (up about 13% nationwide), would move CPI inflation to 11% for the year to November. Tucker Carlson, in his long, useful outburst on inflation on Fox News’ site Dec. 11 (https://www.foxnews.com/media/tucker-carlson-inflation ), pointed out that giving gasoline prices only a 4% weight in the CPI is completely unrealistic for households across most of the country (transportation is the second-largest household expense after shelter). It’s already been forecast that heating the house this winter will cost 6% more at the lowest, but 30% more when using natural gas or heating oil. And Biden’s Build Back Better legislation passed by the House, should it be voted by the Senate, will add a “methane fee” (a form of carbon tax, which Biden cited as a “pledge” at FLOP26 in Glasgow) which will add another 17-20% to those Winter heating costs for natural gas, according to the Wall Street Journal’s calculations Dec. 9 (https://www.wsj.com/articles/the-stealth-home-heating-tax-methane-fee-house-democrats-spending-bill-joe-manchin-biden-11637963624 ). That “methane fee” would rise year by year and eventually reach $1,500/ton of CO2.
Despite many media accounts of American workers’ freedom to quit their jobs and obtain better ones and better pay, the Labor Department reported Dec. 9 that weekly real wages for all workers dropped by nearly 2% in the year that ended in November; average real hourly pay fell by 1.6%. And despite celebrations of a “return to full employment,” there are more than 3 million fewer jobs in the economy than in November 2019, and the labor force has shrunk by 3.5 million since then. Productive or “goods-producing” employment was 310,000 lower in November than two years earlier. Industrial production has just returned to late 2019 levels.
