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“… Deep inside its monthly inflation report on Friday,the Bureau of Economic Analysis said that the cost of legal services rose 1.8 percent in January. That was an unusually large increase, but not nearly as big as the double-digit gain that some forecasters were expecting.
The reason for the divergence: The agency, which is part of the Commerce Department, had changed the source of its data on legal prices, relying on wholesale prices from the Bureau of Labor Statistics rather than the consumer price data it usually uses.
… But in this case, the adjustment was enough to shave roughly a tenth of a percentage point off the monthly change in the core Personal Consumption Expenditures price index. That is a meaningful difference to investors, who track even tiny moves in the index for hints of when and how the Federal Reserve will next adjust interest rates. The central bank officially targets the P.C.E. index, not the better-known Consumer Price Index, when making policy decisions.
The bureau provided no public disclosure of the change. Economists learned about it only when they reached out to the agency to understand why their forecasts had been so far off.
… In January, the C.P.I. for legal services jumped more than 11 percent, according to analyses of data from the Bureau of Labor Statistics conducted by private-sector forecasters.
… “On its merits, you can defend the change,” said Omair Sharif, founder of Inflation Insights, a forecasting firm. “Optically, it’s just not a good look in an environment when people are worried about political interference.”…”
