The Federal Reserve would raise interest rates in the middle of a housing boom, leading to higher unemployment and reduced supply of housing.
The Fed excludes single family home sales because housing quality changes. In the 70s, houses had modest kitchens and bathrooms with tile counters and linoleum floors. These materials were cheap and durable. Today, fashion demands marble, travertine, and granite. Kitchens are massive rooms with big islands, and bathrooms are private oases. It’s hard to do an apples-to-apples price comparison it such a changing market, which is why houses are excluded.
The consumer price index measures a basket of consumer items, food, and energy. Volatile Energy is sometimes excluded to focus on “core CPI”. There’s a cool interactive if you want to see exactly what’s in the market basket, and how prices Chang month to month:
Isn't the index based on durable goods, food, energy...gas,electric, gasoline. If transportation costs go up all others will follow in an inflationary curve. Are you talking about stagflation like in the 70's?
Yes, CPI is based on those things, yes transportation can drive inflation, but retailers are slow to increase prices, as buyers will shift to other goods rather than pay higher prices, so those increases are buffered by price elasticity. Input changes have to be broad, deep, and sustained to move inflation.
Stagflation is curious. The Fed has been pumping unlimited dollars into the money supply for over a decade with very little impact on inflation. The economy was humming before the plandemic. It’s hard to say what’s going on under the current artificially imposed constraints. It’s certainly a shitshow.
If they were, then what?
The Federal Reserve would raise interest rates in the middle of a housing boom, leading to higher unemployment and reduced supply of housing.
The Fed excludes single family home sales because housing quality changes. In the 70s, houses had modest kitchens and bathrooms with tile counters and linoleum floors. These materials were cheap and durable. Today, fashion demands marble, travertine, and granite. Kitchens are massive rooms with big islands, and bathrooms are private oases. It’s hard to do an apples-to-apples price comparison it such a changing market, which is why houses are excluded.
The consumer price index measures a basket of consumer items, food, and energy. Volatile Energy is sometimes excluded to focus on “core CPI”. There’s a cool interactive if you want to see exactly what’s in the market basket, and how prices Chang month to month:
https://www.bls.gov/charts/consumer-price-index/consumer-price-index-by-category.htm
Isn't the index based on durable goods, food, energy...gas,electric, gasoline. If transportation costs go up all others will follow in an inflationary curve. Are you talking about stagflation like in the 70's?
Yes, CPI is based on those things, yes transportation can drive inflation, but retailers are slow to increase prices, as buyers will shift to other goods rather than pay higher prices, so those increases are buffered by price elasticity. Input changes have to be broad, deep, and sustained to move inflation.
Stagflation is curious. The Fed has been pumping unlimited dollars into the money supply for over a decade with very little impact on inflation. The economy was humming before the plandemic. It’s hard to say what’s going on under the current artificially imposed constraints. It’s certainly a shitshow.