I will concede we are in at least a partial economic slowdown, and that what you call it is probably not that important (a point the President also made BTW). 

However, the technical definition of a recession is two or more consecutive quarters of negative economic growth.    By that criteria, we ain't there - not yet anyway.  For the last quarter we have on record, economic growth was still positive (an admittedly anemic 0.3% I believe).  That might be revised downward in the future.

Or it might not.  It could even be revised upward..

Now we have the release of one of the better leading economic indicators - the current quarter's data for the service sector (the majority of our economy) from the ISM - the non-partisan Institute for Supply Management.  It shows the non-manufacturing sectors bottomed in January, and are now in a solid recovery mode.

Interesting, eh?  (Full article here: http://article.nationalreview.com/?q=MDY3OTdkYTYwNDE1NTA2YzYzNzUzN2Q1OTUxYjMyMzQ= )

Personally, I do not know if we are in a recession or not.  Neither do all the folks claiming we are.  Whether we are or not, economic recovery from here is likely to be shallow given the headwinds from the housing decline.  So I am not makiing the case that the economy is going gangbusters - clearly it is not.  But it is doing OK - particularly for an economic slowdown and considering the sub-prime mortage mess.  The constant drumbeat you read in the media on how bad the economy supposedly is right now is mostly nonsense.

It is quite possible that by next fall, we will be back in positive territory and the data just might show that we never entered a recession at all.

The recession that never was.

(HINT:  I can already tell you the MSM spin.  They will insist that the technical data is unimportant.  They will make the garbage claim that, "Except for the top 10%, the economy is in recession" - or words to that effect.)

MWL

Funny how the Dem backers blame the recession on Bush when it appears we may not even go into a recession, but don't acknowledge that it was the Clinton admin that huffed and puffed the tech bubble that blew up just after Bush took over.

Tim

And, don't forget the hell Dubya took for simply stating the economy needed watching, the Democrats accused him of "talking down the economy".

In fact, the economy needed watching, it was set to blow.

The biggest sad sack of all was Jimmy Carter. He could really make the American citizens feel like crap, what with his America last leanings.

Rick

The predicate to the view that we are not in "recession" is that one accepts the government's macro-statistics at face value.

I do not.  Each succeeding Administration has become more adept at tweaking the calculation of statistics to make things seem better than reality. (e.g. GDP continuing to grow, yet inflation under control). 

Consider as "Exhibit A"  today's release of the CPI in which, the govt reports that energy prices were flat in April.     Flat energy prices.  Sure.  That's a laugh.

If I recall (however vaguely) when calculating GDP growth stats, the govt tallies spending from one period to the next, then deflates/discounts the increase by the amount of inflation, thereby arriving at "real" GDP.   So if spending rises 3%, but reported inflation is only 1%, GDP real growth is 2%.     The problem is that inflation continues to be massively UNDERcounted by the Govt.   For most folks living in the real world,  that 3% rise in spending (as an example) has been met by 5% or 7% inflation -- meaning a drop in real purchasing power and income.

I maintain we are in a recession:  but Big Brother simply won't tell us.

What evidence do you have that we are in a recession?  Or that inflation has been under counted.

The market has recovered significantly off its lows.  Real GDP was up a meager 0.6% in the first quarter.  Job loss has been lower than expected. 

If Obama were president right now, would you be saying just the opposite?   

EagleTed:

Faith based economics. Interesting.

*dabbing coffee from laptop screen*

Hetty Award!

Even in a recessionary environment, this honor can be recyled for a dime.

Off to picket the local Conoco, demanding cheap gas, Gov.  Hey, there's an upside to everything.  I can drop a pound or two while walking in a circle.

;)

Hetty 

Ben Stein chimes in on this very subject with his latest YahooFinance article:

"Recessions Are in the Eye of the Beholder"

http://finance.yahoo.com/expert/article/yourlife/81478;_ylt=AmnTEqU5HAeQ2CR9ULreDlKER4V4

Coy

I couldnt agree more Twin.  I think the decline of the dollar has greatly helped stem a wider recessionary trend by increasing our exports in mfg. and other services. 

