Inflation Ex-Inflation Ex-Inflation

I stumbled across a data point yesterday that was quite fascinating: The percentage of food and health care in the Consumer Price Index.

It turns out that Inflation may be even worse that I previously thought.

According to Mark Faber (via Bill Fleckenstein), food and health care are significantly under-weighted in the CPI. That’s based on the actual consumption of food and health care by real (as opposed to theoretically modeled) people.

Faber notes that:

"In the U.S. counts food as only 8% of the CPI index. Whereas, it counts for about 10% in the United Kingdom, about 15% in the rest of Europe and more than 18% in Japan."

I have yet to validate it that percentage, but if it turns out to be true, we have Inflation (as reported) on top of the misleading hedonic/substitution adjustments (ex-inflation) on a disproportionate spending pie (ex-inflation X 2).   UPDATE: Food at home is 7.66% of the CPI according to the BLS (Thanks, Mike)

Hence, doubly understated Inflation. Unless you go Core, which is the original Inflation Ex-Inflation.

Now here’s where things get really interesting. Fleck points out that if you consider the proportion of U.S. household spending on food by income quintile, all but the top 20% of earners spend at least 20% of their paychecks on food.

Hence, what the weighting versus the reality are very different. This means that for 80% of the country’s populace, the CPI weightings are dramatically understates what the average American is experiencing in terms of their inflation versus the official CPI measure.

This goes a long way to explaining the difference between the official inflation data and the generally poor consumer sentiment data.

CPI data is Wednesday, with a consensus of 0.3%.

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NYT Interactive Inflation Chart

Cpi_average_consumer_spending

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Previously:
Is Inflation Really Understated? (No!)  May 08, 2008  http://bigpicture.typepad.com/comments/2008/05/inflation-infla.html

Inflation Abounds  April 29, 2008
http://bigpicture.typepad.com/comments/2008/04/inflation-aboun.html

Is the Fed Causing a Global Food Crisis?
  April 25, 2008
http://bigpicture.typepad.com/comments/2008/04/is-the-fed-caus.html

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Source:
Why all roads lead to inflation
Bill Fleckenstein
Contrarian Chronicles
MSN Money, 5/12/2008 12:01 AM ET
http://articles.moneycentral.msn.com/Investing/ContrarianChronicles/WhyAllRoadsLeadToInflation.aspx

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What's been said:

Discussions found on the web:
  1. Owner Earnings commented on May 13

    Sure as hell looks like food is 15% on the NYT chart?

    ~~~

    BR: I am not sure if that’s their take on all consumption (home and dining).

    UPDATE: That 15% weighting includes restaurants also.

  2. jult52 commented on May 13

    “Fleck points out that if you consider the proportion of U.S. household spending on food by income quintile, all but the top 20% of earners spend at least 20% of their paychecks on food.”

    What is the source for that fact? I don’t find it credible.

    ~~~

    BR: People, don’t just tell me “I doubt this guy.” Do a little research and disprove him!

    This isn’t a popularity contest, its a discussion about analysis and rational reasoning.

    Sweat a little!

  3. austincompany commented on May 13

    The 20% spent on food for the 80th percentile would be reasonable if it includes eating outside the home, i.e. McDonalds, etc. This has been a growing trend in recent years (eating out) and one that is ripe for a downturn in a slow economy – which is already happening to an extent.

  4. Formerly Known As… commented on May 13

    OE,

    Here is my personal example.

    Take home pay, $3600/month
    Monthly food budget $650/month (18% of take-home)

    Seems like allot but for my family of four it works out to be….

    $1.78 per person per meal

  5. Roman commented on May 13

    20% on food! That’s insane. I want to know where he got that number.

    My personal example:

    Take home pay per month: $3,300
    Food bill per month: $400 (this includes eating out)

    Percentage on food = 12%

    Thats the budget for me and my girlfriend, so that comes out to $2.22/meal.

  6. VennData commented on May 13

    The way this should work is:

    The BLS compiles all the raw data and puts it into .xls, .csv. maybe a database format or two.

    Then, private companies create their own CPI, unemployment rate, etc. They could brand them: ‘The JP Morgan CPI,’ ‘The Big Picture Real Rate’ ‘Kudlow & Co Real American Real Rate” etc… Whichever one became most reliable, predictive (or helped with whichever partisan political agenda) could be used. So then over time, the best rates would win out.

