CNBC brought its usual A-game this morning when its in-studio guest Constance Hunter, Chief Economist for Aladdin Capital Holdings, was called upon to comment on the CPI data released. Immediately after the government reported “headline” CPI increase of .5% and “core” (everything but food and fuel) CPI increase of .2%, market maven Hunter was asked whether the Federal Reserve should be reacting to the headline numbers. Ms. Hunter replied,
“You know, even though people feel that, I mean, you go buy gas a couple times a week, you go buy groceries a couple times a week. People feel that in their psychology but that doesn’t really mean that inflation is higher because of course you are not buying a car, you know, every month unless you are Jay Leno and so, you know, those prices have come down over the years.”
So because the average working stiff keeps buying groceries and gas twice a week, he or she gets it into their non-chief-economist head that there is inflation and that it is a bad thing. Clearly they should quit wasting so much of their money on those things and should be buying new cars every month, then they would “feel in their psychology” that there isn’t really any inflation.
But wait, according to the data, new car prices rose 1% this month while food went up .6% and gasoline jumped 3.4%. So why is Mr. Leno supposed to be feeling so great about inflation again?
Source: http://www.bls.gov/news.release/pdf/cpi.pdf
Here is the full train wreck from this morning:
Hopefully Aladdin has started taking applications for a new chief economist.
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Who is Jay Lenno? Is he related to Jay Leno?
Embarrassing! Fixed. Thanks
Who could possibly think that the media is being controlled by the unConstitutional coup? What happened to the remedy of the good ole days of tar and feathers for the minions and the death penalty for counterfeiters?
Some of these figures are astronomical. No wonder they want to exclude energy prices (how convenient that they’re “volatile”.) Even medication and transportation services, though.
Good thing that “technically” there’s no inflation, because things like those aren’t on the CPI
I propose a CPI that excludes any items which prices increase over time so technically we can have 0 inflation!
We have serious deflation! CPI now only includes piped gas and apparel.
What a bunch of aggregating idiots. Their argument about inflation is essentially this: don’t worry that your food and gas is more expensive, because you’re making less money and your house is less valuable. You see, it all balances out.
Hey, she’s actually funnier than Jay Leno. Plus she has crazy eyes.
Right, like YOU’RE the one to ask if Jay Leno is funny or not.
This issue for the Fed is that if prices of gasoline and food rise, this hurts the ability of households to buy other things. It subtracts from their purchasing power and that fall in demand reduces the prices of other goods. So they cannot solve the problem by raising rates. This is a problem that has to play out via substitution and demand destruction.
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