The financial industry is the main culprit but i think we are now getting through most of the turmoil.  Housing has a much longer way to go.  But with housing, it is completely dependent on location.  Here in Denver, they were saying that housing prices have actually risen so far this year. 

The price of gas is going to ripple through the economy starting next month as the prices of goods will have to compensate for the cost of shipping (another reason we need more rail in this country). 

I agree mostly with Ben Stein.

Some things  I have noted; the last time we ate at Chili's and Shells, both restaurants were uncharacteristically near empty.

And, that makes alot of sense to me. Eating out (I still consider it a want, not a need) is one activity that can easily free up a pretty nice chunk of money to be redirected to other areas, like gas.

Other areas, like malls seem to be holding up. I know of no person idle against their wishes. Florida's unemployment is at 4.9%, many states are even in the 3%-4% range. Of course there are a couple of rust belt states that are sporting high numbers, but frankly the people will probably need to leave before they prosper again. Maybe the folks in Michigan (7.2%) could move to Idaho (3.0%) or Iowa (3.5%).

Honestly, I've often thought longterm unemployment benefits (say after 2 or 3 months) should only be given if people moved to more prosperous areas of the nation.

But, what do I know? I'm a rich, fat-cat  (according to most Democrats) Republican living in a walled/fenced community (not gated, though!).

My family, friends (and friend's families) and neighbors (and neighbor's families) are all doing fine, SO FAR in the imaginary recession of '08.

Queen Hetty, perhaps you can whip up some tee shirts that proclaim: I survived the 2008 Recession, if it Really Happened!,  OR  I survived the 2008 Recession, and all I got was this lousey Tee Shirt!!

Rick

If it bleeds, it leads. In the news business extremes sell. Muddling through is just not news.

Another Rick 

Rick Hamilton:

I agree mostly with Ben Stein.

Some things  I have noted; the last time we ate at Chili's and Shells, both restaurants were uncharacteristically near empty.

And, that makes alot of sense to me. Eating out (I still consider it a want, not a need) is one activity that can easily free up a pretty nice chunk of money to be redirected to other areas, like gas.

Other areas, like malls seem to be holding up. I know of no person idle against their wishes. Florida's unemployment is at 4.9%, many states are even in the 3%-4% range. Of course there are a couple of rust belt states that are sporting high numbers, but frankly the people will probably need to leave before they prosper again. Maybe the folks in Michigan (7.2%) could move to Idaho (3.0%) or Iowa (3.5%).

Honestly, I've often thought longterm unemployment benefits (say after 2 or 3 months) should only be given if people moved to more prosperous areas of the nation.

But, what do I know? I'm a rich, fat-cat  (according to most Democrats) Republican living in a walled/fenced community (not gated, though!).

My family, friends (and friend's families) and neighbors (and neighbor's families) are all doing fine, SO FAR in the imaginary recession of '08.

Queen Hetty, perhaps you can whip up some tee shirts that proclaim: I survived the 2008 Recession, if it Really Happened!,  OR  I survived the 2008 Recession, and all I got was this lousey Tee Shirt!!

Rick

 

  

 

 

Sir Rick:  HEIC (Head Elf In Charge) memoed me and asked that I convey to you his thanks for the idea for new T-shirts.  He and other Palace Elves are putting together the new line with your suggestions.  

Another big seller should be WANT CHEAP GAS?  EAT FRIJOLES.

Here's what's going on out here in La La Left Coast Land.  Stopped at the bank to deposit a small manufacturer's rebate check I forgot I had.  There was a time when I didn't have the luxury of overlooking ANY amount of money, especially during the stagflation of the '70's.  Yesh, I can buy gasoline, frightening as the total may be.  At times back in disco days, there wasn't any gas to buy, period.  There is the additional expense of feeding cheese to the mice that power my 4-cylinder Corolla, but it's worth it.

