These are Not Great Numbers

Oh, I’m about to get all numbers on yo ass. Don’t say you weren’t warned:

The New York State Association of Counties has released it’s latest numbers for the end of 2008, and what they predict for 2009 is probably not too surprising: recession at best.

Looking inside the numbers, the biggest one that jumps out at me is the NYS Consumer Price Index, which has fallen at its most extreme rate in twenty years. The CPI is a measurement the price people pay for goods and services on average. As consumers, we tend to think that lower prices are a good thing. But when prices fall precipitously across the board, that’s an indication that people are not buying products at the rate they used to, forcing retailers to lower their prices as a result. When you see a dip like this, its definitely a bad thing.

On the other hand, as the report cites, much of this decline is as a result of gasoline prices falling. The report does not go on to state what percentage of the CPI gasoline represents, so it’s hard to judge how accurate that explanation is. This page deals with the methodology of the study and does make mention of the fact that gasoline prices are rolled into “Transportation,” which is itself one of eight criterion product groups. So, do each of those get rated evenly? If they do or don’t, I’ve missed it in the methodology.

Either way, one troubling factoid from the report’s methodology is the fact that the baseline – the number to which each year’s CPI is compared – is based on an average price index through the years 1982-1984. Does this mean that the CPI was first reported around this time? Because if so, a 1.6% drop in the CPI is only the largest drop in the history of the report, not in the history of U.S. consumer markets. Hard to know in that case where the bottom is. . . .

Looking at the national numbers reported in December, it appears as though the CPI decline in New York has outpaced that of the National average, 1.1%. And isn’t it nice to be ahead of the curve? Looking down farther in this report, the average declines in each category are indeed listed for your perusal. And indeed, the chart tells the whole story: transportation down by 8.9%, more than counterbalancing the biggest increase on the chart, food and drink at 5.9%.