The PCE statistics were released this morning, including a claim that PCE inflation for April was 0.2%. Including food and energy. All I can say is that the government inflation figures are becoming more and more unrealistic in the face of rapidly rising prices.

Obviously it is in the government’s interest in many ways to keep reported inflation low. And in my view, they’ve moved beyond statistical games to outright falsification.

The University of Michigan consumer survey this morning reported that inflation expectations were the “highest in 20+ years.” I guess the consumers aren’t fooled.

For a good read on the actual effects of energy price inflation, Desmond Lachlan:

Past experience suggests that if the recent run-up in oil prices is sustained, it alone will subtract more than a full percentage point from U.S. GDP growth in 2008. That experience also suggests that, over the longer haul, the recent doubling in oil prices will subtract another full percentage point from U.S. GDP growth beyond 2008. Since these oil price increases have occurred in the context of a housing bust and a credit crunch, one must assume that the U.S. economy is facing the real risk of a recession that is both deeper and more protracted than the postwar average. And if the recent spike in oil prices threatens to tip the U.S. economy into recession, just imagine what a further run-up in prices—say, to the $150 to $200 a barrel range—would do.