Today we had a CPI update from the Bureau of Labor Statistics. Back in November 2024, I predicted the that official number would be 3 percent. (Keep in mind that official CPI does not include the cost of buying and paying ongoing costs for a house, the largest expense for the typical American family.) My reasoning for a persistently high number is that we have “leftover inflation” from union deals struck during raging Bidenflation, from businesses finally adjusting their prices to reflect the new reality, etc. Essentially the wage-price spiral.
Let’s see how I did!
The NYT today says official CPI is at 2.7 percent and 2.9 “core”.
Democrat-sponsored NPR says that my theory is garbage and all of the inflation was created by a single Republican:
Related:
- Can our government generate its own inflation spiral? (2022): Government is nearly half the economy and everything the government pays money for is indexed to inflation. Medicare, military and similar contracts, Social Security, pensions, employee salaries, etc.
Wait, seriously? A 1% rise in clothing prices is now considered inflation? Even the young girl in the background is skeptical of Scott Horsley’s take on this, just look at her expression!
Housing up 4%. Gasoline down 8%. Inflation targeting works.
Phil, even sleepy Joe and Hunter know that CPI includes the cost of buying and owning a home!! It’s called owners equivalent rent and comprises approximately one third of the basket. You can quible with how it’s calculated, but please…
Google AI: “ Owners’ equivalent rent (OER) is calculated by surveying homeowners on how much they would pay to rent their homes if they were not owners.”
(I.e., it has nothing to do with the cost of buying and maintaining a house. The typical house would rent at a massive loss. That’s partly due to the fact that a renter receives less value than an owner. He/she/ze/they must move if the landlord decides to stop renting the place out.)
“The typical house would rent at a massive loss”
Philip, you gotta be kidding me. Is typical house build starting Biden presidency? Typical house in my area rents at 6 times of typical monthly mortgage on 95% percent of initial house equity.
My parents old multi-story building yields 1.5 times of its estimated value in annual rent of its apartments. Even now, new homes are coming up for a soul purpose of AirBnB and other vocational rentals. I doubt that the owners are subsidizing temporary tenants.
Perplexed: if the typical house could be purchased and rented out at a profit there would be an offer from an institutional investor for a typical house. (There are some exceptions to this rule, of course, and institutional investors do own about 2% of single-family houses in the U.S.)
Let me know when https://rentprogress.com/new comes into your neighborhood and offers to buy everyone’s house!