Would you believe believe year-over year inflation is barely over two percent? That’s the Truflation claim as of April 17, 2024. 
The above chart is courtesy of the Truflation Dashboard. Here’s the Truflation Methodology.
Truflation provides a set of independent inflation indexes drawing on as many as 30+ data sources and 13+ million prices of goods and services at a country level. These indexes are released daily, making them one of the world’s most up-to-date and comprehensive inflation measures.
OK, but what are the weights and how good are the sources.
Truflation Weights
Truflation weights housing at 23.2 percent.
BLS Weights
The above chart is as of March 2024. There’s no need to break it down further because I want to focus on housing.
The BLS has housing at 36.18 percent. The Truflation weight is 23.2 percent. Truflation’s rate is more than a bit questionable.
Half of American Renters Pay More Than 30% of Income On Housing
PBS reports Half of American Renters Pay More Than 30% of Income On Housing
Rental prices are unaffordable for a record number of Americans, with half of all renters paying more than 30 percent of their income on rent and utilities. That’s according to a new report from Harvard’s Joint Center for Housing Studies that examined 2022 census data.
Read that carefully. That 30 percent figure is from 2022. The average was 25 percent. Rent calculators use 30 percent as an average. I suspect it is now well above 30 percent, but let’s use 30 percent.
As of the third quarter of 2023, the Census Department had the Homeownership Rate at 65.7 percent. That means 34.3 percent of people rent.
The weight for people who rent should be .343 * .30 = 0.1029. Thus, the overall weight for renters should be something like 10.29 percent.
Truflation vs BLS
The above graph from the Truflation March 2023 report BLS Housing Data Discrepancies & Adjusting Our Model
The majority of categories in the BLS estimate were broadly consistent with our own price change predictions. The only outlier was the housing category, where estimates were wildly different from other reputable industry sources whose data we rely on.
The BLS has a particular way of calculating the costs of housing, or “shelter”, which is different from other sources. Firstly, it considers rent and housing costs to be one and the same. In other words, it assumes that homeowners will be paying an equivalent amount in mortgage as renters would pay for the same property, adjusted for size and location. The only difference is that for homeowners, this figure strips out utilities. The utility costs of rental properties are also included if they are part of the rent paid by the tenant. This is known as the Owner’s Equivalent Rent (OER).
With this method, the BLS intends to measure the cost of the consumption value of a home, rather than the changes in value of a house or the actual monthly mortgage repayments. This method has obvious flaws, since there are likely to be a significant number of homeowners who have paid off a portion of their mortgages. For these individuals, the costs would be lower than for property renters.
Meanwhile, when it comes to tenant rent, the BLS includes any government subsidies paid to the landlord in the total cost of the rent, which is also likely to skew the data to the upside. The BLS does take some measures to keep its sample representative, however. It adjusts for the quality of the properties it observes based on age, neighborhood improvements and physical renovations to the home, and it replaces one-sixth of the sample each year.
Truflation does not count rent subsidies. If the cost of rent goes up 10% but the government pays all of that, Truflation says there was no price increase.
Logically, that is ridiculous.
Second and more important, Truflation looks at mortgage rates. Those are relatively constant so Truflation essentially wipes out mortgages except for new home buyers.
Heaven forbid Truflation look at things from the point of view of a renter looking to buy a home facing 7.5 percent mortgage rates on top of housing prices that have doubled since 2020.
The BLS makes the same mistake on grounds that a home is a capital expense not a consumer expense. This has gotten the Fed in numerous messes including the one right now where nearly everyone with a mortgage is trapped in their home unwilling if not unable to move.
Inflation goes well beyond consumer prices and neither the Fed, nor the BLS, nor Truflation has figured this out.
Third, the Truflation housing inputs are suspect.
Truflation uses Zillow, Trulio, Redfin, Apartment List and CoreLogic. It claims “Our methodology for calculating rental price changes incorporates both new rental agreements and rental renewals, which provides us with a balanced view of price changes over time.”
But Zillow, Redfin, and Apartment List all have a huge flaw. They only capture new leases when only about 9 percent of the people move each year.
According to the U.S. Census Bureau, the mover rate remained at a historic low across the country. Data shows that in 2022 the mover rate was 8.7%.
For example, Truflation assigns a weight of 8.1 percent to rental. Only 9 percent of that 8.1 percent should go to Zillow, Redfin, Apartment list, and if I am correct Trulio. If Truflation is weighting all of it’s rental sources equally, that is a huge error.
Corelogic
Corelogic’s Single-Family Rent Index year-over-year was 3.4% in February.
That is much lower than the BLS measure of 5.7 percent but it is way higher than Truflation’s 2.37 percent. And please note that it shot up from 2.6 percent in January
Apartment List, OER, CPI Rent, Zori
Apartment List says year-year-over-year rent is -0.9 percent. Zillow says it is 3.7 percent.
Which is it?
Is averaging the right thing to do when Apartment List suffers from an additional problem that it does not use seasonal adjustments.
What About OER?
Truflation makes a big stink about OER. I side with this view.
I understand the claim against OER. No one really pays it. People pay mortgages. But the calculation attempts to measure inflation as if owners rented.