    The government could still use their rate for now for COLA etc. But after a decade or so, people might get up in arms enough to demand change to a private index (e.g. two guys at a bar: “Our company uses the ‘Kudlow & Co Real American Real Rate’ for our pension plan discounted cash flow analysis.” “Oh you lucky guy, we’ve got the “Gold Bugs Hyper Rate'” .)

  7. coolio commented on May 13

    I’ll verify the $650 for a family of four by Formerly Known As. We’re spending a bit less than that due to my two little ones are only 5 and 3 yo.

    That’s $650, no McDonalds, no restaurants, no coffee except or instant, no soft drinks .. you get the picture.

  8. Blutskralle commented on May 13

    20% sounds about right.

    You have to avoid considering personal experience in these things; I am willing to bet that Barry’s audience is not indicative of the wealth distribution of the U.S.

    The portion that amazes me is that our policymakers are constantly in disbelief about consumer sentiment and behavior as a result of some of these things. I can picture them staring at the CPI data and repeatedly saying “There is no inflation, why are they so mad about it….?”

    Sad.

  9. r squared commented on May 13

    Barry,

    Count me as well as skeptical about that 20% level. I recall in Michael Pollan’s latest book, he cited a statistic that the US spent the lowest % of income per capita than anywhere else in the industrialized world. I will go find that passage, but his argument was that industrialization of food, resulting in “meals” made up of “food products” was driving that percentage down not up. I think that 20% might be more accurate as a global number.

  10. Patrick commented on May 13

    20% isn’t insane. It’s the bottom 80%–for a large chunk of those people they’re already spending their max on food and as food costs rise and incomes stagnate, it’s not hard to hit 20% involuntarily.

    He might also be including food stamps in some odd way, who knows.

    Also, remember it’s not hard to jump from $400 a month for two to $650 (20%). That’s only an additional 2 nice dinners out on the town. All it takes is a few drinks and bam… 20%. Kind of like withdrawing equity to buy a flatscreen.

  11. r squared commented on May 13

    Of course, regardless of the percentage level, it is hard to deny there is not food inflation. I my building there is a “salad bar” run by four Korean women, fairly steady traffic, high quality. 4 weeks ago, they raised the price per pound by 10%. Last time I checked that would qualify as inflation.

  12. Patrick commented on May 13

    Amanda,

    Why are you quoting % of CPI? Isn’t the entire point that the CPI is off and actual spending is what matters?

    ~~~

    BR: Patrick, Amanda has been outed — by a reader! — as our little troll friend. Sure enough, his/her IP address shows multiple names.

  13. rhw commented on May 13

    Price index minutiae 101: The CPI focuses on OUT-OF-POCKET expenditures, and therefore by design does not include medical expenses paid by third parties, ie insurance companies and medicaid. The PCE price index, however, focuses on consumption expenditure regardless of who pays. It therefore has a much larger weight for medical expenses.

  14. Aurora Borealis commented on May 13

    The most obese nation buys less food than any other nation!

    Slight-weighted geniuses work for the US government.

  15. Formerly Known As… commented on May 13

    Say it out loud to yourself ‘THE BOTTOM 80%’

    Since when did 80% of the population become the bottom!!!

    Riddle me this Batman…20% of $87,000 gross income feeds my family of four what?
    .
    .
    .
    .
    3 square meals a day at McDonalds

  16. Mr. Obvious commented on May 13

    2006 median household income = $48,201

    20% of MHI = $9,640.20

    That comes out to $26/day per household. That’s hardly an egregious number.

    Some of you folks live in la-la land….

  17. steve commented on May 13

    It’s not clear how they are treating food prepared at home vs. restaurant and take out. The latter is far from trivial. Also, a significant piece of the grocery bill is non-food.

  18. ndd commented on May 13

    Request for source of data:

    Money quote in Fleckenstein’s article: “Interestingly, if you look at the proportion of U.S. household spending on food, by income quintile, all but the top 20% of earners spend at least 20% of their paychecks on food. Thus the CPI weightings understate what is already an understated rate.”

    The fundamaental data point in the article, totally unsourced. Anybody know where it comes from?

