Chapwood Index Latest Data Further Reveal CPI Is an Irrational, Obsolete Statistic

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Data shows flaws in BLS CPI; real average consumer inflation closer to 10%.

​The Chapwood Index is our attempt to help Americans understand why they feel they aren’t keeping up, and why their money doesn’t seem to go as far.

Chapwood Investments is pleased to announce the latest release of the Chapwood Index inflation data. The Chapwood Index is the real cost of living increase index that shows, on a semi annual basis, a more accurate figure for cost of living increases in the nation’s top 50 major metropolitan areas.

The Chapwood Index reveals that the yearly national average increase for the top 50 U.S. cities was 9.8% for the period from January through December 2013; more than 600% the rate of the Bureau of Labor statistics CPI published of 1.5% in 2013. Oakland (13.4%), San Jose (12.7%) and San Francisco (13.0%) top the list of U.S. cities with the highest cost of living increase nationwide, while Colorado Springs, Raleigh, Albuquerque and Omaha have the lowest (7.5% on average).

“The data solidly supports what many Americans have suspected for years. The CPI no longer measures the true increase required to maintain a constant standard of living. Unfortunately, this negative trend has been in place for 28 years and has resulted in creating a crucial situation where most Americans need to start their own personal austerity measures by reducing their expenditures while demanding more from their savings and financial advisors. This is the main reason that more people are falling financially behind, and why more American’s rely on government entitlement programs,” commented Ed Butowsky, founder of the Chapwood Index.

“True inflation also affects portfolio performance and allocation. If your financial advisor is not accounting for your true cost of living increases, they may be doing you a huge disservice in allocation or risk management to get you the needed returns and exposure you need. The unfortunate truth is that most fiduciaries rely on flawed government statistics which in turn affect investors’ real returns,” added Jared A Levy, Chief Risk Strategist at Chapwood Funds.

The goal of the Chapwood Index is to shine a spotlight on an inaccuracy that is slowly destroying the economic and emotional fiber in this country, hopefully affording more Americans the opportunity to become educated consumers and take immediate control of their spending habits and personal finances.

In 1983, the government CPI rose roughly 12% and the government modified the CPI calculation to save money on salary increases and entitlement benefits, which are tied to CPI; several more negating changes have been made in that calculation to date.

Over 50% of Americans are dependent on government entitlement programs to get by and many may never get off of those programs as COLA (cost of living adjustments) are so far off. The income gap is widening because those earnings at the top are tied to performance while income at the bottom is generally adjusted using CPI. But the issues aren’t only affecting those at the bottom; anyone with any savings or investments needs to accurately measure their cost of living increases geographically.

Index Methodology:
Chapwood’s research team compiled a list of over 4,000 items from consumers around the country of products and services that they spend money on in the daily course of their lives. That list was narrowed down to the top 500 items that were used most frequently and commonly among Americans.

Fluctuations in the true price for each of those items are carefully tracked and monitored without any manipulation or biases, twice a year and city by city, creating a weighted index based on price.

Examples of items included in the Index: Starbucks coffee, Advil, insurance, gasoline, taxes (income & sales), tolls, fast food restaurants, computer paper, toothpaste, oil changes, car washes, pizza, internet service, Gymboree lessons, mobile phone service, cable TV, dry cleaning, movie tickets, toothpaste, hairspray, gym memberships, home repairs, piano lessons, laundry detergent, light bulbs, school supplies, parking meters, pet food, underwear and People magazine.

For more information on the Chapwood Index please contact Ed Butowsky or Jared Levy at 972-897-0197 or email us at ed(at)chapwoodinvestments(dot)com.

About Ed Butowsky
Ed Butowsky, managing partner of Chapwood Investments, is an internationally recognized expert in the investment wealth management industry with 25 years of experience. Through his work with professional athletes, Butowsky was recently featured in the Sports Illustrated article, “How (and Why) Athletes Go Broke” as well as the upcoming ESPN movie on athlete finances, “Broke.”

Butowsky is a frequent guest on CNN, ABC, CBS, NBC, Fox Business News, FOX News Channel, and Bloomberg TV. Ed is also regularly heard on radio shows around the country, discussing wealth management, economics and other subjects that are of interest and timely related to the finance/investments world.

About Jared A Levy
Levy is Chief Risk Strategist for The Chapwood Funds, a non-correlated, low volatility hedge fund.
Jared is a world renowned veteran of more than 19 years in the finance and options industry who previously worked as an options / equities market maker and specialist on three major U.S. exchanges. He’s served as Chief Options Strategist for Wizetrade, Senior Derivatives Strategist for PEAK 6 L.P. and Market Strategist for Zacks Investment Research in addition to authoring two best selling option-trading books.

Levy is a frequent guest on Fox Business, FOX News Channel, Bloomberg TV, CNBC and Al Jazeera as well as radio and TV broadcasts around the globe.

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