Inflation — What Are The Real Numbers?

Why statistics can be deceiving

Photo by regularguy.eth on Unsplash

The dollar is worth less now than it used to be, in terms of say, loaves of bread or how much square footage you can get.

In 1950, the median family home sold for $7,354. In 2022, the median price had reached $428,700.

Using one online calculator that plugs in the government’s inflation rates, we find out that, based on these rates, the price of the house in 2022 should have been $81,289.

So, are the government’s published inflation rates wildly off?

Well, there is a saying — there are “lies, damn lies, and statistics”, a saying that has been attributed to various people since at least the 1890s.

Don’t get me wrong — statistics are a useful tool, but only when provided with context.

There is a website that claims that actual inflation rates are higher than the government says. It’s called Shadow Government Statistics. On the surface, just looking at median home prices, one can see how this claim could be convincing. But let’s dig deeper and remember that statistics can be used to manipulate data rather than to illuminate reality.

Using the forward flat-rate calculator on this site, which allowed me to enter my own inflation rates, when I put in 5.8%…