  19. bluestatedon commented on May 13

    The food-buying experience of someone and his/her significant other, or a family with one or two toddler-aged children, is completely different from a family of five with two rapidly growing teenagers. Anyone with a 16-yr-old teenage boy or girl busy in sports or other activities can attest to how rapidly large quantities of food can disappear from the fridge, irrespective of how frugal and sensible the purchases are.

  20. Fred commented on May 13

    Amanda, right on. Inflation at the consumer level is much more about perception than academic interpretations of what is or is not valid data. Consumers drive the ability to pass on cost. As long as they continue to spend, PPI is a much more significant data point because that basically tells you what the economy is capable of producing (growing). Inflation is a widely misapplied notion – over time, clearly it is the central driver of time valuing assets, but that’s not main street. I do believe that we are in the very beginning of a new supercycle backlash against home ownership, but one that will take a few years to really take hold at the retail level.

  21. Michael Donnelly commented on May 13

    Food at home is 7.66% of the CPI
    Food away from home is 6.173%

    Combine both and you get 14.914% of spending is on food. This is the 2005-2006 average weight and the most recent data we have. As food inflation has been higher than general inflation this % will rise in the next couple of years.

    As it so happens I just wrote a post on the weights in the CPI. Energy is up by 3.5%, so other items have been cut out of the family budget. Food is one of them.

    Links to the CPI weights can be found here
    http://pbp.typepad.com/economy/2008/05/how-do-folks-pa.html

  22. gustav commented on May 13

    As Mr. Donnelly above pointed out, the statement that food is only 8% of the US CPI is false, as easily seen in the NYT link that Barry provided.

    As for Fleck’s unsourced statement about the bottom 80% spending 20% or more on food, this may well be true, but so what? The CPI -U is, after all, titled “for all urban consumers,” not just the bottom 80%.

    Seriously, this conspiracy-mongering about CPI distortions is getting tiresome.

  23. PA commented on May 13

    Remember, the Fed targets the PCE deflator not the CPI, and that deflator gives a weight of 17% to health care. So where’s the problem?

  24. pmorrisonfl commented on May 13

    Personally, anecdotally, Quicken and Excel tells me our upper 20% family (75K < income < 100k/annual) of 2 adults and a toddler spends 16% of take-home on food and dining out. We eat most meals at home, buy first from a warehouse club, 2nd from a local grocer, and our big weekly meal out is Saturday breakfast. I have no trouble believing 20% of income for smaller incomes.

  25. Chad K commented on May 13

    Just to add more anecdotal evidence to the fire… Math on Groceries and Dining [out] stats from Quicken for myself, my parents and 3 of my friends:

    Me [3 kids, wife]: 14% food
    Parents [0 kids at home]: 12% food
    Friend 1 [single]: 20% food
    Friend 2 [1 wife]: 16% food
    Friend 3 [1 kid, 1 wife]: 22% food

    Order of highest income is:
    Friend 1
    Me
    Parents
    Friend 2
    Friend 3

    I know #1 goes out for nice dinners and throws parties for which he typically pays for all the food. I’m a cheapass, but we still eat out several times a week.

    All of the people on the list live in the middle of the US and make more than the median household income.

    Looking at myself, I know the wife and I cut back on the fancier outtings, to help pay for the new house… but with kids getting bigger and McD’s raising prices on their sandwiches about 10% in the past year… our efforts that got us from 16% to 12% now have us back at 14% because of rising costs.

    Fortunately for us, that’s the only inflation that’s hurt us at all.. as we only fill up our vehicles every 2-3 months.

  26. David commented on May 13

    Total family income=$95410 after taxes
    Weekly food allowance(always used up)=$300×52 weeks=$15600

    percentage of income used on food= 16.35%

    this is for a family of four, 2 dogs and a cat.

    My mortgage is $128o/month x 12 months= $15360

    All I can say is wow…my food bill is higher then my mortgage!!

  27. PA commented on May 13

    The main reason the weight on food is lower in the US than the UK and Europe is because the US CPI includes owner-occupied housing costs, which are a big chunk of the index, whereas the harmonised CPI’s now used in the euro-zone and the UK completely omit housing.

  28. Barry Ritholtz commented on May 13

    I can’t believe I actually am about to type this, but:

    Food is considered an essential.
    Dining out is a discretionary expenditure.