I dashed into a little Chinese takeout joint just before noon, and other than the owner, had the place to myself.  Usually the line's going out to the street.  Two minutes later it was, as usual.  Good timing is its own payoff.

Yesterday morning I scraped together pennies from the Royal Mad Money Fund and took a good friend, a real estate broker with an international clientele, to a belated birthday breakfast.  How's business? Picking up.  To many, this dip in prices is a chance to bargain hunt.  Crazy as it may seem, to someone based in London, Paris or Hong Kong, LA real estate, especially if looking for a second/vacation home/investment property, is rather cheap in comparison.

During the breakfast, a group of professional-looking young women were having a lively networking type of meeting.  No one was in tears...lots of laughs.  One gal wandered over to our table and said, "Ladies, you're part of our group this morning, so here's my card and flyer."   Her service?  Clutter control, especially in your home.  I did a double take because she was a dead ringer for Niecey, the former hostess of a show on cable called CLEAN HOUSE that featured the results of the same type of service.  She read my expression and mind and quipped, "Yep, I do look like her, so I use it to my advantage initially."  We all had an additional laugh about that one.

Now, Sir Rick, if people are willing to pay someone to help them go through all their "stuff" and neaten up, things aren't too horrible in the 'hood.,  In its own fashion, much of SoCali had its own recession ahead of the curve when the WGA was on strike.  Not only do entertainment jobs go, but the support services such as restros, florists, car repair and detailing and retail take a big hit.   Strike ended and production and such geared up again.

If I had the choice between the economy I faced going into 1979 and the one 2009 may bring, I'll take the latter.  There are far more ways to turn a buck today than then, even for ordinary Royalty.

:)

qh1 

 P.S. Wow, I had 2 fortunes tucked into my cookie:

YOU ATTRACT CULTURED AND ARTISTIC PEOPLE

Latte-drinking, arugula-eating elitists perhaps? 

and

INVEST, BUT NEVER SPECULATE. 

:) Kachinggggggggggggggggggggg$$$$$ 

Hetty-

There was an opinion piece in today's WSJ that goes along with what you said. 

According to the most recent polls, more than 75% of the American public believes the economy is in bad shape. All three remaining candidates for president are treating the economy as the biggest electoral issue, and all agree the situation is dire.

The normally sanguine Alan Greenspan recently observed that the current economic mess is "the most wrenching" since World War II; Fortune magazine's Allan Sloan, who's been covering the business of business for decades says, "I'm more nervous about the world financial system than I've ever been in 40 years."

There is no denying that the current financial morass is deep and painful. But taking the long view, there is something both startling and disturbing about the gloom that has settled over Wall Street and the country in general. In fact, looking back over the past century, it would be a stretch to rank the current problems as especially notable or dramatic. Something else is going on – namely a cultural rut of pessimism that is draining our collective energy, blinding us to possibilities, and eroding our position in the world.

Who Stole the American Spirit
 

Governor:

Hetty-

There was an opinion piece in today's WSJ that goes along with what you said. 

According to the most recent polls, more than 75% of the American public believes the economy is in bad shape. All three remaining candidates for president are treating the economy as the biggest electoral issue, and all agree the situation is dire.

The normally sanguine Alan Greenspan recently observed that the current economic mess is "the most wrenching" since World War II; Fortune magazine's Allan Sloan, who's been covering the business of business for decades says, "I'm more nervous about the world financial system than I've ever been in 40 years."

There is no denying that the current financial morass is deep and painful. But taking the long view, there is something both startling and disturbing about the gloom that has settled over Wall Street and the country in general. In fact, looking back over the past century, it would be a stretch to rank the current problems as especially notable or dramatic. Something else is going on – namely a cultural rut of pessimism that is draining our collective energy, blinding us to possibilities, and eroding our position in the world.

Who Stole the American Spirit
 

Thanks for the link, Gov, a good article.   One of the key words in it:  "spirit."  The human spirit can be wounded but never completely destroyed. 

