Inflation is totally fixed, says government that lies for a living
The Trump administration says inflation is dropping, and if you’re not feeling that in your rent, grocery bill, or gas tank, clearly you’re not using the same calculator. This week’s Consumer Price Index report showed inflation easing. The problem is that it arrived late, is missing critical input data, and appears more like campaign material than a credible economic snapshot.
Economists were zooming in on one particularly important subset in the data as problematic: owners’ equivalent rent. This is a key part of calculating the inflation seen in the housing market.
UBS economist Alan Detmeister said the price changes in October for the OER appear to have been “set to zero.”
Evercore ISI’s Krishna Guha, digging deeper, said it appears the BLS “put in zero inflation in multiple categories” while calculating the OER for the approximately one-third of cities used.
“To the extent that it introduces a downward bias, the Fed would be mindful of the risk of taking the data on housing services inflation at face value,” he wrote in a Thursday note.
Economists across the spectrum say the numbers don’t add up, or at least weren’t available to be added in the first place. With energy and housing data delayed, the report leans heavily on assumptions, models, and political optimism. Critics are calling the move textbook gaslighting, while the administration insists it’s just “streamlining.” Sure, and “revenue-neutral tax cuts” are next.
It’s just your imagination that you are spending more at the grocery store. Sucks to be you says the orange man.
Of course OER being zero while purchase prices are still going up would make purchasing a house a worse investment, and evidence that we are in another housing bubble.