    You have to eat to survive. You don’t have to dine out.

  29. CPJ commented on May 13

    Perhaps everyone’s already seen this, but here’s an interesting BLS survey from 2006. The author may have gotten his data from this chart, and stretched it a bit:

    http://www.bls.gov/cex/2006/Standard/higherincome.pdf

    For families making <$70,000, the average income before taxes was $32,093. Food (at home) consumption for this group was $4,660 or 14.5%. Include food away from home, and that figure jumps to just over 20%. This group in the study accounts for about 70% of households. For "All Consumer Units", average income is $60,533, with Food consumption being 10%. Either I'm reading this study wrong, or his claim that "all but the top 20% spend at least 20% of their paycheck" seems a bit stretched. Looks like his statement should read more along the lines of "all but the top 30%+...", but his data doesn't appear to be THAT far off. Either way, this may have been the author's source. ~~~ BR: Thank you Chris!

  30. Francois commented on May 13

    “2006 median household income = $48,201

    20% of MHI = $9,640.20”

    The MHI…is it before or after taxes? Last time I checked, I pay my grocery bills with after tax dollars.

  31. Steve commented on May 13

    BR: “I am not sure if that’s their take on all consumption (home and dining).”

    “Food away from home” is NOT only “dining”.

    It is also snacks, limited service meals, food from vending machines, food at employee sites and schools.

  32. Eric commented on May 13

    Although I don’t have the article handy, it is fairly well-known that Bill Fleckenstein publicly stated his refusal about five years ago to go long any stocks, in essence out of protest against the “maniac” Greenspan and his excesses (except for gold/silver stocks, etc.) I could hardly believe it when I read it. Now, BR is very familiar with the notion of being right vs. making money. While it doesn’t mean that Fleckenstein is an unreliable source of statistical information, can we at least acknowledge that he has regularly demonstrated atrocious stock market savvy? Or would that be too frank a thing to do to one of the bear cabal?

  33. Francois commented on May 13

    “can we at least acknowledge that he has regularly demonstrated atrocious stock market savvy?”

    Acknowledged Houston!

    Now, what does that have to do with the data Fleck cites?

  34. Peter B. commented on May 13

    My wife and I spend roughly 12-15%/month of take home (net of taxes/withholdings) or ~6-8% of gross earnings (just shy of $100K/year with both of us part-time) on food at home. We eat out ($30-60/meal) about twice a week (not included in the previous percentages, though we often bring the food home and eat some as leftovers). We have a three year old boy who is very active and has a big appetite. We live in metro Boston, and lack easily accessible grocery options (so aside from inflation, we already pay a higher price than we would 5 miles out into the suburbs for the same products). We are an odd lot and may not represent the norm, but here goes:

    – We are almost 100% vegetarian (the meat we feed our son we will get when we eat out such as chicken in a pasta dish) though we go through 12 eggs every month and a half or so

    – We splurge on food. Wherever possible and practical we buy organic (health, principal, local support, etc.) or otherwise non-commercial products that are high in nutrition and low in crap (e.g. fresh “real” bread from a baker vs. processed chemical junk for 1/2 the price).

    – We’ll buy select items at Costco (e.g. 4-pack of not from concentrate OJ, 2-lbs of awesome coffee, some bulk produce, etc.) but primarily split our shopping among local small merchants (we’re in Boston’s North End, for those that are familiar) or the bi-weekly trip to Whole Foods or Trader Joe’s.

    – We eat a lot of soy products

    – Our vices consist of fresh coffee each morning, and about one bottle of wine or a six pack of good beer (Guinness anyone?) every 1.5 to 2 weeks (further alcohol consumption is certainly accomplished socially and outside of the home)

    – Though we split our milk intake between milk (the more expensive kind lacking hormones and excrement laden parking lots) and soy milk, and our son is primarily the only one that drinks it, we nonetheless eat a lot of diary-based cheese (none of the stuff in a can, with hormones, or that is squeezed between two sheets of plastic in a perfect square).

    – No soda. Virtually no fast food (unless you count the occasional Boloco “Summer with tofu burrito” as fast food)

  35. Mind commented on May 13

    Perhipheral note: All you quoting McD’s prices – DON’T GO TO FAST-FOOD BURGER OUTLETS. Not good for your health. Figure out a different option(s).

