Home prices rise another percent according to Case-Shiller. The Fed does not even count that as inflation.
- 10-City: +0.93 percent
- 20-City: +0.99 percent
- National: +0.90 percent
CS National, Top 10 Metro, CPI, Owners' Equivalent Rent (OER)
- The above chart shows Case-Shiller home price index compared to inflation measures from the Bureau of Labor Statistics (BLS).
- OER is the mythical price the BLS calculates as if one would rent one's own house from himself, unfurnished, without utilities.
- Home prices are not directly in the CPI.
- OER is the single largest factor with a weight in the CPI of 23.51 percent. Rent of primary residence is 7.58 percent of the CPI.
CS National, Top 10 Metro, OER, CPI Year-Over-Year Percent Change
Three Measures of Inflation
- CPI is the Consumer Price Index
- PCE stands for Personal Consumption Expenditures.
- CSAI is a Mish calculation derived by substituting actual home prices in the CPI instead of OER.
Accounting for those paid expenses, PCE overweights health care whereas the CPI overweights housing.
Neither the CPI nor PCE directly includes home prices.
The BLS' rationale is that home prices are a capital good, not a consumer item.
Fed Twiddles ThumbsWith its myopic focus on consumer prices instead of all prices, the Fed blew yet another asset bubble.
Prices of all sorts have been skyrocketing. Ask anyone looking to buy a home what it feels like.
An asset bubble has been brewing for years with Fed Chair Jerome Powell twiddling his thumbs. More accurately, Powell wanted higher inflation to make up for the alleged lack of prior inflation.