This has long been a pet peeve so I thought I'd do a diary rather than just post it on bonddad's diary.
As most of us know the government has been coming out with pretty rose economic numbers for GDP and inflation.
What most of don't know is those numbers are manipulated through "hedonic adjustments." These adjustments are a relatively recent thing which make our government's numbers apples to oranges in comparing them with historical numbers or those of nations that do not hedonically adjust.
Re the inflation numbers, this is from Bill Gross, the famous Pimco bond guru:
"The CPI as calculated may not be a conspiracy, but it's definitely a con job foisted on an unwitting public by government officials who choose to look the other way or who convince themselves that they are fostering some logical adjustment in a New Age Economy dependent on the markets and not the marketplace for its survival. If the CPI is so low and therefore real wages in the black, tell me why U.S. consumers are resorting to hundreds of billions in home equity takeouts to keep consumption above the line. If real GDP growth is so high, tell me why this economy hasn't created any jobs over the past four years."
"High productivity? Nonsense, in part -- statistical, hedonically created nonsense. My sense is that the CPI is really 1% higher than official figures and that real GDP is 1% less."
"In 1998, the methodology was adopted for computers -- surely the biggest step backward in realistic inflation calculations. Since then, the BLS has expanded the concept to include audio equipment, video equipment, washers/dryers, DVDs, refrigerators and, of all things, college textbooks! Today, no less than 46% (my emphasis) of the weight of the U.S. CPI comes from products subject to hedonic adjustments"
http://moneycentral.msn.com/...