A dash of insight

Jeffrey A. Miller's blog has a series of posts since beginning of year laying out his current perspective on the economy and market. He takes some of the perma bears and thestreet.com commentators to task today in his post about inflation. Read the entire series, very interesting.

Understanding Inflation Data

There is probably no single piece of data that is less respected and more misunderstood than inflation reports. It is the one subject where the entire Street.com gang, bulls and bears alike, can agree. Doug Kass, Barry Ritholtz, Ed Stavetski, and Cody Willard have all disparaged government efforts to measure increases in the cost of living. There is even a website where a guy with an econ degree from a top school (meaning he should know better) spends a lot of words creating a conspiracy theory about this number. Maybe he has a different agenda. They also have strong support from Bill Gross.

I promised six months ago (so many issues, so little time) to explore this topic. It is too complicated for a short post, but let me try to cover the basics -- a review of the accepted wisdom on the Street, some obvious points they have missed, and a couple of examples showing why the the reasoning is wrong.