  36. David commented on May 13

    Food away from home is discretionary. The amount a family MUST spend on food is less than 20%. Period.

    I live in a part of the country with some of the most expensive groceries (Bay Area California) and we spend $650/month on groceries. Rarely eat out, maybe twice a month (have a 3 year old).

    $650/month*12=$7800/year, about 10% of the median income for a household in this region.

  37. Jodie commented on May 13

    Fleck was long gold and silver during that time.

  38. Scott commented on May 13

    I noticed you spent a lot of time proving what is obvious and verifiable data to a group that knows better.

    The political hacks and their trolls want you to waste your time doing this, and in some small measure, they succeeded today.

    Take heart from this — it means you have some powerful forces afraid of your relentless assault on false statements, spin, and official government garbage.

    Keep at it — you are more powerful than you realize to attract this sort of attention.

  39. Michael Donnelly commented on May 13

    It’s been getting harder to get an invite over to dinner.

    Depending on good weather we normally invite 2-3 families to our deck for grilling on Fridays. About 2 years ago we’d generally get 1 invite for every time we had folks over. Last year it was a little less frequent.

    This year the ratio has been roughly 2x at our house for every 1 invite elsewhere.

    Not complaining but the change out there is noticeable.

  40. Michael Donnelly commented on May 13

    Beverages at 1.080% is only alcoholic beverages, which technically are a luxury. (I’d dispute the beer at home 0.306%, I need that!)

    Food at home 7.66% includes nonalcholic beverages 0.928% (juice, coffee, soda) and it includes milk 0.323%

    By the way tap water, doesn’t even enter the calculation. Water is considered a utility and is included in the house expenses.

    Water and sewerage maintance 0.660%

  41. John Badalian commented on May 13

    Barry – Like Scott (above) I say kudos & “keep at it”! I’m shocked at the avoidance of the inflation issue by tenured university and college economists! Perhaps they’re terrified of losing contributions and donations from establishment foundations and individuals – the very people who have benefited from this economy over the last 25 years or so.

    It seems anything you NEED (i.e., food, fuel, education and medical care) are skyrocketing in price; while the stuff you WANT (ipods, big screen TVs, Chinese-made lawn furniture) rise at modest rates, if at all. And I haven’t even touched upon the “miracle” of hedonics!

  42. cm commented on May 13

    bluestatedon: You’re right. During my teenage years, my mom frequently enough referred to me as a seven-headed caterpillar. Food was not particularly expensive, it was more an issue of it being suddenly gone.

  43. Blutskralle commented on May 13

    To Jult52:

    When you account for the shape of the income distribution in the United States (as in, consider the % of spending at the top vs. the % of spending at the bottom), your data definitely does seem to support the idea that the lower income demographics will be spending 15%+ (and + could be very large at some points) on food even today, and that’s considering there has been a long-term downtrend in food expenditures as a % of disposable income.

    It definitely seems plausible, glancing at that and slamming it through excel, that the bottom 70% could be spending close to 20% on food, on average. The real issue, of course, is that income being non-normally distributed can make averages somewhat deceiving… food inflation is chicken scratch to the rich, but literally a matter of life and death for the bottom 25%.

    Glad to know my own back of the envelope calculation further up was not completely off base.

    Thanks.

  44. Mike_in_Fl commented on May 13

    I suppose we can argue about the make up of CPI until we’re all blue in the face. But I tell you who is NOT debating about the existance of inflation today: The bond traders. Long bond futures are getting massacred, down 1 8/32 at last count, after truly awful import inflation figures. Import inflation is now running at 15.4% — that’s the largest year-over-year gain in the history of this indicator (which goes back to 1982). If you’re the type who wants to use import inflation as his determinant of the “real” level of interest rates, you could argue that the real federal funds rate is now -13.4%. Is there any wonder why oil is at $125 and counting?

  45. Blutskralle commented on May 13

    Food,

    1 – I recall beverages is a euphemism for alcohol, though I confess I have not looked recently.

    2 – Restaurants (of any form), vending machines, and the like do not magically create food from thin air (unfortunately). Price increases in the underlying cost of the good will either squeeze their profits or be passed on to the consumer; note this is not necessarily an exclusive or.

