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Consider the Consumer Price Index. In this number the Bureau of Labor Statistics compiles a vast array of prices in order to arrive at an inflation rate. This number that we discussed in question 33 is essential to the the financial livelihood of millions of American citizens. In the case of pricing goods; it is one thing to be able to determine the cost of past products or items that were available in prior surveys, it is quite another thing to determine the price of a new product; the cost of services can add the same kind of problems but these prices are based largely on the best quality cost of a service available against past survey services. It is sort of like paying Johnny to mow the lawn. You may be hiring him to mow the same lot but how well he does is another matter. Many of these agencies have been constrained by budgets of late but to their credit, they still attempt to do the best scientific work possible. To explain why the price index numbers are so important, understating inflation which comes from lower price reports can defer payments to Social Security. In essence, a lower price index creates a lower inflation rate which could create an underfunded plan.
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