By TIPPINSIGHTS EDITORIAL BOARD, TIPP Insights

The media celebrated the past week with headlines like “‘Santa is coming after all’; Investors celebrate a cooler-than-expected inflation report” and “November CPI: Biden says economic plan ‘just getting started’ as prices cool.”

Paul Krugman, the Nobel laureate, recently wrote a column in the New York Times, “Wonking Out: When Should We Declare Victory Over Inflation?”

But the credibility of economists, even Nobel laureates, under the Biden presidency has taken a severe blow. Recall, these are the same folks who wanted to foist Biden’s Build Back Better Plan on Americans. If it had passed, inflation would be persisting in double digits.

True, the Consumer Price Index (CPI) released by the government last Thursday showed a 7.1% year-over-year price increase from November 2021 to November 2022, edging down from a rate of 7.7% in October. The CPI has declined steadily from a 40-year high of 9.1% in June to 7.1% in November.

Intriguingly, no media outlet bothered to inform its readers or viewers that the prices have increased by 13.2% under President Biden’s watch between February 2021 and November 2022.

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The simple calculations don’t need a rocket scientist. But no one is curious to make that. The mainstream media would rather play defense for the White House and pretend that its policies are working.

That’s where we fill the vacuum. We developed the TIPP CPI, a metric that uses February 2021, the month after President Biden’s inauguration, as its base and measures the rate of change.

While we recognize that CPIs are index numbers, for common understanding, when we refer to TIPP CPI and BLS CPI, we mean percent change.

Bidenflation, measured by the TIPP CPI using the same underlying data, stood at 13.2% in November. It was 13.2 in October, 12.8% in September, and 12.6% in August.

All TIPP CPI measures are anchored to the base month of February 2021, making it exclusive to the economy under President Biden’s watch. Please note that we use the relevant Bureau of Labor Statistics (BLS)underlying data but recalibrate it to arrive at the TIPP CPI.

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Significant inflation had already set in by the middle of last year. In November 2021, CPI inflation was 6.8 percent. The official CPI year-over-year increases will compare prices to already inflated bases in the coming months. The year-over-year calculation may moderate the statistics, but you will still feel the pinch of inflation.

TIPP CPI vs. BLS CPI

The following three charts present details about the new metric.

The official year-over-year CPI increase reported by BLS is 7.1% for November 2022. Compare this to the TIPP CPI of 13.2%, a 6.6-point difference. Prices have increased by 13.2% since President Biden took office.

Food prices increased by 16.4% under President Biden’s watch compared to only 10.6% as per BLS CPI, a difference of 5.8 points.

Energy prices increased37.4% per TIPP CPI compared to 13.1% according to BLS CPI, a difference of 24.3-points.

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The Core CPI is the price increase for all items, excluding food and energy. The Core TIPP CPI was 10.7% compared to 6.0% BLS CPI in the year-over-year measure, a 4.7-point difference.

Further, gasoline prices have increased by 47.3% since President Biden took office. However, the BLS CPI increase for gasoline is 10.1%, a difference of 37.2 points.

Used car prices have risen by 28.8% during President Biden’s term. The BLS CPI shows that the prices have dropped by 3.3%, a difference of 32.2 points.

Inflation for air tickets under President Biden is 48.4% compared to the BLS CPI finding of 36.0%.

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Americans’ Concerns

The latest Investor’s Business Daily/TIPP Poll, completed last week, shows that nine in ten (87%) of survey respondents are concerned about inflation. Throughout the past year, inflation concerns have stayed above 80%. The share of “very concerned” has been over 50% consistently.

Most respondents (51%) say their wages have not kept pace with inflation. Only one in five (22%) say that it has. The share, who said wages had kept pace, has hovered in the 17% to 22% range since January 2022.

As a result of inflation, Americans are cutting back on household spending.

Most Americans are spending less on entertainment (78%), eating out (78%), purchases of big-ticket items (76%), holiday/vacation travel (72%), and memberships/subscriptions (67%).

Many (62%) are cutting back on even good causes such as charity giving. The high gasoline prices forced 60% to cut back on local driving. Nearly two-thirds (59%) of households are spending less on groceries.

Inflation Direction

The chart below compares the 12-month average of monthly changes against the 6-month and the 3-month averages. We also show the reading for November 2022.

The 12-month average considers 12 data points and presents a long-term reference, while the six-month and three-month averages consider recent data points.

To better understand, compare the three-month average to November 2022 data. For all items, the three-month average was 0.30 vs. 0.1 in November 2022. It is decreasing, and hence it is good.

Similarly, for “Energy,” the rate is decreasing. The decrease in November 2022 (-1.60) exceeded the three-moving average of -0.63, indicating deceleration.

Notice that inflation is slowing for “Food” and “All items less food and energy.”

The U.S. economy is in stagnation – high inflation combined with an economic slowdown. While some may find solace in the falling CPI, the fact remains that many Americans are living paycheck to paycheck with little or no savings to speak of.

To access the TIPP CPI readings each month, you can visit tippinsights.com. We’ll publish the TIPP CPI and our analysis in the days following the Bureau of Labor Statistics (BLS) report. The upcoming release of TIPP CPI is January 12, 2023. We’ll also post a spreadsheet in our store for free download.

READ MORE AT TIPP INSIGHTS

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