A pessimist, an optimist

John Crudele

Dear John...THE ANSWER MAN

Dear John: I read your columns regularly; I also watch Larry Kudlow nightly on CNBC. I respect you both.

However, there seem to be parallel universes that you two live in. While I am finishing my nightly dinner, Larry Kudlow seems to take the face value of the jobs numbers as “happy days are here again.”

And then, while I have my first cup of coffee in the morning, I read you and “the sky is falling.” Is it because I have wine with my dinner and drink my coffee black?

In my opinion, the economy is terrible, but I get a chuckle at you both. D.G.

Dear D.G. First, Larry has been optimistic for years. How has that worked out?

I’m from Brooklyn and can cut through crap. And I’m not saying the sky is falling — just that it’s not even close to sunny yet.

Real journalists are supposed to be skeptics. That’s our job and our nature.

If we don’t pay attention to what our government — both parties — are saying and doing, the sky just might fall.

Maybe you should do this: Drink wine in the morning and coffee at night and see if your outlook changes. Or maybe just stop watching Kudlow’s show.

Dear John: You are too optimistic on the economy.

We are still playing the “measure inflation” game by rules that no longer apply. The government excludes the inflation in food and energy prices because they are historically “volatile” — up this year because of a bad coffee crop or possible oil shipment embargo, down next year when things return to normal.

Unfortunately for us, the Obama administration has changed the game. Higher energy prices are here to stay as long as his administration runs the federal government. Higher food prices are here to stay too, since energy based on ethanol consumes so much of our farm output.

The president was not kidding when he said that “energy prices necessarily must rise” under his policies. Real inflation to those of us out here in the country is at least 4 percent per year, perhaps as much as 6 percent currently. W.W.

Dear W.W. Nobody has criticized me for being too optimistic about the economy in a long time.

And I’ve dealt repeatedly with the misleading statistics put out by Washington on inflation. The deceit goes much deeper than even you think.

Regarding inflation, for instance, there’s something called “geometric weighting,” which says people won’t necessarily feel the effects of inflation because they will change their purchases if prices rise. For instance, the increasing price of steak will make people buy hamburger meat.

So, under this theory of inflation gauging, the price of steak never really went up, because people won’t buy it at the higher price.

And there is “hedonics,” which says that some of the price increases we are seeing don’t really count because the quality of goods is rising. In other words, if you pay more for a TV today than you did last year, there really wasn’t a price increase, because the higher cost was offset by the fact that you got a better TV.

Presto chango: Price increases disappear.

So I’m not very optimistic at all. I’m just hopeful that knowledge of the tricks of the statistics trade will cause them to stop being used.

Send your questions to Dear John, The NY Post, 1211 Ave. of the Americas, NY, NY 10036, or john.crudele@nypost.com.

Larry Kudlow, Dear John, measure inflation, energy prices, price increases, 1211 Ave. of the Americas, NY, NY 10036

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