Sept. 24 (Bloomberg) -- The U.S. consumer price index continues to be a testament to the art of economic spin.
Since wages, Social Security cost-of-living increases and some agency budgets are tied to it, the government has a vested interest in keeping it as low as possible.Yet your real cost of living -- what you keep after taxes, medical bills, college expenses and other household costs -- is probably much higher than the 2 percent annual rate the government reported in July, showing a slight decline.
Millions are falling behind inflation because wage increases aren't keeping pace with the cost of medical care, lost employment benefits, homeownership expenses, energy and transportation.
And there's also a goliath looming in the U.S. economy that makes the government's consumer gauge more deceptive. Even with the stinging reality that housing values are dropping in many markets, homeownership costs such as taxes, maintenance and financing are still rising much faster than the index.
Last week's half-point cut in the Federal Reserve's target rate -- to 4.75 percent -- will do little to shield more than 2 million homeowners from foreclosure for adjustable-rate mortgages that are resetting to monthly payments people can't afford.
... Gerald Prante, an economist with the Washington-based Tax Foundation, found that median real-estate taxes on owner- occupied housing went from $1,614 in 2005 to $1,742 last year.
``That's an increase of 7.93 percent, more than double the inflation rate in that time period,'' Prante says.
Those tax levels may sound like nirvana to a New Jersey resident, where median levies are almost $6,000. Vermont, Illinois, Rhode Island, Massachusetts, New York, Connecticut and New Hampshire all have rates that are more than $3,000, with many upscale areas exceeding $15,000 per year. The single-largest expense for most Americans is housing, accounting for as much as a third of household outlays. Yet the Labor Department's Bureau of Labor Statistics only tracks ``owner's equivalent rent,'' or what a home would yield if it was rented out. Rental units and homes are two very different animals, though, and the government casts a blind eye to total homeownership expenses..... Now workers are shelling out an average of $3,281 from their paychecks for family medical coverage, according to the Kaiser Family Foundation, a non-profit organization based in Menlo Park, California. The average premium for a family policy is more than $12,000 annually.
Since 2001, health premiums have risen 78 percent while wages have only gained 19 percent. The government's inflation measure during that stretch was 17 percent. ...
http://www.bloomberg.com/apps/...fer=columnist_wasik&sid=a2SUCQ3Bslk0 |
Thread abonnieren
