Thursday, April 12, 2012

LOL, How the BLS Reported a Zero Increase in Producer Prices

This morning the Bureau of Labor Statistics reported that the seasonally adjusted Producer Price Index for finished goods was unchanged in March. How did they reach this conclusion?

Partly because prices for finished energy goods fell 1.0 percent in March. The decrease was led by the gasoline index, which declined 2.0 percent, seasonally adjusted! Say what? Didn't energy prices climb in March? Well, yeah, but not in BS BLS land. On an unadjusted basis, the gasoline index climbed 7.5 percent, the BLS just adjusted this climb into a decline.

At the crude energy level things got even worse. Over eighty percent of the monthly decline in March crude energy index can be traced to crude petroleum prices showing a decline. According to BLS, after the BLS seasonally adjusted energy prices, they declined by 11.2 percent! On an unadjusted basis (Translation:In reality), crude petroleum prices rose 3.4 percent.

General merchandise store prices on an unadjusted basis climbed by 7.2 percent. The BLS doesn't include the general merchandise data as a separate category in its seasonally adjusted data, but the picture is clear. If you are buying things on a seasonally adjusted basis, everything is fine--no inflation to worry about.

But, go ahead, I dare you, pull up to a gas station and tell them that you want to reduce your gasoline purchase price by the BLS seasonal adjustment of 11.2 percent off the March price.


  1. I think I will seasonally adjust my life.... if only I could seasonally adjust my wife!

  2. 2012: 3.2%
    2011: 5.8%
    2009: 3.0%
    2008: 6.7%
    2007: 5.8%

    This is the second lowest reported unadjusted finished energy goods for March in five years.

    Anyway, I call seasonal cherry picking. You obviously have no problem reporting seasonal increases when it suits your narrative.

  3. I believe you miss the point of the post. The point is that the adjusted numbers have little basis in reality. Listing the past years numbers are irrelevant to that point. I also think Wenzel gives the BLS too much of the benefit of the doubt usually.

  4. What do you expect? This is the same government that said there were weapons of mass destruction in Iraq, global warming will fry us unless we pay Al Gore, and the dollar is indestructible. LOL indeed!