Scott Alexander

That's about a 16.6% increase over 24 years.

That's roughly a 0.6% annual growth rate.

If the difference between chained CPI and CPI is roughly 0.3% a year and real median income growth is around 0.6% per year then how we measure inflation has a pretty significant impact on how we measure real income as well as every inflation-adjusted measure we looked at.

And I'm pretty confident that chained CPI is valid, because in the Real Median Household Income data from Fred, under Notes, it says, Income in 2024 c CPI-U 2000-2024 and r CPI-URS pre-2000 adjusted dollars, which looks like the pre-2000 numbers are calculated using traditional CPI and the post-2000 numbers are calculated using chained CPI.

This is buttressed by the fact that Fred's chained CPI data only goes back to 2000.

So, briefly, I don't like the miscalculation of inflation section, and I wish it dove into more detail, because, number one, there are multiple valid inflation metrics.

I have nothing against CPI, it's a solid metric and we have the data going back to the 60s, and I have nothing against chain CPI, which is the current standard Fred uses and also makes more sense.

However, there are more inflation metrics beyond chain CPI.

Penn State lists five here alone, link in post.

Number two, the impact of different inflation metrics is large enough to significantly alter the increase in real median wages, say up or down 50%.

Number three, I don't understand how the decision to use different inflation measures affects all our other inflation-adjusted metrics.

To make this specific, I don't know what the real median household income would be for 2019 if we calculated it with CPI, the way we did in 1999, versus with changed CPI.

Number four, the response from economists here feels dismissive, which would be fine if there really was a single consistent inflation metric everyone was confident in.

And maybe there is, but there seems to be a lot more complexity in value judgment to inflation metrics than just CPI, especially when there's such a gap between consumer sentiment and vibes and official statistics, which would be significantly impacted by different inflation measures.

Number five, which is worse, because I cannot help but note that the kind of guys who post things like the US wages in gold or the fiat crisis are disproportionately multi-millionaire crypto bros who, on the one hand, they are all sounds like salesmen at best and scammers at worst, and constantly predict a US fiscal and monetary collapse, but they did go act on those beliefs and built the entire crypto ecosystem worth at least a trillion dollars.

Anyone whose financial or economic philosophy directly leads to them inventing their own ridiculously lucrative alternate financial system deserves to be taken at least somewhat seriously.

To clarify, I don't think the impacts of different inflation measures are large enough for a decline narrative, but they could be for a stagnation narrative.

Real income growth of 16% from 2000 to 2024 sounds like slow, solid but uninteresting growth.

6-7% total growth over the same period feels like stagnation.

inflation-adjusted rents going up 40% versus 30%, an average mortgage payment of 3.3k versus 3k compared to an average mortgage payment of 2k in 2000.