Inflation measurement tweaks make for sunnier data
Summary
The U.S. government is changing how it measures inflation in certain categories like investment advice, software, and legal services. These changes will likely show slightly lower inflation numbers when updated this fall. The updates aim to improve how inflation reflects real changes in prices but come at a sensitive time given political pressures and concerns about trust in official data.Key Facts
- The Bureau of Economic Analysis announced changes to how it calculates inflation in three areas: portfolio management, computer software and accessories, and legal services.
- These changes will be included in inflation data revisions released on September 30.
- The updates are expected to reduce core inflation by about 0.2 percentage points.
- Core Personal Consumption Expenditures (PCE) inflation was 3.4% for the year ending in May and has been above the Federal Reserve’s 2% target since March 2021.
- One example: portfolio management fees currently may show price changes linked directly to stock market moves rather than actual service price changes.
- Economist experts identified issues with how software and tech products, like video games, are counted in inflation measures.
- Political context includes President Trump’s previous criticism of labor data and calls for Federal Reserve interest rate cuts, raising concerns about how inflation data changes are perceived.
- Some experts call for greater transparency in how inflation data are calculated and revised, to maintain public trust.
Read the Full Article
This is a fact-based summary from The Actual News. Click below to read the complete story directly from the original source.
