Who says inflation
House hopeful John Kerry has released a "middle-class misery index"
that claims President George Bush's policies have caused wages to drop and created
sharp spikes in the costs of college tuition, health care premiums and gasoline.
When it comes to measuring misery,
Mr. Kerry isn't breaking new ground. The original misery index has been around
since the 1970s, combining the unemployment rate and the inflation rate. Forbes
magazine publishes a tax misery index. There's even a "grindcore metal band"
from Maryland called "Misery Index."
But the federal government
has long published its own version of the misery index -- the Consumer Price Index.
It measures monthly changes in the prices of thousands of goods and services consumers
buy. Rising prices indicate inflation; falling prices indicate deflation.
the CPI shows tame inflation -- running at about 2 percent or less annually. But
real people with real bills say their personal misery index shows inflation is
on a tear.
Alan Greenspan's perspective of inflation:
Dan Keniston has been cutting and trucking wood in
the White Mountains of New Hampshire for 40 years. At one time he had 15 employees;
now he's a company of one. He does what he can by himself, thanks to an inflationary
spiraling of workers' compensation rates.
"Not long ago I was paying
$34 per every $100 of wages. Then it went to $41, then $50.98, and one year ago
it went to $64 per every $100. On top of that you have to match the Social Security
and pay unemployment. That meant I was paying an additional 75 percent of what
I was paying in wages. I just couldn't afford it.
"Logging is dangerous,
and the insurance company says that's why the workers' comp rates are so high.
But I've had only one claim in 10 years and they only paid $173, so they're not
losing any money on me," says Keniston.
Ask Keniston what he thinks
when Federal Reserve chairman Alan Greenspan says inflation is quite low, around
"I think he's crazy," Keniston says quite emphatically.
paying $1,389 a quarter for health insurance with a $5,000 deductible. Fuel is
terrible. It's about $1.77 for diesel. We've seen diesel go from 92 cents three
years ago this summer to $1.77 now. The insurance on my logging truck has gone
up $1800 in two years. That includes $100 on my commercial liability in case of
a terrorist attack!"
How can it be that people who are paying bills
are getting squeezed while the government tells us that inflation is tame?
of living different for everyone
Economist Joel Naroff of Naroff Economic
Advisors Inc., says the CPI may not be the best measuring tool.
a real problem because the CPI is just a bundle of goods that reflect typical
expenditure patterns. It wasn't created to be a representative cost of living
index. There is no one way of measuring -- there's inflation and there's the cost
of living. Just because the CPI is tame doesn't mean peoples' cost of living is
"While the stated inflation rate may not be going up rapidly,
prices may be going up more so, depending on your lifestyle. If you're seeing
doctors, you have kids in college or you live in an area that depends heavily
on energy sources such as natural gas, oil or propane, you're seeing some pretty
significant price increases. We're seeing significant increases in insurance.
"My cost of living is totally different than yours. If rent
is skyrocketing and I own my home, it doesn't mean a thing to me. But all these
things are pushing the average individual or family even while the government
says there's little inflation."
inflation enough to make you sick
A study by the Washington, D.C.-based
Kaiser Family Foundation shows that private health insurance premiums increased
13.9 percent in 2003, the third consecutive year of double-digit increases. Over
that time span, Kaiser reports, the premium employees pay for family coverage
has increased almost 50 percent from $1,619 to $2,412.