https://www.aei.org/publication/chart-of...XBOu5O99no


Just stumbled across this chart this morning. Haven't had time to delve into it just yet. What's everyone's initial thoughts?

Just at a cursory glance it would appear our basest desires are being fulfilled for far less than the cost of essentials goods and services. The dumbing down of America continues apace.

I would like to see the metrics associated with housing and cars before commenting

the upper tier is inarguable and out of control....

Some of that doesn't make sense....Cars for instance.

I can vouch on TV's. Just bought a 55 inch Roku TV for $349. A few years ago that TV would have cost me $1200.

(02-28-2019 08:28 AM)GrayBeard Wrote:  Some of that doesn't make sense....Cars for instance.

you saw what I saw....

that one and housing is off the chain insane...

like I said, I want to see the metrics associated with that bs....

(02-28-2019 08:28 AM)GrayBeard Wrote:  Some of that doesn't make sense....Cars for instance.

Exactly. I bought my first car in 1996... a new Toyota Corolla off the lot... $9,000 cash. Same vehicle is now $21,000. I suppose with financing and taking into account lower interest rates, a monthly payment on a then common 3 year loan in 1996 is close to the same as a monthly payment on the more common 5-year loan today. Same math with housing/mortgages. But that is deceiving if that is how they are coming up with these numbers.

(02-28-2019 08:20 AM)stinkfist Wrote:  I would like to see the metrics associated with housing and cars before commenting

the upper tier is inarguable and out of control....

Cars caught my attention too. It has to be flawed. A new pickup did not cost $30,000 for a 2WD base version in 1998.

Read thru the comments in the link on the OP. Someone brought up a good point about how the CPI will adjust pricing based on quality improvements, features, etc. Probably explains why cars look flat on the graph.

https://www.bls.gov/cpi/quality-adjustme...nswers.htm

Quote:Why does the CPI adjust prices for changes in quality?
The CPI measures the average change in price over time of consumption goods and services by following the prices of a representative sample of consumption items in the retail establishments that sell them. A fundamental problem for the goods and services in the CPI sample is that their characteristics, not just their prices, change over time as the retailers introduce new versions of items and discontinue the older versions. In many categories of items, this is the primary time when price change occurs. The new version of the item may provide additional benefits or, in some cases, reduced benefits. This change in benefit is quality change.

To measure price change accurately, the CPI must be able to distinguish the portion of price change due to this quality change. The traditional CPI solution to this problem is to temporarily remove an item from the sample when its quality has changed. While this method is sometimes acceptable, it biases the CPI if new version price changes are systematically different from the price changes of the unchanged goods.

What is hedonic quality adjustment?
Hedonic quality adjustment is one of the techniques the CPI uses to account for changing product quality within some CPI item samples. Hedonic quality adjustment refers to a method of adjusting prices whenever the characteristics of the products included in the CPI change due to innovation or the introduction of completely new products.

The use of the word “hedonic” to describe this technique stems from the word’s Greek origin meaning “of or related to pleasure.” Economists approximate pleasure to the idea of utility – a measure of relative satisfaction from consumption of goods. In price index methodology, hedonic quality adjustment has come to mean the practice of decomposing an item into its constituent characteristics, obtaining estimates of the value of the utility derived from each characteristic, and using those value estimates to adjust prices when the quality of a good changes.

The CPI obtains the value estimates used to adjust prices through the statistical technique known as regression analysis. Hedonic regression models are estimated to determine the value of the utility derived from each of the characteristics that jointly constitute an item.

(02-28-2019 08:34 AM)stinkfist Wrote:  

(02-28-2019 08:28 AM)GrayBeard Wrote:  Some of that doesn't make sense....Cars for instance.

you saw what I saw....

that one and housing is off the chain insane...

like I said, I want to see the metrics associated with that bs....

Looking at a national average, I can see the housing make sense. I've seen 75% increases in home values in just 5 years in one of the areas that I have lived in.

(02-28-2019 08:49 AM)miko33 Wrote:  Read thru the comments in the link on the OP. Someone brought up a good point about how the CPI will adjust pricing based on quality improvements, features, etc. Probably explains why cars look flat on the graph.

https://www.bls.gov/cpi/quality-adjustme...nswers.htm

Quote:Why does the CPI adjust prices for changes in quality?
The CPI measures the average change in price over time of consumption goods and services by following the prices of a representative sample of consumption items in the retail establishments that sell them. A fundamental problem for the goods and services in the CPI sample is that their characteristics, not just their prices, change over time as the retailers introduce new versions of items and discontinue the older versions. In many categories of items, this is the primary time when price change occurs. The new version of the item may provide additional benefits or, in some cases, reduced benefits. This change in benefit is quality change.

To measure price change accurately, the CPI must be able to distinguish the portion of price change due to this quality change. The traditional CPI solution to this problem is to temporarily remove an item from the sample when its quality has changed. While this method is sometimes acceptable, it biases the CPI if new version price changes are systematically different from the price changes of the unchanged goods.