Most of us got up this morning and were able to do pretty much whatever we needed or chose to do.  We aren't digging our way out of the rubble in China or looking for food in Myanmar.  As an old friend once remarked, "Any morning I wake up and I'm not on a train to a death camp is a good day."   

Here's a link to a montage you may enjoy from a time when things truly were tough:

http://www.ameshistoricalsociety.org/exhibits/events/rationing.htm

..and even from this era came some of the best film, music, books and plays ever created.

;)

qh1 the semi-artistic and quasi-cultured 

Good points all.

Restaurants in our area are packed.  When we recently visited relatives in Florida, not at all.  The idea of "pockets" of recession may make some sense.  As I said, I am not claiming a great economy - only that those claiming "The worst economy since Hoover, I tell you" are overstating things, and were Obama and the Deomcrats in control, they would not be complaining.  (Of course, Republicans would be so there would still be some gloom and doom.)

Great article on, "Who stole the American Spirit" BTW.  (Hint: our media is a main culprit.

BTW, in my gift or prophesy department :-) , I see that today's Wall Street Journal also has a article on page one, headlined:

Recession? Not So Fast, Say Some.  Despite Pain, Economists Begin Dialing Back Dire Forecasts"

The article starts:

"A funny thing happened to the economy on the way to recession: It's taken a detour.  That, at least, is the view of a growing number of leading economists - including some who not long ago were saying a recession was all but inevitable ...."

MWL

Governor: "..What evidence do you have that we are in a recession?  Or that inflation has been under counted."

-----------------

The obvious answer re inflation is for you to trust the evidence of your own eyes (after you pull them away from Faux News Network).   Go to the store check the prices.   Go fill up your gas tank. Look at the prices. Look at the premiums you are paying for health insurance.   The evidence is the empirical behavior of prices,  on the ground.   As to recession, that is a question of GDP growth, which in turn is dependent on govt-reported inflation.   Its simple arithmatic:  Start with bad numbers and all numbers derived from the incorrect number are also incorrect. 

The old question:  "If a tree falls down in a forest and no one sees it fall, did it?"    The retort of yourself and EagleT seems to be:  "That depends.  What does Pres. Bush want me to say."

If the evidence of your own eyes is insufficient,   try this link:

 http://www.marketwatch.com/news/story/governments-numbers-racket-about-blow/story.aspx?guid=%7BF91A0843%2D69B4%2D4C0C%2D92CE%2DB835D9907945%7D

The full article it refers to is worth a read, especially for those who think they should trust the Govt economic statistics. It can be found in the May 2008 Harpers magazine.

Yikes...  careful, there may not be enough tin foil on your head!  They are coming for you.... 

I like how Fox is the Faux news network when they have the most accurate reporting, per Clinton and several other Dems, of the presidential race.  Perhaps you should turn your eyes away from the looney leftist sites like Daily Kos or MSNBC where they spew the real fake news.  Is CBS a fake news channel?  I seem to remember them making up stories of Bush and getting caught, perhaps helping him get re-elected, yet Fox is the fake one.  GET REAL! 

Second, inflation being high, which it is, doesnt mean we are in a recession.  Two consecutive quarters of negative growth does.  We had a real rate of +0.6% in the first quarter.  Thats after inflation.  Thus, its not possible to be in a recession.  Let me guess, the numbers were real and could be trusted in the 90's, just up until Jan of 2001.  RIGHT?

PS.  Harpers is another FAUX news magazine!!

Gov: " inflation being high, which it is, doesnt mean we are in a recession."

Actually, it kinda DOES.   Consider:

When computing GDP growth, the govt tallies its spending/production numbers to come up with a nominal GDP figure.. It  then deflates/decreases/adjusts  that number, to remove the effect that inflation has on its calculation so as to report "real" GDP, vs GDP which is distorted by price increases.     So that if the govt's initial tally (prior to them deflating the number) shows nominal  1.0% GDP, but their phony inflation shows only 0.4%, then "real" GDP computes to 0.6% "real GDP growth".   But if real inflation is 3%, then GDP growth would be a negative (2%) [i.e. nominal 1% GDP LESS 3% inflation).

