The State of your Wallet

Yogi Berra, the New York Yankee catcher/philosopher once said, “A nickel ain’t worth a dime anymore.” Prices just keep going up, up and up every year. Well there is some good news on this front in this year’s edition of the Hanson Index of Essential Burlington Prices

First, the Consumer Price Index (CPI- all urban consumers) did not increase, not even by a dime, in the year ended February, 2015.  This has never happened in the twenty-nine year history of the Hanson Index.

The reason for the good consumer price news is that energy prices, specifically gasoline prices are down significantly. Last year gas in Burlington averaged $3.63. Today it is $2.46, a drop of 32%.  It is true that a lot of items in the CPI increased last year (food was up 3%) but the drop in energy prices offset these increases. 

The problem with life however is that even the best news often comes with a catch. Since the Great Recession of 2008 – 2009, the economy has grown, employment has increased and corporate profits have soared. But wages have lagged. No one is exactly sure why this has happened. Maybe it is because of competition from low wage countries or maybe technology has replaced a lot of work and workers with machines and computers. Or maybe it is the decline in union negotiating power. Things are unclear here. But certainly, the slow growth in overall prices the last year is welcome news to many in the workforce and retirees.

What are some observations about the Hanson Index now?  First, the prices of services, where labor is a big factor, have gone up the most over the nearly three decade history of the Index. I wish I had put more “things” like the price of a TV or a pair of blue jeans in the index, to compare against service prices. But as they say, never purchase regret at any price. Second, my price Index is a little like our ageing bodies, sometimes we do have to consider surgery. A Burlington to Boston round air flight was a big deal thirty years ago. Today, you can’t even make the trip without a connection. Also, technology has changed the nature of some prices, like a car tune-up. And of course there are the eternal conundrums, like how to price babysitting or a no-fault divorce. What was I thinking back in 1986? In any case we will follow Washington’s lead and push these problems down the road another year.

And finally, there is the original reason for the Index, to see if a list of local, somewhat quirky prices was going up more, less or about the same as the Government’s CPI.  No question on this one. Only two prices have gone up less than the CPI the past twenty-nine years and one, Leunig’s, wants to be the last man standing. No increase in the price of an espresso there since 1998!