Rodney Johnson | Tuesday, March 05, 2013 >>
I hate commuting.
When I first worked in New York in the late 1980s, back when the city still had the personality of a drunk hooker walking home in the mornrning, I lived in Brooklyn Heights because it was one stop from the Financial District. Even that 25 minute commute door-to-door seemed like wasted time. In the years since, I’ve worked to keep my commutes to a minimum.
My family has moved a fair number of times over the last twenty years, owning five different homes as well as renting along the way. When we move, I always have a rule – my home will be close to my office. Period.
And like any good husband and father who demands something, I’m usually overruled. Sometimes by choice, sometimes by circumstance…
Right now I have a commute of 32 miles round trip. It gives me time to be frustrated with Bloomberg radio, only because I can’t stand CNBC at all.
I have “Music Attention Deficit Disorder,” where I can’t quite listen to an entire song, wondering if a better tune is on another station. I end up flipping channels every 120 seconds. Hey, that’s what those radio controls on the steering wheel are for, right?
There’s one other thing I get to do on my drive – watch the price of gasoline change at different points along my route, as well as from day to day. Driving a three-ton behemoth that gets 17 miles to the gallon on a good day will make you very aware of gas prices.
Like everyone else, I know prices have been going up for the last couple of months and are up more than 50 cents a gallon since the start of the year. That is, of course, unless you work for the governrnment…
In their enclosed, snow globe of a world, the price of gas has actually fallen over the past month. And they have the statistics to prove it.
In February, the Bureau of Labor Statistics reported the Consumer Price Index for January 2013. Per the report, the overall inflation rate in January was zero, with prices flat on average. Once food and energy were removed, the Core Index reading was actually higher, up 0.3% for the month, implying that gas prices fell in January.
A quote in their notes went on to explain:
“The gasoline index fell for the fourth straight month, declining 3.0 percent. (Before seasonal adjustment, gasoline prices increased 0.3 percent in January.)” – Economic News Release, Consumer Price Index Summary, BLS, February 21, 2013.
Thank goodness! I get it now!
So at the pump, where I have to trade my ever-shrinking dollars for the fuel necessary to feed my beast of a vehicle, the price went UP by 0.3% in January… and has increased for months.
However, in the small, dark cubicle of some bureaucrat in Washington, DC, it’s the season of “energy must be lower,” so there was a seasonal adjustment made on paper to make gas cheaper in the month of January by a full 3%.
This paper adjustment due to some seasonality has caused not only energy to go down in price but also the entire CPI to come in flat for the month.
All this reminds me of the Marx Brothers film, Duck Soup. At one point, Margaret Dumont watches Harpo, dressed as Groucho, leave the room. Then while her back is turnrned, Chico, who is also dressed as Groucho, comes out from under the bed.
Dumont is surprised and asked where he came from since she just saw him leave. Chico denies he left.
She replies, “But I saw you with my own eyes.”
To which Chico responds, “Well, who you gonna believe, me or your own eyes?”
Unfortunately, we as consumers are now in the role of the duped Margaret Dumont. We can see higher prices, we pay higher prices, but we’re told there are no higher prices. In fact, we’re told, the price of gasoline fell by 3% in January and has been falling for months!
Thank goodness, because for a while I thought that things were getting economically worse.
Which of course, they are.
But lower inflation serves the governrnment’s purpose. It allows the U.S. governrnment to claim that its programs are not driving up inflation. It allows the governrnment to keep any upward adjustment to benefits (based on inflation) at a low level.
Think about the millions of retirees who receive pension or social security increases based on CPI. Their benefit increase will be less, even though the price of gas is actually more.
Or consider the average American family whose income is now back down to levels not seen since the early 1990s. I’d imagine the increase in the price of gas is exacting a heavy toll from them as well.
At this point, you might think that the combination of higher costs for living with flat benefits or falling wages would cause a drop in our standard of living. You would be right… as long as you are operating out here in the real world.
If you would like to change your perspective to a more positive one, simply go inside the beltway and enter the insulated world of the U.S, governrnment, as run and reported by the Marx Brothers.
In that sheltered environment you can add a “seasonal adjustment” to make things appear any way you want. Maybe we should declare 2013 the season of money, and make it appear out of nowhere, at least on paper? Oh wait, the Fed already has a cornrner on that one.
P.S. One of the best things you can do, under these circumstances, is to build up as many streams of income as you can. Not only will these help take the edge off the increasing cost of fuel (and living in general), but they will also give you the much needed flexibility to survive this economic Winter Season.
Another important thing to do is attend our Demographics School conference this April 24-25. It’s where we’ll tell you all the other critical things you should do as soon as possible to remove yourself from the role of the unsuspecting Dumont. Don’t let the governrnment pull a Chico and Harpo on you any longer. See you in April.
Ahead of the Curve with Adam O’Dell
Gasoline prices have been going up, up and away since the start of 2009. It’s about the only commodity that’s sustained such a strong upward trend in prices over this time.