For the 26th straight month dating to august of 2021, rent increased at least 0.4 percent. 
I repeat the core key theme for something like two years now. People keep telling me rents are falling, I keep doubting. The doubters have it correct again.
Rent of primary residence, the cost that best equates to the rent people pay, jumped 0.6 percent. Rent of primary residence has gone up at least 0.4 percent for 26 consecutive months!
All these “rents are falling” projections have been based on the price of new leases, but existing leases, vastly more important, keep rising.
With rents out of the way, Let’s tune into the BLS Report for the details.
CPI Month-Over-Month
- The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.4 percent in September on a seasonally adjusted basis, after increasing 0.6 percent in August
- The index for shelter was the largest contributor to the monthly all items increase, accounting for over half of the increase.
- An increase in the gasoline index was also a major contributor to the all items monthly rise. While the major energy component indexes were mixed in September, the energy index rose 1.5 percent over the month.
- The food index increased 0.2 percent in September, as it did in the previous two months. The index for food at home increased 0.1 percent over the month while the index for food away from home rose 0.4 percent.
- The index for all items less food and energy rose 0.3 percent in September, the same increase as in August.
- Indexes which increased in September include rent, owners’ equivalent rent, lodging away from home, motor vehicle insurance, recreation, personal care, and new vehicles.
- The indexes for used cars and trucks and for apparel were among those that decreased over the month.
CPI Month-Over-Month Shelter
Since September of 2021, rent and Owners’ Equivalent Rent (OER) have gone up at least 0.4 percent every month. Shelter is up 0.4 percent 24 out of 26 months.
OER is the price people would pay to rent one’s own home from themselves, unfurnished and without utilities. It’s an imputed number.
For the 34 percent of people who really do rent, these numbers are a killer.
CPI Year-Over Year
Year-Over-Year Numbers
- The all items index increased 3.7 percent for the 12 months ending September, the same increase as the 12 months ending in August.
- The all items less food and energy index rose 4.1 percent over the last 12 months.
- The energy index decreased 0.5 percent for the 12 months ending September.
- The food index increased 3.7 percent over the last year.
The downward trend in year-over-year CPI inflation is broken. It was 3.0 percent with much cheering in June. It’s now 3.7 percent for the past two months.
Year-over-year rent has increased at least 7.2 percent every month since September of 2022 and at least 4.2 percent every month since February of 2022.
To repeat, for the 34 percent of people who really do rent, these numbers are a killer.
On October 2, I asked When Will Record Housing Units Under Construction Ease Rent Inflation?
That’s really a trick question. For a better question, remove the lead “when” from the sentence.
I have been very skeptical, and rightly so, of falling rent prices for two years.
How the Fed Destroyed the Housing Market and Created Inflation in Pictures
For further discussion of the housing market, please see How the Fed Destroyed the Housing Market and Created Inflation in Pictures
Oh, poor babies! You complain about what the govt. does. It’s not the govt. – nearly all big govts. suck. It’s the voters, who return anyone who will cut taxes and increase spending. We got what we voted for, for centuries.
As I expected, now that the govt. and the fed have bankrupted the nation, we hear a lot of rhetoric about govt. overspending. They all overspend, and we greased the monetary skids by our majority voting habits. We are the ones responsible. Us. The Citizens. WE have destroyed America, with OUR greed. I am deeply ashamed at what the boomers, my generation, have left for future generations.
We could have had Ross Perot. We could have had Ron Paul. We elected men of poor character, and this is the result. We allowed the Constitution to be destroyed. We allowed the deficits all these years. We sowed the seeds of our own destruction. How can we keep blaming the ones we choose for the things they do? WE screwed it all up. We knew what they would do, and voted for more of the same, returning the same psychopaths time after time until they get so old they fall apart in front of our eyes, still ripping us off, and wallowing in their millions, accumulated at the expense of the rest of us. Now that the left has captured government as well as education, we have no one to blame but ourselves as we ask history to repeat itself once again.
Trouble is, with our fiat currency, the stage is set for a spectacular worldwide financial crisis. The 1930s were a fed-caused rolling depression around the world as nation after nation experienced it. I still believe that this time will be much more synchronized and will destroy our way of life, our currencies and our worldwide civilization. Civilizations tend to go up by the stairs and down by exfenestration. We are nothing unusual. Just an old, dying empire that forgot how it got rich in the first place.
