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The chart excludes housing. It's pointless.

• paxys 5y ago
  Says who? CPI does include housing.
  • kelseyfrog 5y ago
    CPI includes housing as "Owners' equivalent rent of primary residence (OER)". If that inspires confidence in anyone, please, I'd like to hear how.
    • paxys 5y ago
      Standard internet discourse. Numbers are bad - "See everyone, things are fucked. I told you so." (which is what this post is about) Numbers are good - "Meh, I never trust the underlying data anyways. It is all meaningless."
      • kelseyfrog 5y ago
        I was being a snark, but I would still genuinely like to hear why someone would feel confident in the method.
        • Aunche 5y ago
          It's the consumer price index. Rent is consumed. A house is an asset. You can sell it at a profit. Your intuition is correct in that it's not quite that simple in the real world. Housing is already the least liquid asset, and people get an emotional attachment to their homes, so they often die without cashing out on their homes. As a result, they feel poorer than they should as suggested by CPI. IMO, the problem isn't the CPI. The market is just fundamentally distorted because the government pumps money into real estate into subsidized loans.
      • harry8 5y ago
        A. Here's a wildly understated measure (like for like equivalent cost of housing systematically under-estimates inflation as defined as the increase in what you have to spend). This other accurately measured thing (wages) is not keeping up even with that biased measure. Argument: It sort of is keeping up with the real thing (what you have to spend because we'll just take cpi) if you squint at a particular period? Actually it isn't, it's still being systematically underestimated. CPI is a crap measure of what people actually face in increase of what they have to spend. What you can actually buy, the purchasing power of wages has not been going up. People aren't being fooled into be angry and bitter. Talk to them. Listen to what they say about their constraints in life. Ideally find some people you like for whom you can feel empathy with their situation.
    • Leherenn 5y ago
      I assume you are complaining about house prices not being directly included in the CPI? I don't know about the exact methodology, but the concept makes sense to me. "Everyone" is buying food "everyday", so it's sensible to have, say, the price of bread included directly. On the other hand, "no one" is buying houses "everyday"; what people are buying everyday is housing, i.e. how much do you spend to have a roof over your head. This is correlated to house prices, but not that strongly. If you bought your house 30 years ago and the mortgage is paid, it doesn't matter whether houses next to you are suddenly worth 50% more, you're still going to pay the same for housing (except maybe due to taxes). If you're renting, it is going to track house prices, but not perfectly. Apparently, in the SF area, the average rent has actually slightly decreased since 2019, while the average house price has increased. All of this means that while the average house price might have increased by x%, the average person (as in, if you aggregate those already owning a house, those renting, those buying houses now, ...) is not spending x% more on housing, so it makes sense to use a metric that follows the latter and not the former. Yes, if you're looking at buying a house, it means CPI is not very accurate for you, but then a single number is never going to perfectly fit everyone.