Changing the CPI methodology

Changing the CPI methodology might sound like a dramatic move. But this isn't the first time we've seen this happen. In fact, the last change was in 2002...

Back then, George W. Bush was the sitting president. And he was the one dealing with a struggling economy and upcoming elections.

So, the 2002 White House needed to change how voters saw the economy. It needed inflation growth to stay low so the Fed wouldn't raise interest rates.

The BLS changed its CPI methodology that year. It adjusted the index weightings from a 10-year spending average to a two-year average. It said it wanted to reflect consumers' spending habits more accurately. The outcome was a slowdown in inflation growth...

In the 10 years before the change, the average CPI increase was 2.7%. Heading into the 2002 midterms, though, the rate had dropped to 2.2%.

Consumer sentiment, as measured by the University of Michigan, tanked from 2002 into early 2003... But by the time the election rolled around in 2004, the mood had changed. Sentiment soared higher. And Bush was elected to another term as president.