The Economy is Scam Likely
As the Economy Enshittifies, so Does the Inflation Data, which Informs Everything from Wages to Benefits but the Data was Not Designed to Capture Issues of the 21st-Century —but Maybe it Should.
In the lead up to the 2024 election, economists spent years insisting Americans were wrong about the economy, arguing that declining views about the economy was a “vibe-cession” and disconnected from the actual economy. Then Trump won and affordability and grocery prices became defining issues.
That disconnect did not appear out of nowhere. It is fundamentally baked into how economists measure prices. Even with full data access, economists would likely still miss what drove pre-election discontent because while the inflation data might do a good job of capturing price changes—like the cost of eggs—the data does a particularly bad job of reflecting how the economy itself is changing.
When the yardstick used to measure living costs begins to drift, not only do economists misread real affordability concerns, policymakers can fail to respond to underlying issues, and the public grows increasingly frustrated by the numbers, experts and the non-solutions.
Understanding the Problem
The most common measure of what the public understands as inflation is the Consumer Price Index (CPI). Originally called the “Cost-of-Living Index,” in 1919, over time it has evolved into the modern measure that anchors inflation headlines. Today, many economists will try to maintain the view that CPI is not inflation, and that neither CPI nor inflation are full measures of cost of living. Housing, for instance, is a big portion of what people pay in a given month, but in many cases does not factor into most inflation measures. Even further, large scale issues like the balloon loans that informed the Great Recession, that caused mass default, are categorically not captured in CPI. Yet CPI remains the most cited statistic by economists when discussing cost-of-living, it also remains the most used metric when implementing cost-of-living adjustments, and is broadly how the public understands cost-of-living. But the modern economy has many problems that simply were not issues when CPI was originally conceived.
One issue is simply the number of new, add-on charges. Seventy-five years ago, buying a television involved a straightforward one-time cost and consumers watched for free using a built-in antenna. Even when cable emerged in the 1970s, it cost the equivalent of $30-40 monthly in today’s dollars and remained entirely optional. Today, televisions themselves have become cheaper and dramatically better, a clear technological triumph that is captured in the CPI. Yet this apparent progress masks a more expensive reality. Watching television now requires navigating a maze of separate costs: the TV, high-speed internet, networking equipment, a laptop to connect the aforementioned, streaming devices, and an ever-expanding bundle of subscriptions, like Netflix, Hulu, HBO Max, Disney Plus, Apple TV, the services multiply while fragmenting content that cable once provided in a single package.
Each subscription brings its own billing ecosystem, complete with service fees, duplicative transaction charges, and increasingly, a suggested tip option. And this pattern is increasingly replicated across almost every sector of the economy. In 1998, a pizza delivery consisted mostly of menu price, tax, maybe a small delivery fee or tip—today an app checkout often stacks menu markups, delivery and service fees, small-order fees, regulatory add-ons, and tip, making it much costlier. The services are not necessarily new, but the platforms, charges and prices are. None of that increase is really captured in the inflation data, which also means your wages, that are linked to unnecessarily low inflation figures, are falling behind the real rising expense of life.
The examples go on and on: digital “purchases” can vanish when licenses change, with access to ebooks and movies revoked after a sale as contracts change, forcing consumers to repurchase somewhere else, potentially even another digital copy or go without. This loss does not register in CPI, which records the original price paid but not the post-sale disappearance or the forced repurchase. Everything from second language apps, like Duolingo, to other web services tempt consumers with free trials that convert to sticky subscriptions, with cancellation hurdles as the backbone of the profit model. Even smaller and more niche issues reflect this trend: courts have started adding complicated charges, so a woman seeking to file a restraining order would likely pay a court fee, a filing fee, a clerk fee and so on, which might price her out of the market if the jurisdiction does not have waivers, but would not get tracked by traditional inflation metrics.
As once-simple transactions have morphed into complex webs of recurring charges, hidden fees, and extractive practices that make the true cost of living far higher than any current inflation measure captures. The result is inflation data increasingly out of sync with the fees and friction that set what people actually pay. Simply put, if inflation is meant to capture some rising sticker price component of the cost of living, as the economy enshittifies, the data does as well.
