The host argues that the Consumer Price Index (CPI) is misunderstood. It is not a simple collection of observed prices but a complex calculation involving a significant number of "imputed" or estimated values. Understanding this is crucial to interpreting inflation data correctly.

Due to budget and staffing cuts at the Bureau of Labor Statistics, more than 33% of the Consumer Price Index is now estimated rather than directly surveyed. This significant increase in imputation questions the reliability of a key metric for economic policy.

The missing October CPI data significantly impacted the report because of how shelter—the largest component—is measured. The Bureau of Labor Statistics uses a six-month rolling panel. By imputing a zero change for the missing month, it artificially dragged down the entire index in a way that simply measuring prices from September to November could not correct.

The CPI averages costs across 80,000 items, many of which are non-essentials or luxury goods. This method masks the true, higher inflation rate on basic necessities. For example, while the CPI showed a 72% cost increase over two decades, the actual cost of essentials like housing, food, and healthcare rose by a much larger 97%.

Despite official CPI averaging under 2% from 2010-2020, the actual cost of major assets like homes and stocks exploded. This disconnect shows that government inflation data fails to reflect the reality of eroding purchasing power, which is a key driver of public frustration.

Due to budget cuts at the Bureau of Labor Statistics (BLS), roughly 20% of all prices in the CPI are now imputed, up from just 2-3% a year ago. This increases the margin of error and reduces confidence in official inflation statistics.

The October 2025 government shutdown forced data collectors to input zeros for parts of the shelter survey. This technicality will artificially depress the year-over-year CPI shelter component for six months, making disinflation look stronger than it actually is until about April 2026.

The BLS assumed 0% October inflation for 88% of the CPI basket due to the government shutdown. This creates a false signal of rapidly cooling inflation and will distort year-over-year data for the next 12 months, rendering the report effectively "junk."

A government shutdown lasting several weeks poses a greater threat than just delayed reports. Data collection for time-sensitive indicators like the Consumer Price Index becomes impossible or unreliable, as prices can't be collected retroactively and people's recall fades, potentially forcing agencies to skip a month of data entirely.