    I’m not sure what you are aiming at with your objections. The underlying problem is that the cost of “raw” food products, if you will, is rising; this drives the cost of everything at restaurants, that is processed, etc.

    Or are you claiming that costs (and prices) are flat for restaurants, vending machines, and the like?

  46. dukeb commented on May 13

    You really can’t compare American vs. Japanese food consumption / expenditures. The Japanese pretty much worship food 24/7 and it’s elevated to an art form even in many of their “fast food” establishments. (Their planning lunch and dinner while eating breakfast.) I’m surprised it doesn’t account for something more like 25-30% of Japan’s CPI index. Seriously.

  47. L’Emmerdeur commented on May 13

    Here’s an idea on how to fix CPI. First, identify all the folks who are responsible for the recent iterations of the CPI calculation (since the early 1980s).

    Next, determine a reasonable monthly allowance for food expenditures in, say, 1983. Then, adjust this amount for their “official” inflation to get a current 2008 allowance.

    Finally, force these CPI fudgers to limit their food expenditures to that 2008 number you calculated. How many of them would starve to death before they called an emergency “Math Is Hard” session to “fix” the CPI?

  48. ndd commented on May 13

    Chris: “For families making <$70,000, the average income before taxes was $32,093. Food (at home) consumption for this group was $4,660 or 14.5%. Include food away from home, and that figure jumps to just over 20%. This group in the study accounts for about 70% of households. ".... Looks like his statement should read more along the lines of "all but the top 30%+...", but his data doesn't appear to be THAT far off." No, actually, if you are quoting from the correct data set, his statement IS far off. It's not "all but the top 30%", it's "the average of the bottom 70%" which may be somewhat off from the median, but nevertheless means that about half are spending "at least 20% on food", or in other words, somewhere in the neighborhood of "the bottom 35%". How true does Fleck's statement sounds "For the bottom 35%..."?

  49. odograph commented on May 13

    Thanks for pushing this Barry. I lean toward disbelieving the CPI myself, but no matter what I think good will come out of the discussion (argument).

  50. odograph commented on May 13

    FWIW, my rough calc is that I spend 14% on food, 7% each on in-house and dining out. That’s very seat-of-the-pants though. And I live pretty simply, consciously spending more on good lunches, etc. (Thai food today!)

    Yikes! This is for a single person …

  51. Michael Donnelly commented on May 13

    you’re missing the point.

    First of all yes, you can certainly live 100% from the Food at Home category and Water.

    You’d have to pack yourself a lunch and bring a bottle of water to work (or drink from the fountain) but it is certainly possible to do so.

    Second, for those lower on the economic scale they would be encouraged to do so because it is cheaper than Food away from home and Beverages (alcoholic)

    Third, if they did so, they’d save some money. But they would be spending alot more money on food than just the average 7.66% of their income. The 7.66% is the average American who also eats 6.173% (nearly half) their food from somewhere other than the grocery store.

    Heck, it’s entirely possible that everyone spends nearly 14.914% (Food and beverages) on eating, with the only thing different is the ratio of food from the grocery store vs food from restaurants.

  52. gustav commented on May 13

    I see Barry has now redefined “food” as “food at home” in the original article, and has posted a comment arguing that dining out is not essential spending.

    Now, that’s certainly true, but irrelevant. The CPI is weighted based upon what consumers actually spend money on, not “essential” expenditures only. And the USA, remember, (1) is richer, (2) has lower food costs, and (3) spends a larger percentage of its food budget on dining out than the UK or EU.

    So is it any surprise that this is reflected in CPI weights?

    If you want to complain about the CPI, you’d be better off pointing out that it doesn’t include taxes, which are a pretty substantial part of most people’s budgets.

  53. DL commented on May 13

    This is all very interesting from the consumer standpoint.

    What I want to know is, when will the bond market figure out that we have an inflation problem.

  54. Francois commented on May 13

    Food-Ex-Water-Ex-Lunch-Ex-Snacks,

    “I have proved multiple number of times that Fleck is unreliable bull-shitter, but Ritholtz keeps sucking up to him (or protecting his own propaganda) and keeps deleting my posts.”

    If the bulk of your writing is like the sample above, it shouldn’t come as a surprise that you get deleted.

