Calculate the true devaluation of the dollar. Compare the Official Government CPI rate against the ShadowStats 1980-based alternative methodology side-by-side.
Recent Comparisons
How to Interpret Results
Why do these numbers differ?
This tool contrasts the Official Consumer Price Index (CPI) against the ShadowStats methodology, which attempts to calculate inflation the way the US government did in 1980.
The Divergence Explained
Since 1980, the Bureau of Labor Statistics has altered how inflation is calculated to account for “consumer substitution” (buying cheaper items when prices rise) and “hedonics” (quality improvements).
- Official View (Green): Assumes that if prices rise, you maintain your standard of living by switching to cheaper alternatives.
- Shadow View (Red): Assumes you want to buy the exact same goods you bought yesterday. This is often called the “Cost of Goods Standard” rather than the “Cost of Living Standard”.
The Difference column effectively shows how much the definition of inflation has changed over time.
The Math Behind It
The calculator runs two parallel equations.
1. Official Calculation: Uses the standard BLS Consumer Price Index ($CPI$). $$ Value_{Real} = Value_{Start} \times \frac{CPI_{End}}{CPI_{Start}} \times (1 + Divergence)^{Years} $$
2. Shadow Calculation: Reconstructs the index by adding back the methodology changes (substitution bias, hedonics) that were removed in 1980 and 1990.