The phony CPI/PPI numbers are the fulcrum that the govt uses to show that "growth" continues, despite the reality we see before our own eyes.

And EagleT thought I was engaged in 'faith based economics".  Sheesh.

pining4Lenore:

Governor: "..What evidence do you have that we are in a recession?  Or that inflation has been under counted."

-----------------

The obvious answer re inflation is for you to trust the evidence of your own eyes (after you pull them away from Faux News Network).   Go to the store check the prices.   Go fill up your gas tank. Look at the prices. Look at the premiums you are paying for health insurance.   The evidence is the empirical behavior of prices,  on the ground.   As to recession, that is a question of GDP growth, which in turn is dependent on govt-reported inflation.   Its simple arithmatic:  Start with bad numbers and all numbers derived from the incorrect number are also incorrect. 

The old question:  "If a tree falls down in a forest and no one sees it fall, did it?"    The retort of yourself and EagleT seems to be:  "That depends.  What does Pres. Bush want me to say."

If the evidence of your own eyes is insufficient,   try this link:

 http://www.marketwatch.com/news/story/governments-numbers-racket-about-blow/story.aspx?guid=%7BF91A0843%2D69B4%2D4C0C%2D92CE%2DB835D9907945%7D

 

The full article it refers to is worth a read, especially for those who think they should trust the Govt economic statistics. It can be found in the May 2008 Harpers magazine.

 

 

inflation?

Guv: "You are (engaging in faith-based economics) since you are just pulling the fact that the CPI is phony out of you a_s_s."

----------------

No Guv, I am suggesting you utilize empirical evidence, and your own grey matter to deduce a small truth.      You asked for evidence.   Its right there.   You think the evidence is no good because it conflicts with what the Govt tells you to believe.

Ignore the reality that you (and the rest of us) experience as you like.    Don't exercise your grey matter if you choose. Accept the govt stats as if they are written by the finger of God.  Your choice.

Go invest in some wonderful 10-year treasury bonds (Why worry, there IS no inflation!)

Who said there was no inflation?  I did not.  I wrote this two posts ago."Second, inflation being high, which it is, doesnt mean we are in a recession. "

The govt certainly did not.  In fact, just today, your govt (which is apparently telling you something different) came out with wholesale inflation that rose 0.4% in April, twice what was expected.  Now, that is significantly less than March's 1.1% number, but historically speaking, is very high. 

The reality is, prices are rising because of oil costs and food input costs.  However, it is being coupled with a broader economic slowdown which is helping (not much) to slow the rate of inflation as consumers spend less. 

Yes, the prices of many things are going up.  But just because you dont like the president, doesnt confirm your dreams of his administration faking all economic news.  

Gov: "..But just because you dont like the president, doesnt confirm your dreams of his administration faking all economic news. "

-------------

Guv, right back at you -- just becasue you like Pres doesn't mean it is scrupulous by telling the American people the truth.     As to the CPI, GDP (and other govt stats, including unemployment) being manipulated, I don't say Bush started this.  He simply took the crap methodologies in place from legacy administrations, and "ran with it".  Well, MAYBE that is all he did.

As to recession or not, as I have laid out for you before, if CPI is UNDER-stating inflation, then GDP growth is OVER-stated. That is just how the math works out.  And if inflation is UNDERSTATED, by say, 1% (easily the case, IMO) then GDP was negative in Q1.

"CPI is phony"

MMM...

NO, it is what it is.

I have my own inflation index "the 3 B index"

Beer, Bead and Beef index.

The BEER and BREAD are already UP!!!

BUT Beef is rising

"just because you like Pres doesn't mean it is scrupulous by telling the American people the truth."  Well, it is all i (and the rest of us) have. 

