_________ (2004) ‘The Real Middle Class Squeeze” BUISNESS WEEK, August 2, p. 102

In previous article, I described the “west wing effect.” It is how we become attached emotionally to statistics and give them legitimacy. However, on close inspection something is flawed in the stats.

So here is another one.

It is called “Core Inflation” and is used by the Federal Reserve Board. At the moment core inflation is rising only at 1.9 % annually. That’s not bad. There is also a measure to look at how the people in the middle are doing.

Unfortunately, there are some economic indicators that are not covered in this core inflation measure. Do you buy gasoline? Do you purchase other forms of energy to heat and cool your house. Pay taxes? Buy groceries? Go out to eat?

These costs ARE NOT counted. Let’s say that together. “THESE COSTS ARE NOT COUNTED.” Statistically, you are doing great. In reality, you are continually losing and feeling the squeeze.

A statistics is not necessarily a lie. Statistics can be extremely helpful. However, when some economic element is distorted, unnecessarily added, or consciously omitted, then the statistics makes us feel good as we feel bad. We then conclude that others are doing pretty good, but we are not. We keep it a secret so as to not look unsuccessful, but we hurt deep down inside. Then we look for some one to blame, but most of the time we fall back on ourselves. We wonder how other people do so well. I feel the same way. They do well by going into debt. Interest payments are also not directly counted in the core inflation.

Again and again, cosmetics transcend substance.