Govt on Inflation: Who you going to believe, me or your lying eyes?
It is obvious that people are cutting back where they can (computers, clothes and furniture) to pay for rising prices on necessities -- food, fuel and health care.
Does the Labor Department cook the books? In a word, yes. The Labor Deparment says that gasoline prices dropped 2%. Now, our "lying eyes" say that just ain't so. But the government says that seasonally, gasoline prices tend to rise by 8% in April as driving season approaches. This year they only rose 6%, so the government does a stupid math trick and says gasoline prices are DOWN 2%.
The real risk here isn't inflation (okay it's a risk, but one we're used to). The real danger is that the government statistics will no longer have the faith of investors and consumers. If we end up following the lead of the Soviet Union, this drama will not play out well.