Buried deeply within Bloomberg’s recap of November’s various and sundry economic statistics, presented with the usual obfuscations and reassurances of stability in the face of unfolding financial catastrophe is one number that somehow manages to reflect what no other US government statistic does: reveals the truth.  Just to be certain it isn’t ever noticed, you’ll find it nestled in the 23rd paragraph of the article, precisely when the reader’s eyes have completely glazed over from statistics fatigue.  The number in question is the “wholesale price index.”

I won’t make you wait: it’s 3.2%.  For one month.  On an annualized basis, that is (without compounding) 38.4%.  It is the highest increase in 34 years, and if you remember the inflation that we endured in the mid 1970s, you know that this does not bode well for next year’s consumer prices. 

What’s unique about this double-digit inflation statistic is that every other government economic statistic has been reconfigured in recent years to reflect a sunnier picture than would have been revealed by the accurate statistics, as they had always been reported.  Unlike, say the unemployment statistics, which now do not consider those whose unemployment insurance has expired - and, God knows how many hundreds of thousands there are of those right now, even if Sec. Chow insists we have only 4.6% unemployment (wanna buy a lovely bridge in Brooklyn?)

So why is this number trustworthy?  Well, unlike the Consumer Price Index, which supposedly tells us what the inflation rate is, it doesn’t exclude the causal aspects of real-world inflation: food and energy.  The average American’s monthly expenses are dramatically affected by those two expenses more than any other single regular expense.  The other excluded element is housing, which in rents is expressed by the published annual inflation rate itself (in cities with rent control), but has become very significant with the preponderance of ARMs, but that, too goes un-included.

However, the wholesale price index must include the costs of fuel and food, because they fall within the manufacturer’s costs.  So be prepared, because the wholesale price increases of November (and, no doubt, December…) will be coming to a store near you in 2008.  And you never will have heard a word about it on the TV news.