Ooooh, I wonder how the changing demographics structure over the past few decades (more old people compared to young people) affects overall inflation expectations? They may be more sensitive now. Interesting article!
One lesson of the Pandemic was the poor word choice of "Transitory" when referencing inflation. Classically defined as "Temporary or Short-lived", transitory gave the impression that it would end in months not years. The Comms teams for the White House and Treasury should never have agreed to the term being utilized repeatedly.
Implicit bias entered the conversation when people didn't feel they were as affected by inflation as they "believed" their neighbor to be. Political leaning dragged in the "Halo Effect" where they gave to much credance to leaders based on deference to educational background. (Slightly different from Authority Bias where they trust the leader implicitly.) "Horn Effect" is the opposite where you hold that same person accountable for their poor judgement/statement.
*Thanks for today's article... This Behavioral Economist loves when people take an interest in the work of others in the field!
Yes, transitory sent the signal that prices will increase then come back down. Not that inflation will decrease but prices will remain higher than before.
Add in that prices increased over 3 1/2 years at the same rate as the previous decade. It's a strong reason why politicians should stay out of this discussion. It's a weird corollary to "Social Security being the 3rd rail of Politics."
Older folks remember prices as they believe they used to be. Believe is I think the key word. I can say I remember when gas was $.50/gallon…but if I’m really truthful about it, I got that price exactly once when I was a kid. So maybe even our anchor price is a bit off…
Price anchoring is a fun retail trick. The perception of value is highly influenced by the framing of the price applied to said item. Does listing an item on sale versus another store listing that same price as their normal offering make you more or less likely to shop at either store?
Typically people see the sale as a bargain and the normal pricing as somehow inferior as a measurement. Same item... Opportunity cost becomes the default function when items are exactly the same, but somehow "different" in a person's mind.
What source are you using to determine that inflation fell? Obviously, the BLS is completely compromised so are there other reliable sources this article is based on?
Joe, I understand that the data presented doesn’t align with our expectations. I hope it is not compromised but if it is, then I am not sure we have other reliable sources. PCE and GDP data come out this week but if we think the BLS is compromised, then I would assume all government data will be too. In short, the data I reference is the latest CPI numbers presented by the BLS. My only estimate of inflation at the time.
The first mistake you are making is assuming that the politically appointed head of the BLS has any ability to affect the outcome of any report. (They don't.) A committee complied the report leading up to the public release and the BLS Head doesn't receive it until the day of (Sometimes the night before.) They have no input and if they somehow made public statements in opposition, you should expect the committee or researchers to absolutely call them out publicly.
Secondly, BLS publishes not only the raw data but the methodology behind how they collect and interpret the data.
*Cognitive biases are a dangerous thing when working from them as a starting point without any corroborating/conflicting data. Ironically the point of how people's "feelings" make for irrational choices is the purpose of this Abdullah's post.
The claim that the BLS is somehow insulated from influence is not serious. It collapses the moment you look at how the institution actually operates.
First, the Commissioner of Labor Statistics is a presidential appointee who serves at the pleasure of the President and can be removed. Leadership is political. Leadership controls priorities, staffing, budget advocacy, internal culture, and risk tolerance. To argue that political leadership has “no ability” to affect outcomes inside a federal agency is institutionally naïve.
Second, prerelease access is not imaginary. Under OMB rules governing Principal Federal Economic Indicators, prerelease information is provided to the President through the Council of Economic Advisers as soon as it is available. The idea that nobody in the political chain sees anything until the morning of release is simply false.
Third, influence does not require someone “editing a number.” The real leverage is upstream. In 2025, BLS formally reduced CPI data collection to align workload with resource levels. Entire metro areas were suspended. Portions of the sample were cut elsewhere. When you reduce sample collection, you increase imputation, increase volatility, and alter representativeness. Budget decisions and resource constraints directly shape what gets measured and how precisely it is measured. That is structural influence.
Fourth, political conditions can literally erase economic reality. During the 2025 lapse in appropriations, BLS did not collect October reference-period survey data and did not publish an October Employment Situation report. Household survey data were not collected and cannot be retroactively recovered. When funding lapses eliminate observation of an entire month, that is political influence affecting official statistics.
Fifth, BLS has acknowledged operational vulnerabilities, including inadvertent early release of CPI files in 2024 that required notification to OMB and the Inspector General. The process is not metaphysically sealed. Governance and controls matter.
None of this requires conspiracy. It requires understanding how institutions function. Leadership is political. Budgets are political. Access rules are political. Shutdowns are political. Resource constraints change methodology in practice.
Saying there is “no ability” for influence inside BLS is not a defense of the institution. It is a misunderstanding of how federal agencies operate.
I have recently been reading Anne Case and Angus Deaton's "Deaths of Despair". I think it may provide insights into the topic of today's post. Case & Deaton point out that White American men with less than a college education, especially, were experiencing dysphoria as a result of various insults, including loss of jobs to robots and globalization, a reduction in well-paid jobs that don't require post-high school education, reduced willingness to move for work, fewer jobs in rural areas... And I want to add "the social changes of the 60s, and the after-effects of the Vietnam War", as someone who lived through that era. These factors led to increased deaths by suicide, drug over-doses and alcohol and its effects, such that US longevity dropped in 2015 and 2017, as well as 2020 & 2021 -- the latter partly as a result of COVID-19, but these other factors were prominent at that time as well. The authors, writing in 2022, suggested that this kind of malaise seemed to be reaching up more into the later years as time passed, and also noted that this was a purely American phenomenon not seen in European countries.
Ooooh, I wonder how the changing demographics structure over the past few decades (more old people compared to young people) affects overall inflation expectations? They may be more sensitive now. Interesting article!
