U.S. Economy Grew 2.8% Last Quarter

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** BLS explains: "The CPI does not necessarily measure your own experience with price change... A national average reflects millions of individual price experiences; it seldom mirrors a particular consumer's experience."

"Average" is a key word here, but it's actually even worse: some of the components are "weighted" higher, some lower; others, like consumer's credit interest payments, some property-related expenses, some insurance costs are not included, use of subjective "hedonic regression" etc.

Also, depending what "weighted basket" of goods and services you are in, your "personal inflation" ("particular consumer experience") may be higher than headline or core CPI.

Neither BLS CPI nor Fed's PCE are perfect at measuring even "average" inflation:
The pricing challenges aren't unique to the CPI. ... The personal consumption expenditures price index, produced by the Bureau of Economic Analysis, also has some quirks when it comes to measuring certain expenses like health care.

So neither the CPI or CPE are ideal, one-univariate-fits-all indices, and both understate inflation. That's one reason why Social Security checks (and/or other "fixed income") even "adjusted for inflation" usually fail to keep up with the actual COL.

*** www.pbs.org - Driving retail spending, wealthier Americans are powering US economy - PBS/AP, Oct 18, 2024

www.bloomberg.com - The Mighty American Consumer Is Powered by Higher Earners - Oct 15, 2024
|------- By many measures, Americans appear to be tapped out: Credit-card delinquency rates are on the rise, millions are falling behind on student-loan payments and the explosion of "buy now, pay later" apps suggests shoppers are racking up billions of dollars in "phantom debt" that can't easily be tracked by economists.

A new study by the Federal Reserve puts data behind that K-shaped spending theory, showing that the recent strength in spending has been driven by middle- and high-income families.

Among key findings:
* - In the two years before Covid, growth in average retail spending was roughly the same across income brackets
* - In the two years following the pandemic, low-income families boosted consumption much faster, helped by government stimulus programs
* - In the past two years, higher-earning households were the main drivers. The Fed researchers speculate it may be because they are enjoying a wealth effect from soaring stocks and home values as well as higher interest and investment income

Wells Fargo economists argued in a recent note that lower rates may not provide much lift for consumer spending. At the macro level, they say, the lost interest income will likely be larger than the savings from households who will be spending less to finance their debt.
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