The Wall Street Journal jumped into the “chained CPI” fray with a Thursday editorial, neglecting the negative financial effect it would have on squeezed Social Security recipients and others, but backing President Barack Obama in replacing the traditional consumer price index with the “more accurate measure of inflation,” notes Grumpy Editor.
Switching the long-running traditional CPI with chained CPI --- short for the mouthful “chained consumer price index for all urban consumers” --- would reduce benefit increases to more than 60 million Americans receiving Social Security and Supplemental Security Income (SSI) monthly payments.
As the Journal happily explains the chained CPI: “This alternative measure of purchasing power takes into account how consumers change their buying habits over time as prices change. When oranges cost more, for example, people buy fewer oranges and eat more apples instead.”
Sounds good. But will that routine happen?
Getting back to the oranges/apples illustration --- Journal editorial writers may be interested to know that at a local Kroger supermarket, oranges are 89 cents a pound with apples a dime higher.
Will consumers really shift to cheaper substitutes?
Following that thinking, an updated CPI formula points to seniors switching, as examples, to bus transportation when air fares rise above the cumulus, or moving from a two bedroom apartment to smaller lodging --- or (worst of all) dropping a newspaper subscription in favor of checking the Web.
Print national advertising drops 15 percent
Newspaper revenue continues to ebb, falling to $38.6 billion or 2 percent last year compared with 2011, according to the Newspaper Association of America.
NAA notes advertising in printed daily and Sunday newspapers dropped 9 percent in 2012, according to data from 15 companies that provided detailed breakouts by category.
In various segments, adds NAA, retail advertising was off 8 percent, national advertising dropped 15 percent while classified advertising declined 9 percent.
Within the classified category, automotive slumped 9 percent, real estate fell 12 percent, recruitment declined 8 percent and all other classified edged down 5 percent, tallies NAA.
However, there are signs that the dips are starting to be made up by other sources, including digital subscriptions and digital advertising.
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