Rent and Healthcare go different ways in 2026. Plus there are huge timing issues.
Category November 2025 CPI Weight (%) Approximate PCE Weight (%) Key Notes on PCE vs. CPI Difference Shelter
(OER + Rent)33.85 ~16 Much lower in PCE Food 13.66 ~13.5 Very similar Health Care Services 6.78 ~17 Much higher in PCE Health Care Commodities 1.5 ~3.5 Higher in PCE Energy 6.32 ~5 Lower in PCE Other ~36.89 ~45 PCE spreads more to recreation, financial services Total 100.00 100.00
Note: Unlike the BLS CPI, the BEA does not publish PCE percentage weights monthly and the changes are more dynamic. Those are estimates based off consumers expenditures.
| Category | Approx. PCE Weight (%) | Hypothetical YoY Price Change | Contribution to PCE (pp) | Notes |
|---|---|---|---|---|
| Shelter Excluding Utilities | 16 | 0 to 2% | 0 to 0.32 PP | Big disinflation driver |
| Health Care Services | 17 | +10% | +1.7 PP | Dominant upward driver |
| Net Shelter + Health Services | +1.7 to 2.0 PP |
Recent Estimates, Goldman and Zillow, Per Grok
- Goldman Sachs (Dec 2025 update): PCE housing inflation (which includes shelter) expected to slow to 2.1% YoY by December 2026 (from ~3.4% YoY in Dec 2025). Monthly pace: ~0.16% m/m by end-2026. They cite rapid multifamily supply, rising vacancies, and subdued new lease growth as reasons shelter’s contribution to core PCE shrinks to ~0.4 ppt by end-2026 (vs. ~0.7 ppt recently). This aligns with broader core PCE cooling to ~2.1%.
- Zillow Research (Dec 2025 CPI forecast update):
- Owner’s Equivalent Rent (OER, major CPI shelter component): +2.9% over 2026 (half-point slowdown from 2025’s ~3.4-3.35%).
- Rent of Primary Residence: +2.0% over 2026 (full-point slowdown from 2025).
- Multifamily/apartment rents: Essentially flat nationally (~+0.3% in 2026), with single-family rents up ~2.3%. Exceptions like NYC could see acceleration due to shortages.
Potential Discrepancy
If we assume a 10 percent rise in health care and a generous 2 percent decline in shelter, the net impact on the PCE would be 1.7 health care minus 0.32 = +1.38 percentage points.
For the CPI, a 10 percent rise in health care and a generous 2 percent decline in shelter, would net 0.678 health care minus 0.677 for shelter (rent + OER) resulting in a wash but only for the BLS.
Although ACA is not as important as Medicare plus corporate plans, inaction could add another 0.3 to 0.5 percentage points to the PCE.
This is a tough estimate because over a million dropped out and many others switched to bronze plans.
We are looking at a setup where difference between the CPI and PCE may be as high as 2.2 percentage points.
This estimate assumes Congress will not do something about Obamacare premiums. There are compromises in the Senate, but Trump recent said he may veto them. Momentum has also stalled.
Perhaps this is due to the fact that only 1.5 million or so have dropped out. But more are likely to do so over the course of the year. Plus many are switching to Bronze plans.
Regardless, despite the surge in support for a compromise, it now appears I got this wrong in the end.
KFF estimates Obamacare (ACA) premiums will rise about 26 percent if Trump signs a bill and 114 percent if not.
Timing of 2026 Health Care Impacts
- CPI: Based on 2026 projections, significant increases in health insurance premiums due to expiring tax credits will likely hit the CPI in a spread-out manner rather than all at once, owing to the Bureau of Labor Statistics (BLS) calculation methodology. While consumer “rate shock” is expected to be immediate upon policy renewal, the CPI, which measures the “retained earnings” of insurers, uses a smoothed, 2-year moving average updated semi-annually.
- PCE: The PCE directly tracks premiums. When premiums jump on January 1st, that new, higher cost will be reflected in the January PCE data (usually released in late February/early March).
| Component | Main Reset Date | Nature of Change | PCE Appearance Timing | Front-Loading in 2026? |
|---|---|---|---|---|
| Medicare (Part B) | January 1, 2026 | ~10% premium increase | Sharp in Jan data; visible Feb release onward | High (YoY peak early) |
| ACA Marketplace | January 1, 2026 | ~114% net premium jump | Step-up in Jan; strong Q1 YoY | Very high |
| Employer Corporate | Mostly Jan 1, 2026 | ~6.5–9.5% overall | Spread Q1–Q2; some smoothing | Moderate |
Timing issues will cause an immediate to perhaps a 3-month phase-in to PCE for corporate plans. The CPI will be extremely lagging.
Year-over-year discrepancies between the CPI and PCE rate to be huge.
We will find out within a month whether this view is accurate.
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January 20, 2026: Might the Next Interest Rate Move by the Fed Be a Hike?
It’s time to discuss the real possibility of a renewed surge in inflation.
