If anybody wants a TL;DR, the official US inflation rate is based on the categorized expenses of urban wage earners.
So, for example, if you’re a rural person who has seen food double in price over the last 5 years, that isn’t included in inflation.
Or if you’re an unemployed student who is paying 10 times the tuition that his parents paid, you are also not included in inflation.
Or if you’re a retiree whose out of pocket healthcare expenses have skyrocketed, that also isn’t included.
But if you’re a software engineer in San Francisco, your expenses are considered. Not your house, though; that’s not consumption, it’s an investment.
Substitutions also aren’t included. For example, if food prices double and you realize you can’t afford to shop at Whole Foods anymore, so you go to Safeway instead. You’re paying the same price you were before, but now it’s for weird cleaner-flavoured Safeway produce instead of Whole Foods produce. What’s the inflation rate on food? 0.
The net result here is, the US inflation rate narrowly excludes all of the **** parts of the US economy. BLS insists that it’s not doing it - at least, not on purpose. But it’s all written right there in their own methodology guidebook.
If you want to understand how much money Americans are being paid, what you really want is a CPI-adjusted discretionary income. This is the amount of consumption Americans have left after paying for all of the stuff they’re pretty much forced to pay. Unfortunately, however, the United States government does not measure it.
(Just in case anybody thinks I’m being too hard on the US here, let me give you some examples of what Canadian CPI excludes: food, energy, housing. They might as well use the ****ing Big Mac index.)