How inflation numbers are manipulated to appear lower. How to change your mindset about inflation to get ahead of it.
Topics covered include:
- How Inflation (PCE) Calculations Are Changing
- Why the PCE Changes Are Suspicious
- The Biggest Changes Ever to Inflation Calculations
- What Causes Inflation
- AI Buildout Is Boosting Inflation
- How Rising Income Can Overcome Inflation
- Inflation Is Currency Debasement
- Most Things Get Cheaper and Better Over Time
- Personal Inflation Rate and Retirement
- We Can Beat Inflation by Improving Our Skills
- Inflation Manipulation vs Inflation Fabrication
- How to Outsmart Inflation
Show Notes
Preview of the 2026 Annual Update of the National Economic Accounts—BEA
The Inflation Outlook by Governor Stephen I. Miran—U.S. Federal Reserve
Live Retirement Portfolio Cohort—Money for the Rest of Us
Episode Sponsors
Delete Me – Use code David20 to get 20% off
Become a Better Investor With Our Investing Checklist
Become a Better Investor With Our Investing Checklist
Master successful investing with our Checklist and get expert weekly insights to help you build your wealth with confidence.
Related Episodes
475: Inflation’s Illusion: Debunking the Normalcy of Currency Debasement
429: Which Inflation Protection Strategies Worked and Which Didn’t?
Transcript
Welcome to Money for the Rest of Us. This is a personal finance show on money, how it works, how to invest it, and how to live without worrying about it. I’m your host, David Stein.
Today is episode 560. It’s titled, “Is Inflation Manipulated? And if So, What Do We Do About It?”
A Change to the Inflation Gauge
I recently got an email from one of our Plus Members, and he wanted to know whether the upcoming revamp of the inflation gauge by the Bureau of Economic Analysis—is that legit, or is it a political move to massage the numbers? Now, I hadn’t heard of the change. Apparently, it was announced last month, in June 2026, just a couple of paragraphs. And they talk about improvements to the Personal Consumption Expenditure Index, the PCE. Now, that’s different than the Consumer Price Index.
The Consumer Price Index, it’s a cost of living index. We’ll get to more of that. But the Personal Consumption Expenditure is what is used to take GDP, gross domestic product, the monetary value of what is produced, and to deflate the nominal numbers into a real number. And they’re making a change. The BEA announced the changes, what they call improvements to their methodology. And there wasn’t a whole lot of information about it. They talked about changing how they measured portfolio management services. If you pay an asset manager, they typically use revenue of asset managers.
So if you’re paying 1% of your portfolio value to an asset manager, a financial advisor, then if the stock market goes up, you’re paying them more money. They’re not providing more services. It’s a price increase because your assets went up.
I used to be an asset manager. We loved when the market went up, because we made more money and we didn’t have to do more work. We didn’t have to go to more meetings because a client had more money. And so this is one of the changes.
The Miran Connection
Now, here’s what’s curious. Back in December, Federal Reserve Governor Stephen Miran, appointed by President Trump—he used to be Trump’s economic advisor—he pointed out what he didn’t like about how portfolio management services were incorporated into the personal consumption expenditure, because it had added almost 0.2%, a little bit more, to the PCE, because the stock market had gone up over that year. This was in December 2025. He saw that as a problem, which is fine; it’s his opinion.
But lo and behold, six months later the BEA is changing the methodology. And here’s their description of the change. I don’t even know what it means. It says that BEA will improve the deflation methodology for consumer spending on portfolio management and investment advice services to better reflect the timing and quantity of services consumed. Fair enough. They’re shifting to a CES—consumer employment statistic—quantity extrapolator from the portfolio management and investment advisory industry. So some type of quantity extrapolator.
Now, there is no other details on this. They say they’re going to provide more details this fall, but the numbers are already being incorporated. Now, they’re also changing some things regarding computers and legal services and how that’s measured, which is fine. But here’s some of the criticisms from economists. One is the lack of transparency. And two, it turned out the changes only reflect some areas where inflation has been pretty high, because the stock market went up in the case of asset management services.
But there are other areas within the PCE and the consumer price index where there’s some measurement challenges, including those that perhaps artificially lower inflation. Those were untouched.
And so given the lack of information and the fact that the changes impact areas that have had higher inflation, and one of the sort of niche changes they’ve made in terms of portfolio management services was a specific area that Stephen Miran criticized in a speech he gave last December, it’s a little suspicious.
As a Money For the Rest of Us Plus member, you are able to listen to the podcast in an ad-free format and have access to the written transcript for each week’s episode. For listeners with hearing or other impairments that would like access to transcripts please send an email to team@moneyfortherestofus.com Learn More About Plus Membership »