What is hedonic quality adjustment?
Hedonic quality adjustment is one of the techniques the CPI uses to account for changing product quality within some CPI item samples. Hedonic quality adjustment refers to a method of adjusting prices whenever the characteristics of the products included in the CPI change due to innovation or the introduction of completely new products.

The use of the word “hedonic” to describe this technique stems from the word’s Greek origin meaning “of or related to pleasure.” Economists approximate pleasure to the idea of utility – a measure of relative satisfaction from consumption of goods. In price index methodology, hedonic quality adjustment has come to mean the practice of decomposing an item into its constituent characteristics, obtaining estimates of the value of the utility derived from each characteristic, and using those value estimates to adjust prices when the quality of a good changes.

The CPI obtains the value estimates used to adjust prices through the statistical technique known as regression analysis. Hedonic regression models are estimated to determine the value of the utility derived from each of the characteristics that jointly constitute an item.

which is why I laughed at econ profs....

there's a reason loan terms have increased from 3 to 7 yrs. now...

this is how capitalism milks to the point of the flat line or diminishing....

this is how wealth division has created today's schema in this country....

the middle class in the '60s/'70s a new car was affordable for a single income earner.....

now it takes two under the roof that has created the upper tier of this 'supposed inflation chart'...

this is the impact of globalization and inflated valuation/debt....

shite's going to hit the fan one day....I don't claim to know when...I simply hope I'm dead when it happens...

(02-28-2019 08:49 AM)miko33 Wrote:  Read thru the comments in the link on the OP. Someone brought up a good point about how the CPI will adjust pricing based on quality improvements, features, etc. Probably explains why cars look flat on the graph.

https://www.bls.gov/cpi/quality-adjustme...nswers.htm

Quote:Why does the CPI adjust prices for changes in quality?
The CPI measures the average change in price over time of consumption goods and services by following the prices of a representative sample of consumption items in the retail establishments that sell them. A fundamental problem for the goods and services in the CPI sample is that their characteristics, not just their prices, change over time as the retailers introduce new versions of items and discontinue the older versions. In many categories of items, this is the primary time when price change occurs. The new version of the item may provide additional benefits or, in some cases, reduced benefits. This change in benefit is quality change.

To measure price change accurately, the CPI must be able to distinguish the portion of price change due to this quality change. The traditional CPI solution to this problem is to temporarily remove an item from the sample when its quality has changed. While this method is sometimes acceptable, it biases the CPI if new version price changes are systematically different from the price changes of the unchanged goods.

What is hedonic quality adjustment?
Hedonic quality adjustment is one of the techniques the CPI uses to account for changing product quality within some CPI item samples. Hedonic quality adjustment refers to a method of adjusting prices whenever the characteristics of the products included in the CPI change due to innovation or the introduction of completely new products.

The use of the word “hedonic” to describe this technique stems from the word’s Greek origin meaning “of or related to pleasure.” Economists approximate pleasure to the idea of utility – a measure of relative satisfaction from consumption of goods. In price index methodology, hedonic quality adjustment has come to mean the practice of decomposing an item into its constituent characteristics, obtaining estimates of the value of the utility derived from each characteristic, and using those value estimates to adjust prices when the quality of a good changes.

The CPI obtains the value estimates used to adjust prices through the statistical technique known as regression analysis. Hedonic regression models are estimated to determine the value of the utility derived from each of the characteristics that jointly constitute an item.

Thanks so until manufacturers are permitted to produce cars of the same quality as in 1996, the metric is useless then. If I could have bought the same Corolla brand new for $8,000, I wouldn't have bought a 5 year old car with 110k miles on it for $8,000.

Yes. This $15/hour thing will be real in a few years.

(02-28-2019 08:59 AM)GrayBeard Wrote:  

(02-28-2019 08:34 AM)stinkfist Wrote:  

(02-28-2019 08:28 AM)GrayBeard Wrote:  Some of that doesn't make sense....Cars for instance.

you saw what I saw....

that one and housing is off the chain insane...

like I said, I want to see the metrics associated with that bs....

Looking at a national average, I can see the housing make sense. I've seen 75% increases in home values in just 5 years in one of the areas that I have lived in.

which is why averaging is a ridiculous comparison relative to wages....

(02-28-2019 08:38 AM)200yrs2late Wrote:  

(02-28-2019 08:20 AM)stinkfist Wrote:  I would like to see the metrics associated with housing and cars before commenting

the upper tier is inarguable and out of control....

Cars caught my attention too. It has to be flawed. A new pickup did not cost $30,000 for a 2WD base version in 1998.

https://jalopnik.com/truck-buyers-in-the...1832867969

The WSJ cites JD Power data in reporting that pickup buyers in America paid an average of $44,000 for a full-size model last year, up by a ridiculous 61 percent from a decade ago. The average price for all vehicles over that same time period rose by less than half of the truck stat, going up by 28 percent to around $32,500.

I find it hard to believe that cars were close to flat.

Trucks are out of control. The BASE 4x4 Ford Ranger STARTS around $32k. the F-150 is even worse.

(02-28-2019 07:44 AM)200yrs2late Wrote:  


https://www.aei.org/publication/chart-of...XBOu5O99no


Just stumbled across this chart this morning. Haven't had time to delve into it just yet. What's everyone's initial thoughts?