For those that own a home and pay for their own healthcare insurance the cost is skyrocketing. Healthcare insurance, homeowners insurance, home repairs, and property taxes, are all going up rapidly. The decline in rents doesn’t help them. Of course I am happy that someone is getting a break.
All of the inflation related “estimates” are figments of a distorted and demented mind whose priorities are questionable. NONE of the are accurate and consumers are aware of this fact.
ram prices, car prices, rental prices, and the external costs of never owning and having to subscribe will not be reflected in the CPI.
In the new era of alternative facts how can we trust any government numbers anyway? Trump assures us the economy is doing well, when it’s self evidently imploding before our eyes.
the affordability president…
Q: What goals do you have for ’26 in Congress for your agenda?
TRUMP: I have great executive orders. Like, water coming out of a sink. The water wouldn’t come out. They had all sorts of restrictions. I took them off. Straws. They don’t have to be paper anymore. I’d like to have all that confirmed.
Inflation under Biden reached at least 8%. Trump has lowered inflation below 3%.
He is trying to undo the damage from the Birdbrain Biden regime.
Crude oil is above $60. Now what?
And the CRB commodity index is hitting new highs. The FED’s operating procedure is biased towards accommodation.
Most of the people who switched to ACA Bronze plans are going to do everything in their power to avoid going to the doctor.Each medical visit will incur out-of-pocket costs at full insurance rates, which are actually more expensive than uninsured cash rates at most doctors offices. It is going to be a very profitable year for insurers, as people completely avoid medical care.
Follow the money. I want to know what the “non profits” like Blue Cross Blue Shield in Jacksonville, Florida pay their executives as well as who they pay as far as subcontractors, as in any conflicts of interest (i.e., family of executives own the subcontractors).
In addition to Minnesota, lots of fake healthcare and EBT business are now being discovered in Maine. One should make a study about fraud in the USA at this point (and include ethnic groups for entertainment purposes), and how this widespread fraud affects the CPI when it comes to housing and rent. One side consequence is that Government stats on healthcare/poverty are all false.
Also, whether it is prudently advisable at this point to invest in fraud or not. It seems that fraud outperforms any investment in the USA, and local authorities are defending it more than any other institution or legal principle in the country. So it’s a safe, government-protected investment. Al Capone would say “we used to work hard for such money in my days”.
Maybe even change the definitions of meritocracy and deserved success to include large-scale fraud. Only now I understand what they meant by “sanctuary areas”. Sanctuaries for fraudsters.
Trump cannot advance his aggressive positions, not only because of tactless presentation (to say the least), but also because he seems to be representing a country of crooks and their ideological accomplices State Governors in MN, OH, ME, CA, IL and perhaps others.
The next time any American lectures me on hard work, honesty and success, I’ll make sure to have a 100-large case list for him.
Many countries in Europe are having the same type of fraud from the same sort of people. It’s only now it is being suspected that the extent accounts for double-digit percentage levels of the state appropriations for various services. In plain language they think they are getting ripped-off royally too.
Back in Greece in the 80s, a phrase was populated in high schools, “only suckers work“. Not by the teachers, but by the students who were repeating their parents. The new motto across the country was “get hired in the public sector“. Then the EEC (currently EU) started funding Greece, it became “get a government contract“. As another commentator said a couple weeks ago, most of his friends were doing business with the US government. Now, the normal American way would be to try to overstate the value of your cow, with the paperwork legitimate. The Greek way was through fake invoices that the EEC was paying. Corrupt officials were stamping the invoices as checked and that they inspected the purchased equipment.
Nobody said much, because i) the percentage of the population involved was huge, ii) the vast majority stole small amounts.
Why was it wide spread? Modern Americans don’t know that most economic endeavors in old cultures spread through word of mouth. That’s why you have lots of Greek restaurants in the USA (not in Greece!), lots of dry cleaners by the Chinese, etc. If one finds a trick, the rest are copying it. That’s how things work in ethnic communities.
If Americans keep being “naïve Scandinavians” (things that surprise old culture people when they visit America, Ireland, Japan, and Scandinavian countries, are houses without fences and unsupervised stores and products) their countries will be looted. Well, it’s already on, but to such an extend that even people from older countries are having a problem digesting the information. Their kids can’t move out of the house because the government subsidizes the rent of “the others”, pricing them out of options. And then a price survey is done, and statistics are drawn.
That’s why I’m saying – one should make a study on how fraud affects rent prices per area.
Those who commit fraud gain nothing.
“Woe unto the defrauders: Those who when they take the measure from mankind demand it full, But if they measure unto them or weight for them, they cause them loss. Do such (men) not consider that they will be raised again Unto an Awful Day, The day when (all) mankind stand before the Lord of the Worlds?”
Maine also has a big Somali population. I’m shocked – shocked – that it’s also rife with fraud.
