RIP PRECESSION HELLO UNFLATION

By dayvidday on Mon, Dec 1, 2008 1:42 pm

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OMG! It's official! For a few months now, we've been onto the idea of a "precession," a span of time wherein the economic powers that be flatly refuse to call anything a "recession." We assumed this had something to do with Dick Cheney's political whopper and pressure to not to claim the recession started with Bush.

Unfortunately for Mr. Sit-in-a-coffin-naked-and-masturbate-while-a-bunch-of-dudes-watch, the recession did, in fact, start with The Dumbest, making him the even worst President ever.

So it is with great sorrow we must put to rest the word "Precession."

Unflation though? Still all about that.

Unflation

SOAPBOX | BY DAVID DAY

Of all our recent economicwoes, from the decimation of the housing market to the collapse of investment banks, there is one specter that's gone unmentioned. For months, we’ve been all about precession, the general unwillingness to call the economy what it is, but now there is an even deeper problem: Unflation.

Unflation is the “fuel surcharge” that UPS now adds to its rates, currently at 9.25 percent for ground packages. Unflation is the fee American Airlines now charges for checked bags, each way for the first bag, each way for the second. These costs don't increase the value of the standard service, which would be inflation, but couch hidden costs that make it more expensive. Fuel charges can even be applied to things like municipal garbage pickup rates. Unflation.

Airlines also have fuel surcharges, and they’ve recently admitted that despite fluctuations in gas prices, they are “unlikely to drop” these costs. American Airlines' parent company’s vice president even recently boasted to stock analysts that these fees bring in “several hundred millions of dollars,” but larger companies are doing things even more sinister.

Unilever, the world’s second-largest maker of food products, is changing packaging without changing pricing. So while the product looks the same, it’s in fact, smaller. Their Skippy™ Peanut Butter increased the dent in the bottom of their jars, reducing the size by 1.7 ounces, but not the price. And Breyers Ice Cream went so far as to tweak the tapering on its packaging to cut out 8 ounces. Kellogg’s cereal, Dial soap, Tropicana orange juice, the list goes on and on. Even furniture has been shrinking. Unflation.

In some cases, health is used as an excuse for unflation. T.G.I. Friday’s “Right Portion, Right Price” campaign is pitched to help you save inches around your waist, but it’s also designed to save the chain money. The National Restaurant Association’s 2008 Industry Forecast touts “bite-size” desserts as this year’s biggest trend, reducing the cost to your gut as well as the restaurant. Recent news out of LA has high-end restaurants in a pricing quandary, some opting for what are called “medium plates.” Fast food is not exempt, either. Just one example: The size of Wendy’s value-size fries has shrunk. Unflation.

Regardless of what it’s called, the trend is disturbing. Politicians are speaking up, like Sen. Bob Menendez, D-New Jersey, who is calling for a repeal of airlines’ fuel surcharge, particularly for holiday travelers this season. Guess what? Prices are expected to go up, possibly by 15 to 20 percent.

Perhaps the same federal regulations for product changes (“New and Improved,” “Even More Mayonnaise!”) should be applied to smaller sizes. Then a Hershey’s Special Dark “giant” chocolate bar would need to say, “Now With 15% Less Chocolate!”

Unflation is just another part of the precession problem; it's intended to muddle up our understanding of economic reality. The Consumer Price Index was virtually unchanged for September, yet the cost for food at home is up 7.6 percent over the last year. We call it unflation, not because the phenomenon is unknown, but because we have to name it something.

But mostly we call it unflation because it is unfair.