As our population gets older there are more people that “remember the good ol’ days”
One lesson of the Pandemic was the poor word choice of "Transitory" when referencing inflation. Classically defined as "Temporary or Short-lived", transitory gave the impression that it would end in months not years. The Comms teams for the White House and Treasury should never have agreed to the term being utilized repeatedly.
Implicit bias entered the conversation when people didn't feel they were as affected by inflation as they "believed" their neighbor to be. Political leaning dragged in the "Halo Effect" where they gave to much credance to leaders based on deference to educational background. (Slightly different from Authority Bias where they trust the leader implicitly.) "Horn Effect" is the opposite where you hold that same person accountable for their poor judgement/statement.
*Thanks for today's article... This Behavioral Economist loves when people take an interest in the work of others in the field!
Yes, transitory sent the signal that prices will increase then come back down. Not that inflation will decrease but prices will remain higher than before.
Add in that prices increased over 3 1/2 years at the same rate as the previous decade. It's a strong reason why politicians should stay out of this discussion. It's a weird corollary to "Social Security being the 3rd rail of Politics."
Thanks for sharing Gen Z is "the most optimistic group in the survey"
Older folks remember prices as they believe they used to be. Believe is I think the key word. I can say I remember when gas was $.50/gallon…but if I’m really truthful about it, I got that price exactly once when I was a kid. So maybe even our anchor price is a bit off…
Price anchoring is a fun retail trick. The perception of value is highly influenced by the framing of the price applied to said item. Does listing an item on sale versus another store listing that same price as their normal offering make you more or less likely to shop at either store?
Typically people see the sale as a bargain and the normal pricing as somehow inferior as a measurement. Same item... Opportunity cost becomes the default function when items are exactly the same, but somehow "different" in a person's mind.
This is interesting!!! Lived experience matters!
What source are you using to determine that inflation fell? Obviously, the BLS is completely compromised so are there other reliable sources this article is based on?
Joe, I understand that the data presented doesn’t align with our expectations. I hope it is not compromised but if it is, then I am not sure we have other reliable sources. PCE and GDP data come out this week but if we think the BLS is compromised, then I would assume all government data will be too. In short, the data I reference is the latest CPI numbers presented by the BLS. My only estimate of inflation at the time.
The first mistake you are making is assuming that the politically appointed head of the BLS has any ability to affect the outcome of any report. (They don't.) A committee complied the report leading up to the public release and the BLS Head doesn't receive it until the day of (Sometimes the night before.) They have no input and if they somehow made public statements in opposition, you should expect the committee or researchers to absolutely call them out publicly.
Secondly, BLS publishes not only the raw data but the methodology behind how they collect and interpret the data.
https://www.bls.gov/k12/teachers/posters/pdf/how-bls-collects-data.pdf
*Cognitive biases are a dangerous thing when working from them as a starting point without any corroborating/conflicting data. Ironically the point of how people's "feelings" make for irrational choices is the purpose of this Abdullah's post.
The claim that the BLS is somehow insulated from influence is not serious. It collapses the moment you look at how the institution actually operates.
First, the Commissioner of Labor Statistics is a presidential appointee who serves at the pleasure of the President and can be removed. Leadership is political. Leadership controls priorities, staffing, budget advocacy, internal culture, and risk tolerance. To argue that political leadership has “no ability” to affect outcomes inside a federal agency is institutionally naïve.
Second, prerelease access is not imaginary. Under OMB rules governing Principal Federal Economic Indicators, prerelease information is provided to the President through the Council of Economic Advisers as soon as it is available. The idea that nobody in the political chain sees anything until the morning of release is simply false.
Third, influence does not require someone “editing a number.” The real leverage is upstream. In 2025, BLS formally reduced CPI data collection to align workload with resource levels. Entire metro areas were suspended. Portions of the sample were cut elsewhere. When you reduce sample collection, you increase imputation, increase volatility, and alter representativeness. Budget decisions and resource constraints directly shape what gets measured and how precisely it is measured. That is structural influence.
Fourth, political conditions can literally erase economic reality. During the 2025 lapse in appropriations, BLS did not collect October reference-period survey data and did not publish an October Employment Situation report. Household survey data were not collected and cannot be retroactively recovered. When funding lapses eliminate observation of an entire month, that is political influence affecting official statistics.
Fifth, BLS has acknowledged operational vulnerabilities, including inadvertent early release of CPI files in 2024 that required notification to OMB and the Inspector General. The process is not metaphysically sealed. Governance and controls matter.
None of this requires conspiracy. It requires understanding how institutions function. Leadership is political. Budgets are political. Access rules are political. Shutdowns are political. Resource constraints change methodology in practice.
Saying there is “no ability” for influence inside BLS is not a defense of the institution. It is a misunderstanding of how federal agencies operate.
I have recently been reading Anne Case and Angus Deaton's "Deaths of Despair". I think it may provide insights into the topic of today's post. Case & Deaton point out that White American men with less than a college education, especially, were experiencing dysphoria as a result of various insults, including loss of jobs to robots and globalization, a reduction in well-paid jobs that don't require post-high school education, reduced willingness to move for work, fewer jobs in rural areas... And I want to add "the social changes of the 60s, and the after-effects of the Vietnam War", as someone who lived through that era. These factors led to increased deaths by suicide, drug over-doses and alcohol and its effects, such that US longevity dropped in 2015 and 2017, as well as 2020 & 2021 -- the latter partly as a result of COVID-19, but these other factors were prominent at that time as well. The authors, writing in 2022, suggested that this kind of malaise seemed to be reaching up more into the later years as time passed, and also noted that this was a purely American phenomenon not seen in European countries.