Who compiles the inflation index?
The LA Times got a front row seat with one of the Bureau of Labor Statistics staffers as she drove some of her 850 miles per month to record all of the prices that eventually make their way into the CPI. This is a nuts and bolts look into how the American inflation index is actually measured and compiled. Below is a snippet of the story.
Shielding a tablet computer with skill worthy of a CIA operative, [Kim] Gomory is among 400 Bureau of Labor Statistics staffers, including about 70 in the Los Angeles area, who compile data used to calculate the Consumer Price Index, the best-known gauge of U.S. inflation.
The latest survey, released today, calculated that the Consumer Price Index rose 1.1% in June — the second-largest increase since 1982 — and jumped 5% compared with June 2007. Prices in Los Angeles, Orange and Riverside counties rose by 1.1% in June and 5.4% compared with a year earlier.
To the consternation of critics who say the index fails to reflect Americans’ struggles to make ends meet, the CPI is holy writ for bankers, economists, policymakers and politicians as they set mortgage and credit-card interest rates, wages and government benefits programs such as food stamps and Social Security.
Before such macro decisions are made, however, it is the micro, meticulous labor of staffers such as Gomory that matters.
Quietly, with extreme discretion, she helps fashion a national market basket, figuring what shoppers pay for a variety of goods and services. Gomory spends 10 minutes to an hour at each location, talking to folks, scrutinizing prices and taking down information while attracting as little attention as possible.
“Anything that consumers spend pennies on is eligible for pricing” as part of the 80,000 items her agency tracks to compute the CPI, explained Gomory, who earned a liberal arts degree at the University of La Verne and has taken economics courses at several local universities.
Gomory spoke as she made her rounds recently at more than a dozen spots, including a health club, a cleaners and a camera store. In exchange for seeing how the “economic assistant” does her work, a Times reporter and photographer agreed not to identify the enterprises that participate voluntarily. This information is so closely held that Gomory doesn’t even disclose it to her family.
–LA Times, 16 Jul 2008