Truck and Barter Where Sympathy and Hedonism Collide
Tuesday, March 18, 2003
I finally received a response from OMB regarding source of the official discount rates to be used in Cost-Benefit analysis of Federal government projects. It came from the desk of one Robert B. Anderson, and is dated the 12th of March. Excerpt:
"The interest rates used for Circular A-94 are taken directly from the forecast of interest rates that is prepared within the administration each year to use in computing the Federal budget."
There you have it folks, another black box for analysts to take into account...
The macroeconomic data that are regularly released present a wide-angled but static picture of the U.S. economy, and I find it difficult to write anything of substance about them. Whether consumer prices inch up, or stay flat, or dip, little can be inferred about the short-term or long-term consequences--with any degree of confidence or certainty.
It is also hard to tell an original and compelling story from the series--and there are hundreds of important stories hidden in the indices. The most common stories are the most banal--a "shock" to the economy from rising energy prices. The "core" index stays flat while energy and food move about wildly. Hello? This is not the 1970's--and we do not have price caps. A spike in energy prices will not cause a catastrophe--e.g. hyperinflation--overnight.
I'm more interested in the stories behind individual commmodities--for instance, rice. Since 12/97, the CPI all city average of rice has dropped 1.5% from a base of 100 to 98.5 in 1/03. In contrast, potatoes have increased from 184.6 to 237.5 over the same period (an increase of 28.65%). Most goods have seen an increase in their price levels, along with the general trend. Computer hardware has been a visible and much discussed decreasing component, but rice has not. I'll have to investigate this phenomenon further...