Interesting that sectors that are heavily in bed with government are seeing their costs skyrocket?

Education
Medical
Child Care

Government throws more $$ into something, costs go up, government throws even more $$ into it. Vicious circle.

(02-28-2019 09:05 AM)swagsurfer11 Wrote:  Yes. This $15/hour thing will be real in a few years.

you really don't understand min wage in cali/ny vs ala/ms...

wages adjust accordingly due to market/labor demands...

aw hell, let's just bring in more illegal aliens.....that's sounds like a good idea...

/sarc

(02-28-2019 09:09 AM)BadgerMJ Wrote:  

(02-28-2019 07:44 AM)200yrs2late Wrote:  


https://www.aei.org/publication/chart-of...XBOu5O99no


Just stumbled across this chart this morning. Haven't had time to delve into it just yet. What's everyone's initial thoughts?

Interesting that sectors that are heavily in bed with government are seeing their costs skyrocket?

Education
Medical
Child Care

Government throws more $$ into something, costs go up, government throws even more $$ into it. Vicious circle.

funny how that 'works', eh???

(02-28-2019 09:02 AM)EverRespect Wrote:  

(02-28-2019 08:49 AM)miko33 Wrote:  Read thru the comments in the link on the OP. Someone brought up a good point about how the CPI will adjust pricing based on quality improvements, features, etc. Probably explains why cars look flat on the graph.

https://www.bls.gov/cpi/quality-adjustme...nswers.htm

Quote:Why does the CPI adjust prices for changes in quality?
The CPI measures the average change in price over time of consumption goods and services by following the prices of a representative sample of consumption items in the retail establishments that sell them. A fundamental problem for the goods and services in the CPI sample is that their characteristics, not just their prices, change over time as the retailers introduce new versions of items and discontinue the older versions. In many categories of items, this is the primary time when price change occurs. The new version of the item may provide additional benefits or, in some cases, reduced benefits. This change in benefit is quality change.

To measure price change accurately, the CPI must be able to distinguish the portion of price change due to this quality change. The traditional CPI solution to this problem is to temporarily remove an item from the sample when its quality has changed. While this method is sometimes acceptable, it biases the CPI if new version price changes are systematically different from the price changes of the unchanged goods.

What is hedonic quality adjustment?
Hedonic quality adjustment is one of the techniques the CPI uses to account for changing product quality within some CPI item samples. Hedonic quality adjustment refers to a method of adjusting prices whenever the characteristics of the products included in the CPI change due to innovation or the introduction of completely new products.

The use of the word “hedonic” to describe this technique stems from the word’s Greek origin meaning “of or related to pleasure.” Economists approximate pleasure to the idea of utility – a measure of relative satisfaction from consumption of goods. In price index methodology, hedonic quality adjustment has come to mean the practice of decomposing an item into its constituent characteristics, obtaining estimates of the value of the utility derived from each characteristic, and using those value estimates to adjust prices when the quality of a good changes.

The CPI obtains the value estimates used to adjust prices through the statistical technique known as regression analysis. Hedonic regression models are estimated to determine the value of the utility derived from each of the characteristics that jointly constitute an item.

Thanks so until manufacturers are permitted to produce cars of the same quality as in 1996, the metric is useless then. If I could have bought the same Corolla brand new for $8,000, I wouldn't have bought a 5 year old car with 110k miles on it for $8,000.

It's a gov't created problem based primarily on safety followed by efficiency standards. If the regulations go away tomorrow, the car companies will still have to charge higher rates for awhile to recoup the years of costs in engineering/design that created the new features.

Having said that, I'll bet someone will be enterprising enough to offer the ability to create a 'new' car based on older tech designs if someone would be willing to pay up front for such a car. It would have to be on a very small scale in order to avoid gov't attention. All you would have to do is make sure the vehicle was street legal in your state.

(02-28-2019 09:06 AM)BadgerMJ Wrote:  

(02-28-2019 08:38 AM)200yrs2late Wrote:  

(02-28-2019 08:20 AM)stinkfist Wrote:  I would like to see the metrics associated with housing and cars before commenting

the upper tier is inarguable and out of control....

Cars caught my attention too. It has to be flawed. A new pickup did not cost $30,000 for a 2WD base version in 1998.

https://jalopnik.com/truck-buyers-in-the...1832867969

The WSJ cites JD Power data in reporting that pickup buyers in America paid an average of $44,000 for a full-size model last year, up by a ridiculous 61 percent from a decade ago. The average price for all vehicles over that same time period rose by less than half of the truck stat, going up by 28 percent to around $32,500.

I find it hard to believe that cars were close to flat.

Trucks are out of control. The BASE 4x4 Ford Ranger STARTS around $32k. the F-150 is even worse.

I paid $12k for a one owner 2004 F150 XLT 4x4 in 2011. It now has a rebuilt engine and 240k miles on it and I can still get $10k for it. I get that new trucks have a lot more features, but dammit, it's a truck. I don't need it equipped like a Cadillac.