The U.S. Bureau of Labor Statistics admitted to a mistake in their Consumer Price Index calculations Thursday that caused understated inflation estimates to be published for the past five years. The Bureau said that the intern they had assigned to compile the calculation had forgotten to “fill down” the final column since February 1, 2016, leading to the inflation calculation to be falsely reported as approximately 2% since that time. Fortunately, the calculation is largely insignificant on U.S. Financial decision making, and the error has now been corrected.
The Bureau was asked to provide public testimony to legislators as calculating the CPI is a fundamental responsibility of the agency. Congressional leaders worried if the error, while trivial in this case, were reflective of systemic problems that could impact the more important calculations performed by the bureau, such as the “Average hours spent per day watching TV” calculation or the National Tendonitis Rate.
“Let me be clear,” said BLS Commissioner William Beach during public testimony, “this was an isolated incident regarding an anachronistic statistic that no one uses anyway. While we apologize the for the inaccuracy, I assure you that our core calculations remain impeccable. Our brightest interns, some of which are actually attending college, are placed in charge of these spreadsheets and we verify their work once annually, like clockwork.”
Financial institutions are known to use the CPI statistic infrequently, often merely as a check figure for their models grounded in more robust statistics like the Dog Ownership Index and Google Search Trends. Most financial institutions believe the error, while noteworthy, is unlikely to impact any actions on Wall Street or Main Street.
“We know that most consumers don’t even know how to describe inflation, except in arguments about communism in Venezuela,” said Merrill Lynch Bond Analyst Jacob Oliver. “The error is really just a blip in most models and is unlikely to affect any outcomes. That said, we are watching the public hearing closely to determine if any of their other calculations such as, god-forbid, the Shoelace-Length Survey are liable to suffer from similar errors. That would be impactful.”