4 ms·

That is incorrect. Here you can see that the US CPI-U includes shelter which is running at 3.5% inflation https://www.bls.gov/news.release/cpi.htm https://www.b

by guelo 8y ago

That is incorrect. Here you can see that the US CPI-U includes shelter which is running at 3.5% inflation https://www.bls.gov/news.release/cpi.htm https://www.bls.gov/news.release/cpi.htm

mistermann 8y ago
> That is incorrect. Maybe, show me your math proving that number is correct. I can't speak for the US, but in Canada the housing component of the CPI has utterly no connection to actual observed costs of owning or renting, at the national level as well as the municipal level. You don't have to take this as a fact (I can't really prove it if the government doesn't share their data or calculations, can I), but moreso something to think about in the formation of your world view.
- nradov 8y ago
  Don't be lazy. The BLS publishes their methodology in detail. What specific part of it do you disagree with?
  - mistermann 8y ago
    "I can't speak for the US..."
  - mistermann 8y ago
    https://www.bls.gov/cpi/factsheets/common-misconceptions-about-cpi.htm https://www.bls.gov/cpi/factsheets/common-misconceptions-abo... "The CPI used to include the value of a house in calculating inflation and now they use an estimate of what each house would rent for -- doesn't this switch simply lower the official inflation rate?" "No. Until 1983, the CPI measure of homeowner cost was based largely on house prices. The long-recognized flaw of that approach was that owner-occupied housing combines both consumption and investment elements, and the CPI is designed to exclude investment items. The approach now used in the CPI, called rental equivalence, measures the value of shelter to owner-occupants as the amount they forgo by not renting out their homes. The rental equivalence approach is grounded in economic theory, receives broad support from academic economists and each of the prominent panels, and agencies that have reviewed the CPI, and is the most commonly used method by countries in the Organization for Economic Cooperation and Development (OECD). Critics often assume that the BLS adopted rental equivalence in order to lower the measured rate of inflation. It is certainly true that an index based on home prices would be more volatile, and might move differently from other CPI indexes over any given time period. However, when it was first introduced, rental equivalence actually increased the rate of change of the CPI shelter index, and in the long run there is no evidence that the CPI method yields lower inflation rates than some other alternatives. For example, according to the National Association of Realtors, between 1983 and 2007 the monthly principal and interest payment required to purchase a median-priced existing home in the United States rose by 79 percent, much less than the rental equivalence increase of 140 percent over that same period." Now, one can certainly make a reasoned argument that this is a reasonable change to tracking shelter costs in the CPI, but it is a fact that housing purchase prices are not included in CPI calculations for shelter, and it is also a fact that the majority of people choose to own their home, for very good reasons. https://tradingeconomics.com/united-states/home-ownership-rate https://tradingeconomics.com/united-states/home-ownership-ra... "Home Ownership Rate in the United States remained unchanged at 64.20 percent in the first quarter of 2018 from 64.20 percent in the fourth quarter of 2017. Home Ownership Rate in the United States averaged 65.24 percent from 1965 until 2018, reaching an all time high of 69.20 percent in the second quarter of 2004 and a record low of 62.90 percent in the second quarter of 1965." And again, I don't know about the US, but in Canada it is a little known fact that our government "just so happens" to choose their representative rental properties for CPI calculations such that the numbers they produce don't even remotely resemble the actual increase in renting costs. The fact of the matter is, in the current environment of skyrocketing housing costs in much of the Western world, the CPI does not reflect actual cost of living increases for the citizens whose tax dollars pay the salaries of the people printing the numbers, and for statistical agencies to dismiss this by simply pointing at some technical "reason" tucked away on a website (that almost no one knows about) is a failure of democracy.
    - nradov 8y ago
      Housing purchase prices are largely an investment, not a cost. Including purchase prices in the CPI would be just as silly as including 401(k) contributions. If all goes well you're going to get that money back plus gains.
      - mistermann 8y ago
        > Including purchase prices in the CPI would be just as silly as including 401(k) contributions. If 401k contributions were deemed by 60% of Americans to be a ~necessary part of their life. And whether or not you're going to get it back....you may, yes, but then again, you may not, in a very big way. For example, perhaps there's a gigantic bubble going on. It's a bit of a philosophical question really - is the government's role to inform people of reality, or to shape their perception of reality. At least a partial role of the CPI is to measure inflation, and reflect the real world costs to real world citizens. If not, then why fund this department? Would you be philosophically opposed to publishing two CPI numbers: one as is (that uses estimates), and one that uses actuals that are consistent with the actual economic environment citizens experience according to the way they have chosen to arrange their lives?
        nradov 8y ago
        Yes I would be philosophically opposed to the government publishing CPI numbers that include durable investments of any kind. CPI should only be consumption. People can always choose to rent instead of buy.
        mistermann 8y ago
        60% of people choose to buy for reasons that are their own business. The question is whether two numbers should be printed, so taxpayers know what is actually happening in their economy. So, you are supporting deceit. Which is your choice, of course.

