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Housing is not included in the CPI I believe. https://economics.stackexchange.com/questions/4777/why-arent-house-prices-included-in-cpi https://economics.stacke

Housing is not included in the CPI I believe. https://economics.stackexchange.com/questions/4777/why-arent-house-prices-included-in-cpi https://economics.stackexchange.com/questions/4777/why-arent...

txsh 8y ago
You’re right. Housing isn’t a consumer good. But CPI does fail to measure inflation in consumer goods. I agree with op that there has been inflation for years.
elvirs 8y ago
CPI does not include rent but thats what more than half of average couples combined income is spent on. (Couple with full time $15 per hour jobs living in $2000 per month apartment)
- BenoitEssiambre 8y ago
  It includes rent just not house prices because house prices reflect investment (cost of consumption in the future) more than immediate consumption. House prices are converted to a kind of rent equivalent before being included in CPI.
- dragonwriter 8y ago
  > CPI does not include rent CPI includes both rent costs for actual rentals and imputed rent for owner occupied housing. [0] > but thats what more than half of average couples combined income is spent on. More like a quarter. [1] [0] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... [1] https://www.bls.gov/news.release/cesan.nr0.htm https://www.bls.gov/news.release/cesan.nr0.htm
api 8y ago
This is why I don't take the CPI seriously as a meaningful measure of inflation "on the ground." A key inflation metric that misses the major expenses of most people is IMHO borderline fraudulent. From what I've seen inflation has been very high for the past 20 years, but has not been evenly distributed at all. The deflationary pressures of offshoring, automation, technological advancement, and device convergence have caused tech, appliances, and gadgets to drop dramatically in price, creating the illusion in many sectors of low inflation or deflation. Offshoring and automation have also held wages down and kept consumer product and service prices from inflating much. The Internet has completely collapsed the price of media (music, TV, news, etc.) too. If you're looking at these things then inflation looks low. Tuition, health care, housing, and energy on the other hand have all inflated quite a bit. Housing is the big one. In some markets it's at the level of "real estate hyperinflation," rising to absolutely ludicrous 8-15X median income multiple prices. There's also been a lot of asset and stock price inflation and bubbles in things like trendy tech and cryptocurrencies can be considered secondary symptoms of a lot of money sloshing around. I've heard the present condition described as "in-deflation": deflation in everything you make and in therefore labor, inflation in everything you need such as health care and housing/rent. My hypothesis is that this results from an impedance mismatch between inflationary industrial-era economics and monetary policy and deflationary information-age pressures. Both high technology and globalization are extremely deflationary. We did a ton of QE to re-inflate the economy after 2008 but since high tech and globalization were such powerful deflationary pressures the only place all that money could go was real estate, stocks, and speculative bubbles. In any case they've pumped so much money into the economy we may now be about to see a little bit of wage growth.
- dragonwriter 8y ago
  > This is why I don't take the CPI seriously as a meaningful measure of inflation "on the ground." But it (that CPI doesn't including housing costs) is a completely false statement that can only be made (other than dishonestly) if one lacks even a basic knowledge of the matter being discussed.
dragonwriter 8y ago
Housing is part of the CPI [0], contrary to what lots of people in the thread are saying. Now, there are legitimate debates about the imputed rent method by which owner-occupied housing is included in the CPI, but housing is definitely part of the CPI. [0] https://www.bls.gov/cpi/questions-and-answers.htm#Question_10 https://www.bls.gov/cpi/questions-and-answers.htm#Question_1...

Housing is not included in the CPI I believe. https://economics.stackexchange.com/questions/4777/why-arent-house-prices-included-in-cpi https://economics.stackexchange.com/questions/4777/why-arent...

txsh 8y ago

You’re right. Housing isn’t a consumer good. But CPI does fail to measure inflation in consumer goods. I agree with op that there has been inflation for years.

elvirs 8y ago

CPI does not include rent but thats what more than half of average couples combined income is spent on. (Couple with full time $15 per hour jobs living in $2000 per month apartment)

BenoitEssiambre 8y ago
It includes rent just not house prices because house prices reflect investment (cost of consumption in the future) more than immediate consumption. House prices are converted to a kind of rent equivalent before being included in CPI.
dragonwriter 8y ago
> CPI does not include rent CPI includes both rent costs for actual rentals and imputed rent for owner occupied housing. [0] > but thats what more than half of average couples combined income is spent on. More like a quarter. [1] [0] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an... [1] https://www.bls.gov/news.release/cesan.nr0.htm https://www.bls.gov/news.release/cesan.nr0.htm

api 8y ago

This is why I don't take the CPI seriously as a meaningful measure of inflation "on the ground." A key inflation metric that misses the major expenses of most people is IMHO borderline fraudulent. From what I've seen inflation has been very high for the past 20 years, but has not been evenly distributed at all. The deflationary pressures of offshoring, automation, technological advancement, and device convergence have caused tech, appliances, and gadgets to drop dramatically in price, creating the illusion in many sectors of low inflation or deflation. Offshoring and automation have also held wages down and kept consumer product and service prices from inflating much. The Internet has completely collapsed the price of media (music, TV, news, etc.) too. If you're looking at these things then inflation looks low. Tuition, health care, housing, and energy on the other hand have all inflated quite a bit. Housing is the big one. In some markets it's at the level of "real estate hyperinflation," rising to absolutely ludicrous 8-15X median income multiple prices. There's also been a lot of asset and stock price inflation and bubbles in things like trendy tech and cryptocurrencies can be considered secondary symptoms of a lot of money sloshing around. I've heard the present condition described as "in-deflation": deflation in everything you make and in therefore labor, inflation in everything you need such as health care and housing/rent. My hypothesis is that this results from an impedance mismatch between inflationary industrial-era economics and monetary policy and deflationary information-age pressures. Both high technology and globalization are extremely deflationary. We did a ton of QE to re-inflate the economy after 2008 but since high tech and globalization were such powerful deflationary pressures the only place all that money could go was real estate, stocks, and speculative bubbles. In any case they've pumped so much money into the economy we may now be about to see a little bit of wage growth.

dragonwriter 8y ago
> This is why I don't take the CPI seriously as a meaningful measure of inflation "on the ground." But it (that CPI doesn't including housing costs) is a completely false statement that can only be made (other than dishonestly) if one lacks even a basic knowledge of the matter being discussed.

dragonwriter 8y ago

Housing is part of the CPI [0], contrary to what lots of people in the thread are saying. Now, there are legitimate debates about the imputed rent method by which owner-occupied housing is included in the CPI, but housing is definitely part of the CPI. [0] https://www.bls.gov/cpi/questions-and-answers.htm#Question_10 https://www.bls.gov/cpi/questions-and-answers.htm#Question_1...