So anyone who bought real estate pre-2020, the vast majority of real estate owned BTW, cut ther interst rate by a percent or two through a refinance, then raised rent to almost 2x 2020 prices. Explain that to me using an idea other than gouging or extreme greed. BTW Material prices and not 2x their Jan 2020 price, service wages are not 2x the Jan 2020 wage, and freight charges are not currently 2x their Jan 2020 rate, so those don’t fly as excuses.
Fear of continuing inflation might have had some effects.
The interest rate is going to keep rising. There is no way we can stop, the out of control spending on Medicare and Medicaid.
The Federal Reserve knows it will not be addressed by Congress.
Interest rates will decline as the Fed will become the buyer. They are already supporting the bond market by allowing banks to borrow at face value rather than sell. Eventually this will not be enough and then they will start QE again
Maybe eventually but history shows if you don’t get inflation under control it gets out of hand and that affects votes.
Resetting the target or changing the measure won’t help much, most people don’t believe the stats as it is. But who knows, it’s this belief that’s been supporting market’s so far, but the bond market is getting twitchy hence the recent bearish steepening that’s occurring.
Something is definitely afoot in the T-bill market.
The ugliest 30 year auction I’ve ever seen just occurred.
If I had to place a bet, I’d say that something is breaking somewhere. If we finish out the year with the VIX below 25, I’d be extremely surprised.
Without the FED buying and countries like Japan selling, we’ll have worse auctions in our future.
This will continue until the T-bill market fails to find bids.
Of course, there will always be bids for T-bills, but at what interest rate?
The elephant in the room, and what I think will break the markets, is the interest on the national debt, that will continue to reset higher and higher each month, cranking up the pressure on Congress.
Congress will eventually be forced to do something, but will it be to cut spending, raise taxes, both?
It will break the market for a long time.
Cutting spending will lose votes.
I do not believe China and Japan are selling. I am sure China isn’t.
But QT is in play and so is huge issuance.
But mostly people would rather that 5+% short term than gamble on long term.
It’s a time preference issue.
I’m certainly not going to buy 30 year T-Bills at 4.5%. The risks are huge.
What cannot continue can be postponed for a while, but not forever.
Congress will eventually be forced to deal with inflation and T-Bill rates.
I am convinced the Fed cannot stop what is coming, even if they timed rate hikes\cuts to perfection.
This is a Congressional problem, at least in the long term.
Eventually QE will be needed to control interest rates. Inflation can’t be solved by the FED as it is the government’s policy.
The answer will be Fed lowering cost of borrowing for Government and Government changing the inflation calculation. The change will creep up tax brackets and reduce indexed government payouts. It’s devaluation hidden. And it’s the only way out of the mess without admitting they created a mess
I sent in an order for a block of 20 year treasury bonds today. Yield is supposed to be 5.088%….
We have the most incompetent fed ever.
They should be all fired and brought to trial for treason, counterfeiting money and buying MBS, junk bonds, direct monetization of government debt, all crimes outside their mandates.
Along with all of the politicians in both parties
What? You mean the CPI MoM graph clearly shows that, at least for now, inflation is now slowly rising?
My goodness. What is the Fed to do?
Well, if you believe the CME guys, then the chances of the Fed keeping the FFR at 5.5% is @ 89.3% today.
How does that make sense? It doesn’t. The Fed isn’t done yet. They’re simply hoping that the UAW strike is going to slow the economy down in Q4. Will it? I have my doubts.
Nice job, JPowell. Inflation is STILL transitory in your mind.
I think they’ll hold. There’s a multi month delay between rate changes and effects. Unless inflation continues to be high over the next few months, they won’t raise rates much.
Time for my monthly Compound Dollar Devaluation Report, formerly called Compound Inflation Report. CPI is a Euphemism for Dollar Debasement. The dollar has become worth less ( two words), and requires more of them to purchase the same item.
Borrowed money is still in a surplus stage with more credit issued than speculative goods to purchase. I mention speculative goods because often these are essentials for survival and have a captured market. There are enough essential goods and actually no shortages. There is just a disruption of the equilibrium between the two by the way cheap money is used for speculation. Also the tax structure gives unearned income an advantage over that which is earned by labor. The problem is we cannot pay farmers not to grow money, like when there is an agricultural surplus.. We can only pay savers not to spend money by higher returns on savings. Money in savings is not lent out so does not contribute to inflation like other investment vehicles.There is no longer any fractional reserve lending because there is no longer a reserve requirement.