by guelo 8y ago

That is incorrect. Here you can see that the US CPI-U includes shelter which is running at 3.5% inflation https://www.bls.gov/news.release/cpi.htm https://www.bls.gov/news.release/cpi.htm

mistermann 8y ago

> That is incorrect. Maybe, show me your math proving that number is correct. I can't speak for the US, but in Canada the housing component of the CPI has utterly no connection to actual observed costs of owning or renting, at the national level as well as the municipal level. You don't have to take this as a fact (I can't really prove it if the government doesn't share their data or calculations, can I), but moreso something to think about in the formation of your world view.

nradov 8y ago
Don't be lazy. The BLS publishes their methodology in detail. What specific part of it do you disagree with?
- mistermann 8y ago
  "I can't speak for the US..."
- mistermann 8y ago
  https://www.bls.gov/cpi/factsheets/common-misconceptions-about-cpi.htm https://www.bls.gov/cpi/factsheets/common-misconceptions-abo... "The CPI used to include the value of a house in calculating inflation and now they use an estimate of what each house would rent for -- doesn't this switch simply lower the official inflation rate?" "No. Until 1983, the CPI measure of homeowner cost was based largely on house prices. The long-recognized flaw of that approach was that owner-occupied housing combines both consumption and investment elements, and the CPI is designed to exclude investment items. The approach now used in the CPI, called rental equivalence, measures the value of shelter to owner-occupants as the amount they forgo by not renting out their homes. The rental equivalence approach is grounded in economic theory, receives broad support from academic economists and each of the prominent panels, and agencies that have reviewed the CPI, and is the most commonly used method by countries in the Organization for Economic Cooperation and Development (OECD). Critics often assume that the BLS adopted rental equivalence in order to lower the measured rate of inflation. It is certainly true that an index based on home prices would be more volatile, and might move differently from other CPI indexes over any given time period. However, when it was first introduced, rental equivalence actually increased the rate of change of the CPI shelter index, and in the long run there is no evidence that the CPI method yields lower inflation rates than some other alternatives. For example, according to the National Association of Realtors, between 1983 and 2007 the monthly principal and interest payment required to purchase a median-priced existing home in the United States rose by 79 percent, much less than the rental equivalence increase of 140 percent over that same period." Now, one can certainly make a reasoned argument that this is a reasonable change to tracking shelter costs in the CPI, but it is a fact that housing purchase prices are not included in CPI calculations for shelter, and it is also a fact that the majority of people choose to own their home, for very good reasons. https://tradingeconomics.com/united-states/home-ownership-rate https://tradingeconomics.com/united-states/home-ownership-ra... "Home Ownership Rate in the United States remained unchanged at 64.20 percent in the first quarter of 2018 from 64.20 percent in the fourth quarter of 2017. Home Ownership Rate in the United States averaged 65.24 percent from 1965 until 2018, reaching an all time high of 69.20 percent in the second quarter of 2004 and a record low of 62.90 percent in the second quarter of 1965." And again, I don't know about the US, but in Canada it is a little known fact that our government "just so happens" to choose their representative rental properties for CPI calculations such that the numbers they produce don't even remotely resemble the actual increase in renting costs. The fact of the matter is, in the current environment of skyrocketing housing costs in much of the Western world, the CPI does not reflect actual cost of living increases for the citizens whose tax dollars pay the salaries of the people printing the numbers, and for statistical agencies to dismiss this by simply pointing at some technical "reason" tucked away on a website (that almost no one knows about) is a failure of democracy.
  - nradov 8y ago
    Housing purchase prices are largely an investment, not a cost. Including purchase prices in the CPI would be just as silly as including 401(k) contributions. If all goes well you're going to get that money back plus gains.
    - mistermann 8y ago
      > Including purchase prices in the CPI would be just as silly as including 401(k) contributions. If 401k contributions were deemed by 60% of Americans to be a ~necessary part of their life. And whether or not you're going to get it back....you may, yes, but then again, you may not, in a very big way. For example, perhaps there's a gigantic bubble going on. It's a bit of a philosophical question really - is the government's role to inform people of reality, or to shape their perception of reality. At least a partial role of the CPI is to measure inflation, and reflect the real world costs to real world citizens. If not, then why fund this department? Would you be philosophically opposed to publishing two CPI numbers: one as is (that uses estimates), and one that uses actuals that are consistent with the actual economic environment citizens experience according to the way they have chosen to arrange their lives?
      - nradov 8y ago
        Yes I would be philosophically opposed to the government publishing CPI numbers that include durable investments of any kind. CPI should only be consumption. People can always choose to rent instead of buy.
        mistermann 8y ago
        60% of people choose to buy for reasons that are their own business. The question is whether two numbers should be printed, so taxpayers know what is actually happening in their economy. So, you are supporting deceit. Which is your choice, of course.