ECONOMIC ANALYSIS:

Thinking About Subtleties

I’ve been thinking about subtleties. Actually I’ve been thinking about inflation, gas and food, frozen pizzas, my green bean casserole, instant coffee, and T-paper. Runaway inflation is a fact of life that far exceeds the under 3% that is still presently being hawked by the spin meisters for the Bush Administration and the Federal Reserve Bank. By definition “core inflation” conveniently excludes energy and food items which might be OK if we didn’t have to power the things we own and feed ourselves and our families. These two categories of necessities will continue to constitute a growing part of our expenditures. We now pay more for what we buy, or pay the same and get less!

You see last Friday I topped off my PT Cruiser which was down to about half a tank. After the most recent jump to $3.749 per gallon for the 10% ethanol blend, this cost me $26.80. When I got the car in June of 2000, I could coast up to the same pump “on the fumes in the tank” and fill it up for about $22.00. This represents almost a 144% increase over the eight years. My weekly trips to the grocery store to purchase/ replenish the same items cost me a bit over 60% more since my mother’s death five-and-a-half years ago. I was aware of THESE spiraling costs every time I opened my wallet to pay. However, I am (and all of US/us are) also paying more for the same stuff even if the so-called “sticker price” has NOT changed. These are the subtle (or covert) increases for which we get dinged because the quantities and/or the packaging have conveniently been “downsized.”

Last Saturday evening I treated myself and my little Scottish Terrier, Mac II, to a frozen pizza when “we” watched the Harry Potter movie on ABC. When I put the pizza on the pan before I slipped it into the oven, I noticed that there was at least 3/4th of an inch of more pan showing around the edge. The pan hadn’t spread; the pizza’s diameter had shrunk by an inch and a half! Mac gets the pepperoni and sausage chunks, and I swear the little guy counts. At the end of the pizza, I got “the look” that I had held back on his allotment – I hadn’t, but he didn’t TH*NK so! This was a subtle price increase of about 8 to 10% even though I thought I had paid the same price for the same brand.

The culinary repertoire of things I fix for pot luck or cooperative meals at church is kind of limited. Two weeks ago I made my green bean casserole. I opened the usual four cans of green beans, drained them off, and emptied them in the usual bowl to mix them with a can of crème of mushroom soup. Not only was the bowl not at its normal level, but the grey-brownish goop of the condensed soup didn’t have any visible mushroom pieces! I had to open and drain a fifth can of beans and add a can of mushroom stems and pieces to restore my concoction to its regular level and appearance. I already knew from recent experience that I had to add a cup of self-rising flour and three tablespoons of cocoa powder to the get the usual volume of batter I needed for the brownies I make to take to events. These actions also mark a “food-flation” increase - subtle yes, but still there!

A recently purchased jar of instant coffee was compared to a jar from a year ago that I had saved to store nuts and bolts in my basement. The new jar was about an eighth of an inch shorter and narrower by the same measure. With all this in mind, I also noticed that the chrome shaft of my T-paper holder was now showing a visible inch when I replaced the roll. Without my realizing, the roll had actually evolved/ narrowed by an inch for the same brand at the same price. Hum, what gives?

“Eternal vigilance” in not only the price we pay for freedom, it is also what we must all do to truly know the price we are actually paying for the things we purchase. Like so many households across America we are finding that there is just too much month left at the end of the money – and the roll!

I’m Fred Cederholm and I’ve been thinking. You should be thinking, too.

Copyright 2008 Questions, Inc. All rights reserved. Fred Cederholm is a CPA/CFE, a forensic accountant, and writer. He is a graduate of the University of Illinois (B.A., M.A. and M.A.S.). He can be reached at asklet@rochelle.net.