Though good numbers are hard to quantify, the White House Council of Economic Advisers tallies a subset of ten highly measurable junk fee types at roughly $90 billion a year, about $650 per household, and that leaves out lots of more common add-ons and the time costs of dodging them, not to mention any of the aforementioned issues. As a slice of total consumer spending, this subset of junk fees is still under 1 percent, but the effects are likely concentrated with some families paying much more. Even if the exact monthly total varies, the general scamminess of the economy is growing year over year, raising living costs faster than economists can fully quantify. Oversight remains fragmented, with sporadic enforcement without a comprehensive framework, so the underlying incentives persist, and the official statistics that should capture these frictions are degrading in coverage as the problem expands.
Understanding Inflation Estimates
The longstanding practical workaround has been to track and maintain many baskets, but this strategy actually preserves a traditional basket—CPI—which ends up being more and more wrong. Because even if agencies publish additional indices, most contracts, COLAs, and tax thresholds still default to the traditional measure, which are encouraged, so the legacy basket sticks around regardless of newer and better alternatives. Statistical agencies also acknowledge these calibration problems, with numerous reports documenting the need for CPI modernization. The challenge is that adjustments to the underlying metrics are slow, often lagging actual consumption by years. Looking forward, this problem grows more complex as new forms of extraction emerge.
Wage increases, or cost-of-living adjustments, are often linked to CPI but if these measures are fundamentally undercounting real household costs, each raise applies an unduly deflated rate to a base that is already too low. The gap between true living costs and CPI-indexed pay then compounds over time. Even with yearly raises, which are increasingly uncommon and less generous, a poorly scoped CPI applies an understated growth rate to an already underpaid base, as real costs increase in complicated new ways. This partially explains why diagnosing the affordability crisis can be so difficult.
Good Data is the Policy Fix
There is an old adage in economics that argues that ‘we only measure what we care about’ and the United States is not measuring cost of living very well. If even a fraction of the aforementioned charges moved from hidden fees into posted prices, headline inflation would mechanically trend up. This is not just a win for accuracy, when price indexes better reflect what people actually pay, those corrected estimates spillover into wages, benefits, cost-of-living adjustments, and bargaining power, making the net-impact quite meaningful. The takeaway is simple, economists need to bring these costs into the light so policy can target the real price pressures households face.
The targeting of junk fees by the previous administration should be seen as a policy floor, not the ceiling. Targeted bans and one-click cancellations address symptoms, not a system embedded in platforms, checkout flows, and pricing architectures. A strategy should mandate standardized, all-in price disclosure across sectors and modernize national price statistics so hidden costs enter the official record, by making prices easy to see and adding hidden fees into the totals.
The Bureau of Labor Statistics (BLS) should execute the National Academies’ modernization plan by using transactions, scanner, and web-scraped data, running parallel experimental indexes during the transition, and refreshing weights on a rolling basis with timelier expenditure data, allowing shifts in payment modes, subscriptions, platform fees, add-ons, to register quickly. In tandem, priority should go to difficult categories such as housing and medical care, with supplemental subgroup indexes that make distributional exposure visible in real time. Because payment methods are changing as much as consumption itself, statistical agencies should pilot an affordability satellite account with BLS and Bureau of Economic Analysis that reports all-in, consumer-facing costs alongside CPI and PCE, capturing mandatory fees, platform charges, and subscription rollovers that current item specifications miss.
The Conclusion
Failing to modernize these datasets, means economists run the risk of correctly measuring the wrong thing, and are therefore relying on empirics that are both technically accurate and missing the point. There are many broad categories of CPI, multiple estimates of PCE, and hundreds of subseries measures of inflation; the point remains, with so many different datasets attempting to measure the changes in price, one of them should reflect what the public actually pays. Because, though CPI was never originally meant to track issues like “the price changes of BMW making heated seats a monthly subscription service” —but maybe it should.