Data Quality Alert

US Inflation Data
Accurate Numbers, Compromised Collection

The Bureau of Labor Statistics reported 2.7% annual inflation for November 2025—significantly below the 3.1% analyst consensus. But a 43-day government shutdown left October data uncollected and November data limited to half the month. Economists warn: don't take these numbers at face value.

2.7%

Official CPI (Nov 2025)

2.6%

Core Inflation

4.1%

Consumer Expected

Days of Shutdown

Executive Summary

The November CPI release showed headline inflation at 2.7% year-over-year and core inflation at 2.6%—the lowest core reading since March 2021. However, multiple Wall Street economists explicitly warned against taking these numbers "at face value."

The federal government shutdown from October 1 to November 12, 2025 prevented the BLS from collecting any October price data. When collection resumed on November 14, agents captured only the back half of November—potentially skewing results with Black Friday discounting effects.

While alternative trackers like the Cleveland Fed Nowcast (2.62%) broadly corroborate the trend, the 1.4 percentage point gap between official CPI (2.7%) and consumer expectations (4.1%) reveals a measurement framework that has lost touch with lived experience.

Compromised Data Collection

43-Day Shutdown Impact

The longest government shutdown in US history (October 1 - November 12, 2025) left October CPI entirely uncollected. November data gathering was limited to just the latter half of the month, potentially capturing Black Friday discounting effects that skew readings lower.

"Take it with the entire salt shaker." — Wells Fargo Economists

Consumer Perception Gap

Official vs. Felt Inflation

The University of Michigan Consumer Sentiment Index sits at 53.3—in the 1st percentile historically. While BLS reports 2.7% inflation, consumers expect 4.1% over the next year. 47% of respondents spontaneously mention negative effects of high prices.

"While the rate of change has slowed down, the price level continues to advance, and that's what people are feeling." — Joe Seydl, J.P. Morgan

The Cost of Money

Excluded Since 1983

Former Treasury Secretary Larry Summers' NBER research shows that including mortgage interest—as CPI did before 1983—would put 2022's peak inflation at 18% vs. the official 9%. Median monthly mortgage payments rose from $1,500 (2021) to over $2,600 (2024).

"If we still measured inflation the way we did in 1980, today's inflation rate would be 8%, not 3%." — Larry Summers, NPR

Alternative Measures Corroborate

Independent Trackers Bracket Official Data

The Cleveland Fed's inflation nowcast (2.62%) and State Street PriceStats (2.66%) closely track the official BLS figure, providing reasonable corroboration of the underlying trend direction—even if the specific magnitude remains questionable due to shutdown disruptions.

Inflation Measures Compared

Source	Current Reading	Difference from BLS	Notes
BLS Official CPI	2.7%	—	November 2025 (shutdown-affected)
Cleveland Fed Nowcast	2.62%	-0.08 pp	Real-time model using oil, gas, CPI/PCE (Dec 18)
State Street PriceStats	2.66%	-0.04 pp	800,000+ daily online prices (Sept 2025)
NY Fed Consumer Survey	3.2%	+0.5 pp	One-year consumer expectations
University of Michigan	4.1%	+1.4 pp	Consumer inflation expectations
Conference Board	4.8%	+2.1 pp	Consumer expected inflation
ShadowStats	Inactive	—	Inactive since mid-2023; methodology criticized

Official vs. Consumer-Expected Inflation Gap

November 2025 Category Breakdown

Category	YoY Change	Direction
Coffee	+18.8%	Surging
Ground Beef	+14.9%	Rising
Fuel Oil	+11.3%	Elevated
Shelter (34% of CPI)	+3.0%	Moderating
Airline Fares	-5.4%	Declining
Eggs	-13.2%	Falling

CPI Methodology Changes Since 1980

Owner's Equivalent Rent (OER) 1983

Rather than tracking actual housing costs including mortgage interest, BLS now asks homeowners what their homes would rent for. OER comprises 24-27% of CPI. During the 2021-2022 housing surge, private measures showed rents up 14.9% while OER showed only 4.1%—a 12-18 month lag that systematically smooths housing volatility.

Impact: Excludes financing costs that dramatically affect consumer welfare

Geometric Mean Formula 1999

Allows for modest substitution within categories (different apple varieties). The widespread claim that BLS assumes "hamburger substitutes for steak" is demonstrably false—substitution occurs only within item categories, not between them.

Impact: Reduced reported CPI by approximately 0.27 percentage points annually

Hedonic Quality Adjustments 1998+

Generates intense criticism but minimal actual impact. BLS economists documented that all hedonic models introduced since 1998 produced a net CPI increase of about 0.005% per year—essentially zero. Shelter hedonics actually adjust upward for housing aging.

Impact: Negligible (contrary to popular belief)

Boskin Commission Findings 1996

Concluded CPI overstated inflation by 1.1 percentage points annually due to quality improvements, new products, and outlet substitution. Mainstream academic estimates suggest remaining upward bias of 0.8-1.0%—contradicting conspiracy theories of systematic understatement.

International Projections

Organization	2025 US Inflation Projection	Notes
IMF World Economic Outlook	2.7%	Aligns with BLS methodology
OECD (November 2025)	3.2%	Uses COICOP harmonization; differs from BLS
OECD (June 2025)	3.9%	Emphasized tariff impacts

Structurally Understated, Not Falsified

Assessment of November 2025 CPI Data

Today's 2.7% inflation reading is not manipulated, but it is methodologically incomplete and circumstantially compromised. Alternative real-time trackers like Cleveland Fed Nowcast (2.62%) and State Street PriceStats (2.66%) closely match the official figure, providing reasonable corroboration of the underlying trend.

The deeper issue is structural: CPI methodology excludes financing costs that dramatically affect consumer welfare, uses shelter measurements that lag market conditions by 12-18 months, and reflects decades of methodology changes that—while defensible individually—cumulatively produce readings divorced from lived experience.

For decision-making purposes: The direction of inflation (declining) is likely accurate. The level understates actual cost-of-living pressures by perhaps 2-5 percentage points depending on methodology assumptions. Today's specific magnitude (2.7% vs. ~3.0% expected) should be treated skeptically until cleaner December data arrives.