By one Bill Melugin on twitter:
“In the wake of the MN fraud scandal, Virginia Democratic state rep Jessica Anderson has introduced HB1369, a one page bill that would ban VA from requiring nonprofits to verify whether people are eligible for certain federal taxpayer benefits“.
Or as Charles “Lucky” Luciano said, “I joined the wrong mob!”
Will we ever see any proof of the somali fraud rings or will that come after the gestapo is finished?
Even Tim Walz admitted it, concurrently serving some word salad that they’ll get to the bottom of it and that he generally trusts Minnesotans. The DOJ issued subpoenas on Tim Walz, Jacob Frey and some other officials. And whistleblowers (democrats!) had been punished by Walz, which was the slap in the face, and now he’s saying “he knew nothing about it”.
And if you Google and YT search you’ll find videos with whistleblowers and written proof all over. The Medicare fraud alone is astounding. In Maine they excelled on the “healthcare for the elderly” fraud business.
Washington State seems to be a basket case too, no wonder they elected a random unknown and unemployed street person as Seattle’s mayor – she’ll do what they tell her and keep quiet during the looting, in exchange for the first salary she ever had.
You know, Gestapo existed in European cities during the occupation… but so did the black market crooks, charging incredible amounts for food and basic items (too bad Hollywood never made a movie about the occupation outside of France, which was very mild because it was a tourist destination for Wehrmacht officers). The black market operatives were all locals, and they were so bad, even the Gestapo was against them unless they were paid to leave them alone. The fact that the Gestapo was bad, doesn’t mean that the other thieves were good. Most of the locals were more afraid of them than of the Germans.
The French did some good movies about the occupation and some very good comedies.
Yeah, the movies were good, but the occupation in France (and Netherlands and Denmark) was mild compared to other countries, some of their youth had even joined the SS and had their own units. Denmark had 6,000 Waffen-SS volunteers.
In Athens, on the other hand, the garbage trucks were picking up bodies dead from starvation, in the thousands. The price for a sack of flour and a bottle of olive oil in the black market was an exchange for a sewing machine or full-set furniture. Your house would be emptied for the price of meals for one week.
In France it was like a change of government with a very authoritarian one, but in Poland and Greece it was like an invasion of aliens against humans.
In Davos Trump also stated that his goon squad would continue to grow and violate our constitutional rights.
Stopping, searching and Killing Americans in the streets is simply another nightmarish feature of the Trump regime.
34 Felonies and an admitted pederast. Who voted for this vicious swamp creature?
Seems like most of the people that voted for Trump are decent and ordinary, they just did it because he was put forth as the “conservative” values choice, whether there is much truth to that or not, and they couldnt conceive of voting for a third party candidate.
in Davos…
Trump: “If I want to really crush the housing market, I could do that so fast, and people could buy houses … I always say, look, you know I can crush the hell out of the market, we can drop interest rates to a level — and that’s one thing we do want to do.”
Trumps antics could be considered hysterical ~ if it were a comedy show.
Interest rates have risen since August, despite three Fed rate decreases and the switch to QE.
Trump can only bomb and intimidate, threaten and kill. Interest rates are going up because no one can trust a word he says. Plus multi trillion dollar deficits he runs only encourage price increases.
Young people are priced out and the problem will not be solved by lower interest rates. Lower them and the price of the house goes up. Only lower house prices will do. Too bad for the Boomers though.
So with the switch to bronze plans, how do either of these account for new out of pocket spending because of high deductibles?
“This is a tough estimate because over a million dropped out and many others switched to bronze plans”.
The CPI is supposed to incorporate hedonic adjustments…i.e. changes in quality. This behavior would result in a decline in quality and therefore an upward adjustment in prices. The BLS picks/chooses which items deserve hedonic adjustments. The retained earnings method probably doesn’t incorporate hedonics, even if it did they probably would choose to not hedonic adjust in order to understate “street” inflation even more.
Does the PCE just use a weighted average of spending? If so then it’s measure would not take into account consumers just taking on more risk and less/no coverage(lower quality).
Excellent article BTW !!
Good article! Imagine if Social Security COLA were tied to PCE. It’s hard to imagine rate cuts with a rising PCE. As far as health insurance, people are forced to pick “insurance” that only covers catastrophic incidents.
I have been pondering this myself. If insurance companies lose 1.5 million customers that were paying $450/month = $675 million dollars that need to be made up somewhere, perhaps increase premiums to the remaining customers or take losses. Not good either way.
The guy in the YT video below is a medicare expert and he posted an interesting video of the cost of an appendicitis (his own daughter) and what medicare patient would pay. Very interesting and unsustainable.
https://www.youtube.com/watch?v=J6lWRSHzhRM
Swedish pension giant Alecta just dumped $8.8 billion in US government bonds this morning.
Is that the reason why Swedish 10-year govt bonds just hit a 24-month high in yield?
Given that there are 30 trillion in marketable treasuries and somewhere around 1 trillion is traded on an average day that somehow doesn’t seem significant.