• Jeff Matthews

The “Core Inflation Rate” at My Church: 10%

“Our budget will increase by 10% because of rises in fuel, electricity and insurance costs. Just to stay where we are, we need to increase our pledge income by 10%…” Thus reads the pledge request included in my church bulletin today. Seems that, along with the rise in utility expenses, our insurance costs are going up 50% next year and our heating oil costs are rising—and altogether our cost increases average out to 10%.

Now, this is just one individual church in one small corner of New England. A quick Google search reveals a total of 386,000 churches in America and over 3,700 synagogues. Clearly, a 10% inflation rate at one small church does not represent the trend at several hundred thousand other houses of worship.

But, unlike government statistics—which are based on samples that are massaged, averaged and seasonally adjusted—it is a real number.

It is not presented “ex-food and energy,” the way most economists have been trained to consider inflation. And it does not whimsically delete certain costs, in the same way that the government inflation statistics delete, say, 20% increases in hotel room rates.

That’s right: in this weekend’s edition of the Wall Street Journal, we read the following: According to the Labor Department, hotel prices were down 2.5% in September from a year earlier, but industry executives say prices are actually rising robustly. Patrick Jackman, a Labor Department statistician, says the government’s index of hotel prices doesn’t include the price of hotels for business travel. That tends to strip out higher-price business rates.[Emphasis added.]

In that same article, titled “Inflation Toehold? Firms Gain Power to Boost Prices,” the paper notes that the price of a standard room at the Waldorf-Astoria hotel in New York is up 20% over last year.

Yet that 20% increase has vanished from the official government statistics because, apparently, “consumers” do not pay it.

Getting back to my church’s 10% inflation problem, I should note that not a dime of this 10% budget increase is producing better mission programs or higher administrative salaries.

Not one individual except, perhaps, the Russian men who stole state oil fields following the collapse of Communism, and their forebears in the Middle East and Southeast Asia, as well as the investors clipping coupons from Exxon-Mobil and Chevron, benefits from this 10% cost increase.

Nevertheless, it is a true, unadjusted, out-of-pocket cost increase which must be paid in order to turn on the lights and heat the building that supports the fifty twelve-step programs that use our building each week, not to mention the nursery school program and Bible studies. And, of course, Sunday services.

So enjoy the 2% adjusted, massaged, refined, imputed, restructured, and redefined CPI while you can…because my church needs to spend 10% more money “just to stay where we are.”

Jeff Matthews I Am Not Making This Up

© 2005 Jeff Matthews

The content contained in this blog represents the opinions of Mr. Matthews. Mr. Matthews also acts as an advisor and clients advised by Mr. Matthews may hold either long or short positions in securities of various companies discussed in the blog based upon Mr. Matthews’ recommendations.

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The content contained in this blog represents only the opinions of Mr. Matthews. This commentary in no way constitutes investment advice. It should never be relied on in making an investment decision, ever. The content herein is intended solely for the entertainment of the reader, and the author.

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