However, there is a big difference between a faulty methodology in computing something and purposely reporting incorrect numbers for the purpose of misleading the general public (which you contend). 

The CPI is computed with over 80,000 inputs.  It is the most accurate calculation of the general prices in the economy. The price of food and gas have skyrocketed in the past few years.  These are two things that everyone uses and uses everyday, thus it appears to us more often.  So, you become under the impression that the price appreciation of goods is more prevalent than it really is.  Also, prices change differently in different places.  Maybe where you are in Ohio, prices have risen faster than here in Colorado. 

All this stuff has been calculated the same way since the mid-90's when the US changed from reporting the GNP (now NNI) to GDP.  I dont think there is any manipulation by the govt apart, like you said, from faulty methodology.  If there was, wouldnt they have underreported today?  And last month?  And the month before?  (all above analyst estimates). 

Hey Pining4,

I am sure glad you think the same way as I do.  The majority of the good folks do not seem to have a clue why we are in a massive recession.  I keep telling people if you base your thinking on government economic statistics and watching Fox News or CNBC  you are going to get a "feel good report".  I think you need hit the pavements and talk to working Americans and small business owners. You will get a whole different perspective on our economy. Here is why I believe we are in a recession.  The demise of the Dollar, Record number of house forclosures, slumping housing market, record US trade deficits, health care premiums increasing at a 15 to 20% yearly increases, record fuel costs, employee pay increases at less than 3% with inflation built in for most American workers, record number of small businesses closing their doors. almost 50% of Americans have no health care policies.  I can go on and on.  Folks try driving through your local industrial parks.  Look at the number of manufacturing plants that are for sale.  Look at  the  parking lots of mfg. plants. 8 out of ten are only half full. While you are driving arount look at the new business construction going.  They are either big box stores or gigantic warehouses.  I am not trying to be a pessimist. I am a realist. Some of you are going to say there a plenty of companies that are having record earnings.  During "The Great Depression" there were also a number of companies that great earnings.  The problem is the majority of our companies and employees in the work force are bleeding. That is a fact.  On the other hand, Government statistics can be manipulated.  That's my story.

Hank:

I would not be surprised if some government statistics are inaccurate (I have been very skeptical of the inflation numbers in particular).  Howefver, I am very leary about any charges of "manipulation".  Consider this;  The DOL, chock full of government employees, would be delighted if they could figure out a way to give yet another bloody nose to the Bush administration.  Considering the problems we have with the disloyalty in the State Department and the admininstative functionaries in the CIA, do you really think the folks at DOL could be pushed into putting out MORE favorable statistics than we were actually experiencing?

As for your "gut feelings" - what area do you live in?  Local conditions may be affecting your opinion of economic conditions.  In the area I am in, I know quite a few small business owners, I look at employment and business conditions, and our area is still pretty good.

Do we have some economic problems in the US as a whole? Sure.  But this is NOTHING like the 70's, much less (IMO) the '30's.

MWL

Mwleach,

Here is a case in point.  About two years ago our top US Scientist on Global Warming was fired because he believed his reports were altered /manipulated without his consent. He believed global warming was getting more serious than the government wanted to admit.  I hope you take a drive around some industrial parks. It is an eye awakener.

Governor,

If you look at the service sector to see the condition of the economy all you see is a majority of part time workers and full time workers working for minimum or slightly above minumum wages.  That would tell me we got a lot of workers having a hard time making a living.  That is not what I would call a mature economy.

Governor, 

The average hourly wage in April might have been $17.29 per hour but that could be misleading if    the top 20% of hourly workers are makin $80.00 per hour. I do know the majority of the service industry pays bottom line wages.  I still think Governor you are spending way to much time with statistics.   I think you need to get out and talk to the people to get a good perspective of our lack of growth for the ordinary citizen.

Hank,

I think we are talking about different service sectors.  For example, a doctor or lawyer are considered service employees.  I think, perhaps, you are talking about low-skill hourly employees like those that work at Wal-Mart or the grocery store. 