CPI, now called DOLLAR DEVALUATION INDEX or DDI for short is only calculated Annually to minimize the appearances of a devaluing currency. If September 2023 Compound Dollar Devaluation were calculated Biennially it would be 12.2%, stating that dollars devalued 12.2% and are worth that much less than in September, 2021. This is a .1% rate decrease from last months biennial Compound Dollar Devaluation of 12.3% . If September 2023 Compound Dollar Devaluation were calculated triennially, it would be 18.26%, stating that dollars devalued 18.26% and are worth that much less than in September, 2020. Coincidentally this months Compound Dollar Devaluation rate held steady and was unchanged from last months triennial Compound Dollar Devaluation of 18.26% . PRICES ARE STILL GOING UP, BECAUSE THE BASE YEARS ARE ALREADY INFLATED.
This month I am adding the Compound Dollar Devaluation numbers with 2007, 20012, and 2014 as base years.
Compound Dollar Devaluation with. 2007 as the base year: 49.56%
Compound Dollar Devaluation with 2012 as the base year: 29.60%
Compound Dollar Devaluation with 2014 as the base year: 28.00%
DDI does not truly reflect the sky rocketing prices of necessities. CPI often minimizes the true affects of inflation for political reasons and to lower COLA increases for Social Security and Public Employee Pensions.
Once again inflation is not simple inflation but is compound inflation. Triennial Compound DDI is 12.14% greater than FED targeted 2% CPI goals for this same 3 year time period.
It would take nearly 6 years of ZERO PERCENT CPI to arrive at what the FED’s targeted 2% CPI would have produced with Sept, 2020 as the base month. I call this important number the “ZERO PERCENT CPI NEUTRAL AFFECT ADJUSTMENT INDICATOR” comically called ZPCpiNAAI for short.
Unregulated Non Banks have taken borrowed money that was too cheap to pass up and used it to financialize our economy through speculation and stock buybacks rather than capital investment. It is estimated that 5% of GDP is spent on stock buybacks rather than wages, factories or infrastructure. Corporations borrow money for stock buyback with the intent of stabilizing stock prices when insiders with stock options cash out.This greed does absolutely nothing for humanity.
Much of inflation is speculative, and non productive. Whatever it takes to remove the speculative component out of the equation, and enhance the productive component in our economy is in order. The FED is reigning in unregulated Non Banks by raising interest rates, and making the price of greed more expensive. Keep up the good work.
Boom times are when society leverages borrowed money and lives beyond its means. Recessions are when society lives within its means. Boom times and inflation only benefit those with access to borrowed money first, everyone else suffers.
But, but, but…just think how more “valuable” those shares keep becoming!
Good work. Thanks for doing this, perhaps you can do a 5 year projection so we know where we might be 5 years from now around 2028.
Overall the CPI that the average person experiences is higher than the “reported” number. There are incentives for the govt economic politburo to under report true inflation. The wolf is guarding the chickencoop. The brain dead media accepts these numbers as gospel like these lap dogs do. No objectivity in their reporting. There are lies, there are damn lies, and then there are statistics.
I suspect the cola is just some number they decided on. Like most of the numbers reported by the gov’t. There are so many layers of adjustments and seasonal factors, it’s impossible to check their math.
More than expected by whom? Local rents are up 30%. Corrupt government statistics are fit to floor a bird cage.
At 4% y-o-y inflation, prices will double in 18 years.
Inflation is too high. The FED should stop treating banks as nonbanks. The FED should eliminate the payment of interest on interbank demand deposits. The FED should reimpose reserve and reserve ratios on banks so as to sterilize the surplus liquidity in the economy.
Link:
link to files.stlouisfed.org
“The FED should eliminate the payment of interest on interbank demand deposits. The FED should reimpose reserve and reserve ratios on banks so as to sterilize the surplus liquidity in the economy.”
I agree with your sentiments. However, as a wholly owned subsidiary of the member banks, the Fed will do no such thing. The US government made a deal with the devil when the Fed was formed and main street America is paying the devil its’ due for this. Being that the Fed is the vehicle which provides the ultimate backstop for the USG to deficit spend to infinity, I don’t expect anything to change for the better for the average American.
