Thursday, November 11, 2021

Why Yesterday’s CPI report was so important


 - by New Deal democrat

As promised, here is a link to my article, Why Yesterday’s CPI Report was such a Big Deal, over at Seeking Alpha.

I go into a great deal of detail parsing the report, particularly with regard to how the huge increase in house prices as has been recorded by both the Case Shiller and FHFA house price indexes, is now bleeding over into “owner’s equivalent rent,” the CPI’s official measure of housing inflation, and which is over 1/3 of the entire consumer inflation measure.

This in turn has implications for “real” wages and for “real” consumer spending, which in turn have big implications for the economy as a whole, 2/3’s of which is precisely that consumer spending.

I explain why this means that the consumer picture has darkened, and what I will be watching for to see if it spreads to the producer or financial sectors.

As usual, clicking over and reading should be helpful to you in understanding the current economy, and pay my lunch bill.