    A tad of good manners is the best anti-delete device known to the Net community.

    Try it…you’ll be surprised.

  55. Unsympathetic commented on May 13

    Amanda, were you trained in rhetoric by Republicans? Merely saying something doesn’t make it an established fact.

    You’ve hypothesized that Fleck is unreliable. OK, yummy. Now show me why, without using vitriol. You haven’t bothered to even support (let alone prove) your own argument. Your repetitive posts show me that you have no point.. because if you simply showed your work, I’d have to respect and agree with you.

    20% is dead-on correct for my monthly food expenses, when everything is added in. If something passes the plane of my face, it counts.

  56. Michael Donnelly commented on May 13

    Publish under your own name and you stand a better chance of keeping your posts.

    But you make a good point, that I glossed over. You have to count all food and that is 14.914%

    Bill Fleckenstein is either ignorant or just dumb to say that food is 8% and especially dumb to compare the 8% to another nation’s 20% when they are counting all food.

    There are plenty of folks who eat 80% or more of all their food out.

    So let’s call it food ex:rich people eating, ex: feeding prisoners & school lunches

  57. Darkness commented on May 13

    Of course the industry http://www.newstrategist.com/store/ knows exactly what everyone spends on these things. For 94.95$, you can too. (No idea who these guys are, found them searching for data, but like all things, with data you get what you pay for.)

    I’ll second the 14% number for our two-person household. Although half of that is wine, according to quicken, which should be discretionary, but like good beer, never really feels discretionary when the wine cabinet gets thin. On the other hand, we buy flour and rice in 50 pound bags and make everything from scratch as well as shop at Asian and Indian grocers (much much cheaper to not eat American-style meals), and our menu does not revolve around meat. That and the $3 in lettuce seedlings I invested in a month ago have already given up 20 salads and are as alarmingly large as ever out in the garden. Best ROI I’ve had this year.

    I feel for those of you who have to feed growing teenagers.

  58. Barry Ritholtz commented on May 13

    Food-Ex-Water, Steve, Moses, Amanda, and all the other fake names you use to have conversations with yourself:

    If you post under multiple names, engage in flame baiting, make data up, or engage in any other troll-like behavior, you violate my terms of usage — you are gone. My blog, my rules.

    I just came back from a delicious lunch to delete 47 troll comments. It took 11 seconds.

    Your time obviously has little worth much to you, but at the present ratio — somewhere between 20-40 to 1 — I am happy to keep deleting your posts.

    You should really have more respect for yourself . . .

  59. daveNYC commented on May 13

    Bah, having to double post, sorry. Here’s the pre-tax income for all five groups: $9,974
    $26,657
    $44,933
    $70,975
    $149,963

    Nice thing about population quintiles is that mean vs median becomes moot. Dig that jump for the high 20%.

  60. omnisip commented on May 13

    Hey Barry,

    If you were to adjust the weighting in CPI to what Europe uses, how would the new CPI chart compare to old CPI inflation calculation methods?

    Dan

  61. Aurora Borealis commented on May 13

    Data from the Swedish and Finnish government statistical administrations:

    Sweden:

    Food at home
    weight CPI 13,0%

    Finland:

    Food at home
    weight CPI 13,3%

  62. Cavin commented on May 13

    Hi Barry, what do you mean by “actual consumption of food and health care by real (as opposed to theoretically modeled) people”?

    What’s the difference between the two?

  63. ScottB commented on May 13

    Barry, Chris above misstates a number. The $4,660 in food expenditures by the lower 70 percent is for ALL food, including away from home. $2,784 is for food at home, $1,875 is for food away from home. And as other readers have pointed out, you can get these broken out for all five quintiles. The numbers come from diaries kept by families that are part of a random/stratified sample.

  64. meneame.net commented on May 14

    Como la inflación roba a los pobres y da a los ricos

    Este artículo explica muy bien y con las cifras en la mano (y gráficos interactivos) como las medidas oficiales de inflación subestiman el alza de los precios para el 80% más pobre de la población (que gastan mayor parte de sus ingresos en alimentos)….

  65. Toro commented on May 16

    Considering how overweight Americans are, especially when compared to other people around the world, it doesn’t seem to make much sense that the US weights food the least.

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