The American Bankers Association is the most powerful lobby in Congress. They had Congress eliminate Regulation Q Ceilings on the premise that the nonbanks are in competition with them.
See the Fed’s propaganda in their own “Bible”: by R. Alton Gilbert (retired senior economist and V.P. at FRB-STL) – who wrote: “Requiem for Regulation Q: what it did and why it passed away”, 2/1986 Review.
Dr. Gilbert asked the wrong question. His implicit and false premise was that savings are a source of loan-funds to the banking system. Gilbert assumed that any potential primary deposit (funds acquired from other DFIs within the system), were newfound funds to the banking system as a whole.
Thereby in his analysis, Gilbert also assumes that every dollar placed with a non-bank deprives some commercial bank of a corresponding volume of loanable funds.
See Steve Keen.
link to bit.ly
Gilbert asked: Was the net interest income on loans/investments derived from “attracting” these savings deposits (viz., outbidding other DFIs) greater than the interest attributable to the direct and indirect operating expenses of retail and this wholesale “funding”?
The question is not whether net earnings on CD assets are greater than the cost of the CDs to the bank; the question is the effect on the total profitability of the commercial banking system. Since all time deposits originate within the banking system, there cannot be an “inflow” of time deposits and the growth of time deposits cannot, per se, increase the size of the banking system.
This is not a zero-sum game. One bank’s gain is less than the losses sustained by the other banks in the System. The whole (the forest), is not the sum of its parts (the trees), in the money creating process.
Today the social security COLA was announced at 3.2%.
Given the above figures it means the government is screwing retirees for another year. That should make MPO45 happy – LOL
I do wonder what senior renters are going to do given rents rose WAY more than their COLA. At some point the government is going to have to step in there and either directly pay landlords, ban senior evictions or force rent control on senior occupied dwellings or a combination of all 3. The political party that promises this or something like this has a good chance of getting elected in 2024.
Social security adjusts based on wage increases not cpi
Typically incorrect Marxist.
A Social Security COLA is based on changes in the Consumer Price Index for Urban Wage Earners and Clerical Workers (CPI-W).
This index has nothing to do with Seniors cost of living.
It is a special index that excludes anything that has gone up in price.
(Just kidding about that last one.)
The Government will provide Seniors with a pup tent and a collapsible aluminum cooking kit, with Far Eastern recipes for dog, cat and rat.
There are these new retirement communities, often conveniently situated behind a big box store, where seniors can have a more direct relationship with nature and their neighbors. If your senior has dementia or other mental illnesses, they can seek treatment at one of many on site pharmacies.
Coming soon, to behind a Walmart near you!
If history is any guide, the democrats will promise it and then whatever they try to implement will be illegal. And the amounts will likely be proportional to the percent of visible light ones skin absorbs.
Lol. I’m not happy about people becoming poor but I’m on record for a long time that social security won’t help much over the next 10 years because of inflation caused by huge demand and lower productivity/labor force. You can’t have 100+ million people asking the rest to carry them, there is no free lunch.
The easy solution for seniors will be to move overseas but if everyone does it then US citizens will bring inflation to whatever host country they land. I think Portugal saw the writing on the wall and recently made changes to their NHR program essentially gutting it.
The whole system needs reform, its a giant sheet of glass that’s shattered and pushing it just a little bit harder will make the pieces crumble everywhere.
And one last point, people here worried about seniors being screwed when young people have become hopeless, kids get school lunches cancelled, horrible wage adjustment (why not talk about COLA for minimum wage?) and definitely no student loan forgiveness but seniors are the victims…boo hoo.
It’s also why young people are leaving too.
You are pretty much right, except for that part about the beer which really is free as long as you keep buying enough beer.
Not in IL. Governor J.B. Pritzker Diverts Rental Assistance Funds Meant for Citizens to House Illegal Immigrants.
link to thegatewaypundit.com
I’ve been traveling around California and Oregon since June staying in short term rentals and investigating rental markets in Los Angeles, Berkeley and Portland as well as a few smaller towns. Rents in these areas are slowly falling with increasing vacancies. I also looked at New York City and Asheville, NC in May and believe rents there are increasing. However, NYC has since killed Airbnb and I expect rents to fall there next year as more units hit the market.
Been watching craigslist for almost 3 years, and there are way more places available than before, and many look like they are worth the money. In 2020 it was almost impossible to find a habitable rental for under 4k.