SOURCE: Chapwood Investments

Chapwood Investments

June 25, 2012 08:00 ET

Chapwood Index Reveals That the Government Grossly Underreports the Real Cost of Living Increases, Leading to an Increasing Overreliance on Government Entitlement Programs

New Index Solidly Supports Notion That the Unintended Consequences of This Manipulation Has Had Direct, Devastating Consequences for Many Americans; "Entitlements Are a Virus That Is Very Hard to Cure"

DALLAS, TX--(Marketwire - June 25, 2012) -  Chapwood Investments is pleased to announce the public release of the Chapwood Index, a real cost of living index that attempts to show, on a quarterly basis, a more accurate figure for cost of living increases in the nation's top 50 major metropolitan areas.

The Chapwood Index national average increase is 9.9%. Top 10 Cities with largest cost of living increase from 2011 to 2012:

     
  San Jose, CA 12.8%
  San Francisco, CA 12.5%
  Los Angeles, CA 12.3%
  Oakland, CA 12.3%
  San Diego, CA 12.1%
  Long Beach, CA 12.0%
  Sacramento, CA 11.8%
  New York, NY 11.6%
  Philadelphia, PA 11.4%
  Washington, DC 11.4%
     

What the Chapwood Index found was that the government grossly underestimates the real cost of living increase for most Americans on average 600 basis points by using the biased proxy called the consumer price index (CPI). "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. "The data solidly supports what all 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."

Mr. Butowsky developed the Chapwood Index because he felt that the CPI was not an accurate reflection of the true cost of living increases, nor did it reflect any changes in purchasing power for consumers. For instance, if a person's income went up by 4 percent but their cost to maintain a current lifestyle went up 8 percent, then they have actually experienced a 4 percent decline in their purchasing power -- a much more valuable consideration for consumers when it comes to every day budgeting, maintaining their standard of living and/or retirement planning. The Chapwood Index gives a more accurate, and realistic, indicator of the true cost of living increases. An unintended conclusion of the index is the clear evidence of just how much the CPI has contributed to our nation's overreliance on government entitlement programs.

"The need for government aid through entitlements is a virus that has been caused and supported by the government's purposeful manipulation of the CPI," continued Butowsky. "This is an illness that now affects well over 50 percent of the people in our country and the cure is very difficult to inject. The Chapwood Index reveals that one of the main causes for the increasing reliance on U.S. Government entitlement programs is due to the intentional misrepresentation of the true cost of living increase that Americans face annually and therefore makes it very difficult to maintain a constant standard of living."

Most alarming, the Chapwood Index revealed that the yearly combined national average increase for the top 50 U.S. cities was 9.9% for the period from January through December 2011; more than triple the rate of the Bureau of Labor statistics CPI published. San Jose (12.8%) and San Francisco (12.5%) top the list of U.S. cities with the highest cost of living increase nationwide, while Wichita, Albuquerque, Indianapolis and Omaha have the lowest (7.4%).

"I am tired of observing people committing financial suicide by using a flawed statistic that is universally known to be inaccurate as a benchmark for maintaining a constant standard of living. One way to reduce the dependency on entitlements is to amplify the real cost of living increase and have people take personal austerity measures. I firmly believe the government gravely underestimates the national rate of inflation -- a number plagued with bias and statistical manipulation. Most people universally accept that the government's rate of inflation is accurate. It simply isn't. This blind acceptance is one of the main reasons that over 50% of Americans are dependent on government entitlement programs to get by. This is horrible. Americans that rely on this statistic are falling behind [financially] more and more every year. Individual purchasing power is sinking in quicksand, and people are unable to maintain their current lifestyle. Individuals must focus on having their salaries and portfolios increase over and above the combination of the government's reported CPI and their personal tax rate. It is about time someone does something about this tragedy and stands up to explain why people are falling behind each year. This is why I created the Chapwood Index."

The goal of the Chapwood Index is to shine a true light on a slow moving virus that is destroying the economic and emotional fiber in this country, affording more Americans the opportunity to become educated consumers and take immediate control of their spending habits and personal finances.

Index Methodology:
In creating the Chapwood Index, 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. Over a 2-year period, fluctuations in the true price for each of those items was carefully tracked and monitored without any manipulation or biases, quarter-by-quarter and city-by-city, creating a weighted index based on price. Examples of items included in the Index: Starbucks coffee, Advil, gasoline, taxes, 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.

Mr. Butowsky went one step further to create the Chapwood Forecaster, which allows consumers to input their personal information, utilizing the Chapwood Index for their city, to determine a realistic financial plan. "In putting this together, we realized that, as financial advisors, we must do a better job of discussing what a client's true cost of living increases might be. Relying on the CPI can only lead to more disastrous outcomes for our consumers and our country," states Butowsky.

For more information on the Chapwood Index, or to speak with Ed Butowsky, please contact Sarah Heatley at sarah@chapwoodinvestments.com or 972-865-2225.

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.

 
The Chapwood Index
 
CITY YEAR
2011-2012
1st QUARTER
2012
1. New York, NY 11.6% 3.3%
2. Los Angeles, CA 12.3% 3.6%
3. Chicago, IL 10.9% 4.1%
4. Houston, TX 9.9% 2.7%
5. Philadelphia, PA 11.4% 3.4%
6. Phoenix, AZ 8.7% 2.9%
7. San Antonio, TX 9.6% 2.7%
8. San Diego, CA 12.1% 3.5%
9. Dallas, TX 9.4% 2.3%
10. San Jose, CA 12.8% 4.1%
11. Jacksonville, FL 8.4% 2.2%
12. Indianapolis, IN 8.1% 2.9%
13. San Francisco, CA 12.5% 4.2%
14. Austin, TX 9.1% 2.7%
15. Columbus, OH 10.4% 3.3%
16. Fort Worth, TX 8.7% 2.9%
17. Charlotte, NC 8.9% 1.9%
18. Detroit, MI 10.4% 2.8%
19. El Paso, TX 8.3% 1.9%
20. Memphis, TN 9.1% 2.6%
21. Baltimore, MD 10.6% 3.0%
22. Boston, MA 11.2% 3.1%
23. Seattle, WA 10.8% 2.9%
24. Washington, DC 11.4% 2.7%
25. Nashville-Davidson, TN 9.4% 2.8%
26. Denver, CO 9.1% 2.4%
27. Louisville, KY 8.3% 2.7%
28. Milwaukee, WI 10.9% 3.3%
29. Portland, OR 10.4% 2.9%
30. Las Vegas, NV 9.9% 3.2%
31. Oklahoma City, OK 8.9% 2.1%
32. Albuquerque, NM 7.4% 2.8%
33. Tucson, AZ 8.5% 2.8%
34. Fresno, CA 11.6% 4.3%
35. Sacramento, CA 11.8% 4.2%
36. Long Beach, CA 12.0% 4.0%
37. Kansas City, MO 9.4% 2.8%
38. Mesa, AZ 8.5% 2.4%
39. Virginia Beach, VA 9.3% 3.4%
40. Atlanta, GA 10.2% 3.1%
41. Colorado Springs, CO 8.7% 2.8%
42. Omaha, NE 8.3% 2.6%
43. Raleigh, NC 8.4% 2.7%
44. Miami, FL 9.1% 3.2%
45. Cleveland, OH 10.7% 4.1%
46. Tulsa, OK 8.8% 3.1%
47. Oakland, CA 12.3% 3.9%
48. Minneapolis, MN 9.6% 2.9%
49. Wichita, KS 7.4% 2.3%
50. Arlington, TX 9.1% 2.5%
     

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