An interesting article came my way today courtesy of a friend “BC”. The article is Deconstructing ShadowStats. Why is it so Loved by its Followers but Scorned by Economists? by Ed Dolan.
Mish readers likely know that I believe inflation to be understated, and that I also believe Williams’ ShadowStats is wildly on the high side. For example, please consider GDP, Real GDP, and Shadowstats “Theater of the Absurd” GDP.
I have also mentioned food inflation on many occasions. While food prices (especially beef) did jump in the last year or so, I recently bought chicken breasts for $.99 a pound and very lean center cut pork chops for $2.49. Sale prices on center cut pork chops have generally ranged from $1.79 to $2.49 for 15 years! Not on sale, I have seen them as high as $5.49.
So I buy pork chops on sale, and freeze them. Same with chicken and beef. While non-sale prices have gone up more, ShadowStats calculations seem absurd.
Want to combat food inflation? Buy a big freezer, buy food on sale, and freeze it.
I never dove in into Williams’ numbers to see where he may have gone wrong. Ed Dolan just did that, with convincing tables, graphs, and commentary.
Here is a snip.