Yes, these low-skilled employees are being hurt right now as they normally do in an economic downturn.  Its especially hard since inflation is so high. 

From Wikipedia:
A service is the non-material equivalent of a good. A service provision is an economic activity that does not result in ownership, and this is what differentiates it from providing physical goods. It is claimed to be a process that creates benefits by facilitating either a change in customers, a change in their physical possessions, or a change in their intangible assets.

By supplying some level of skill, ingenuity,and experience, providers of a service participate in an economy without the restrictions of carrying stock (inventory) or the need to concern themselves with bulky raw materials. On the other hand, their investment in expertise does require marketing and upgrading in the face of competition which has equally few physical restrictions.

Bill Gross agrees with me:

http://www.pimco.com/LeftNav/Featured+Market+Commentary/IO/2008/IO+June+2008.htm

And if inflation IS higher than the official govt stats, then the real, inflation-adjusted economy has been shrinking for at least 2 quarters,  and stagnant for much of the past several years...

Anyone who cares to use their senses that inflatin AIN'T under control  Which means GDP "growth" is a lie they are telling us.

Who is the "faith based" ideologue...?

Pining, I listened to a good conference call by Bill Gross the other day talking about this very thing and how you should invest in PIMCO bonds because of it.  He makes some good points.

However, i got a white paper from a small investment manager here in town that disputes his claim.  This manager states that the CPI is very accurate in aggregate and that it only looks understated because the current inflationary trends are concentrated on food and energy, two things that everyone pays attention to on a daily basis.

However, the CPI includes over 80,000 items, many of which are not shopped for over the course of the year or even every few years.  For example, LCD televisions and computers, both of which have seen significant deflation over the past 4 years.  

Also included are housing prices.  Now, even here in Colorado, the price of housing has plummeted which would help drag down the CPI.

Thus, it says that while people go to the grocery store, on average, on a weekly basis and see the prices of food and gas go up (significantly on some items), they dont realize how much other items have gone down, mainly electronics and housing because they dont shop for these items very often.

I don't know if its true or not, but i found it interesting.   

Guv:  First, its good to have a "heart to heart" on this.

1. Weightings:   I would assert that, excepting housing costs,  food and energy represent the biggest expenditures for most households.    As you point out, most households do not put out the dough for a piece of electronics every month, but fuel (for vehicles and home heating/cooling) IS purchased every month.  So those SHOULD be weighted heavily.  Lets put some numbers to this:  If 30% of a typical/median household's expenditures are on food+fuel, then that should be weighted 30% in the CPI, no?

2. "Core" vs "headline" CPI:  (headline excludes the 'volatile' food and energy categ).   To me, its helpful to use "core" numbers when looking at something from one month to the next.   Why?  They may be a huge spike in these one month, which reverses itself in a month or so.   So you want to "screen out the noise".     But, when looking at a year or more of data, or even several months, strung together,  "core" inflation is pointless -- if food and energy prices are engaged in a SUSTAINED SURGE, then its inflationary. Period.

3. Housing: Guv, note: in the US, house prices are NOT included in the CPI.   That is by govt design.  Renter's equivalency is used. (If I recall, this is the cost someone pays to rent a house).     By rights,  housing is the biggest outlay for most families. May be 50% or more of expenditures  for some who bought a house in the past few years.  But say its only 35%, for argement's sake --   housing prices have what, doubled during 02-05... that is inflation.  But it was hidden, because housing prices are not in the CPI.   And even renter's equivalency, if I recall, may be underweighted vs. % of typical household budget goes to pay for the roof over one's head.

4.  Did that newsletter you mention discuss hedonic adjustments?  (affectively, the govt imputes negative price action on products where the quality has increased -- then adds that imputed negative inflation rate into the calculation for overall CPI).     If a company did this kind of crap with their books, the officers and directors would be in a federal penitentiary.

CPI is a scam.