http://www.thedailyreview.com/site/news.cfm?BRD=2276&dept_id=465724&newsid=19214924&PAG=461&rfi=901/20/2008
The vast array of economic data compiled by the federal government is extraordinary but, sometimes, unintentionally misleading. As data are compiled and compressed into averages, means and indexes, they sometimes lose their immediate relevance to individuals.
But the latest consumer price data released by the Bureau of Labor Statistics provide a clear picture of the plight facing American consumers as recession looms.
According to the bureau, inflation rose at a rate of 4.1 percent in 2007 while real wages increased by 0.9 percent. That in itself represents a substantial squeeze, but the real problem is in the details. The overall inflation statistic is an average derived from the costs of a wide range of goods and services that are not equal in importance to consumers. It includes a substantial increase in home heating costs for many Americans, for example, which is offset somewhat by a 1.4 percent reduction for domestic natural gas - scant comfort for those who use other fuels.
Consumers also faced soaring costs for basic staples, such as bread and milk, which have a greater impact than increases in some other areas. They also faced more than 10 percent increases in health insurance costs and nearly 6 percent increases in actual medical care.
Compounding those problems is that the reported rates of increase are annual averages. So the price of gasoline rose 8.2 percent for the year but 30 percent for the last quarter alone. That latter number is the one that most affects consumers.
The numbers make clear that the economy is going to be the chief issue in the upcoming congressional and presidential elections. And they point to the need for systemic economic improvement in terms of better jobs, energy development and health care reform, rather than any quick-fix, short-term remedies to guide politicians past the next election.