Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

CPI vs Alternative Inflation Measures

• Many argue CPI understates “real” inflation, especially since 1980s methodological changes (e.g., switching from mortgage costs to owners’ equivalent rent, quality adjustments, substitution).
• Others counter that large understatements (e.g., 3–5x) are arithmetically impossible when checked against decades-long price histories (gas, general CPI).
• Several suggest using multiple indicators: CPI, cost-of-living or “cost of thriving” indexes, and asset price measures.

Including Interest Rates / “Price of Money”

• The Summers paper’s core claim—adding borrowing costs to inflation—resonates with those who feel 2022 was exceptionally painful, especially for mortgages, car loans, and credit cards.
• Critics say this risks double-counting, blurs the line between price levels and financing methods, and creates circularity (using a rate-driven index to set rates).
• Some propose separate measures: one excluding interest for monetary policy, another including it to match household experience.

Consumer Sentiment vs Official Data

• One view: sentiment is “polluted” by negative media and shadow-stats narratives; survey data show many people expect real income gains and low personal job-loss risk.
• Opposing view: sentiment actually tracks older or interest-inclusive measures better; people are reacting to genuine cumulative cost increases, not vibes.

Historical Comparisons (1960s–80s vs Today)

• Nostalgic claims: a single male income could support a large family, home, and modest life; today two incomes barely sustain a smaller household.
• Pushback: average household sizes were smaller than claimed; many women already worked; crime and many QoL metrics (technology, health, amenities) are better now.
• Broad agreement that housing, education, and healthcare have risen far faster than CPI.

Cost of Living, Housing, and Inequality

• Housing scarcity (zoning, land costs, limited building post‑2008) is widely seen as central to perceived inflation.
• Debate over whether asset/land inflation and high corporate profits mean “greedflation” and policy skewed toward capital rather than the median person.
• Some emphasize that interest hikes hurt borrowers and renters, while asset owners and some retirees may benefit.

Trust, Politics, and Measurement

• Significant distrust that inflation metrics are politically biased to limit government outlays (e.g., Social Security COLAs).
• Others stress that CPI methods are transparent, heavily scrutinized, and roughly validated by independent projects.
• Goodhart’s law is invoked: once CPI became a policy target, it became a worse descriptor of lived inflation.