But ignoring OER creates another problem, and it’s a big one. The cost of housing is going up, people are trapped in their own homes, unable or unwilling to move because it is too costly to do so.
Debate Over Lags, OER, and Rent: Is More Inflation On the Way?
Case-Shiller home price index, CPI rent index, and the index of hourly earnings for production and nonsupervisory workers.
I discussed the above chart in my post Debate Over Lags, OER, and Rent: Is More Inflation On the Way?
Look at that graph of home prices.
Truflation sweeps that under the rug as does the Fed and economists in general.
Auto and Home, Insurance & Maintenance Costs Soaring
Insurance, repairs, and maintenance costs are up for both homes and autos. Some homeowners are skipping home insurance. What’s going on and who is to blame?
On April 19, I commented Auto and Home, Insurance & Maintenance Costs Soaring and People Are Angry
Those who live in flood zones, hurricane zones, or fire zones have seen their rates rise 50-100 percent or more. A quote from $3,200 to $31,000 is shocking.
Ask anyone in a hurricane zone, anyone in school, and anyone who buys their own health insurance what their inflation rate is.
The BLS averages all of this. Economists wonder why so many people are angry.
The Fed (economists in general) view home prices as a capital expense, not a consumer expense. Thus home prices are not in the CPI nor in the PCE (Personal Consumption Expenditures) measure of inflation. The latter is the Fed’s preferred measure.
This is a serious ongoing economic mistake by the Fed. The Greenspan Fed and the Bernanke Fed both ignored home prices. Asset bubbles brewed, culminating in the Great Recession.
Powell made the same mistake. However, because there were no liar loans this time, the result is people are trapped in their homes unwilling to trade a 3.0 percent mortgage for a 7.0 percent mortgage.
Truflation makes the same mistake and compounds them by lowering its weights of rent and OER.
The Fed’s Big Problem, There Are Two Economies But Only One Interest Rate
I described the Fed’s role on February 20 in The Fed’s Big Problem, There Are Two Economies But Only One Interest Rate
And as a direct result of soaring home prices, insurance and maintenance costs had to rise. The only surprise is the lag in which that happened.
Some of the lag is due to regulators prohibiting insurers to raise prices.
Who Fits the Truflation Model?
If you are a renter, someone looking to buy a home, someone who pays their own health insurance, or someone with escalating college expenses, you probably think Truflation is nuts.
If you own your own house, are on Medicare, and are not in a flood, hurricane, or fire zone, congratulations, you fit the Truflation model. I am actually in the group of lucky ones (although I would prefer to be 40 again).
A Better Measure of Inflation?
Truflation wants to be a better measure of inflation. It isn’t. In attempting to fix some issues, it introduced others.
And it ignores the big elephant by insisting rising home prices have no part of inflation.
The 34 percent of the nation who rents would laugh at Truflation percentage weight of rent at 8.1 percent with a strangely calculated OER at 13.8 percent.
And so do I even though I personally fit their model. I do not believe I am the average person, nor do I believe that averaging wildly differing measure makes much sense in the first place.
We don’t need a better CPI, we need something that will take into consideration the issues I brought up starting with the huge mistake of ignoring housing bubbles as if they are not part of the inflation problem.
How about income taxes? Joke with this and the BLS.
If they would stick with the same methodology over time, the CPI would be a useful metric even if not exactly what each person experiences.
But inflation is only a part of the rise in the cost of living. What about all the new things we are forced to pay for even though we don’t want them? Like medical insurance that covers sex changes, backup cameras on cars, premium energy bills to cover expensive green energy, unnecessary car repair bills to satisfy state regs… That stuff increases every year.
Truflation is just one of the inflation available indexes. It is more volatile than the indices the federal reserve prefers which are the PCE core and PCE supercore.
None of these are cost of living indices meaning indices that are designed to track the growing overall cost of maintaining a constant standard of living.
Just don’t expand the money supply. No more overall CPI inflation over time. No need to figure out how to calculate inflation. Lower CPI prices are a blessing for shoppers.
Economists tend to use Orwellian double speak when talking about inflation/deflation. They define deflation as lack of demand, while defining inflation as currency debasement. Totally different concepts.
Cpi, truflation, are they all lying?
It appears they are. At least for America.
Note truncation report is a global report. Meaning? For all western nations? Or poor nations as well?
Perhaps this is where the flaws occur? India and China do not have the same massive debts or rent or home ownership discrepancies as America. Perhaps that is thebonly justification we can give a check mark for the truncation report?
Price rises are NOT inflation Mish… when will you understand that? It’s not hard.
Inflation is the expansion of money supply beyond the rate of growth of the economy.
Right now money supply is not expanding, so price rises are synthetic scarcity.
But does Truflation make that distinction, and what role do their differences in weighting make in the overall. Teach, I’m all ears.
Cpi, truflation, are they all lying?
It appears they are. At least for America.
Note truncation report is a global report. Meaning? For all western nations? Or poor nations as well?
Perhaps this is where the flaws occur? India and China do not have the same massive debts or rent or home ownership discrepancies as America. Perhaps that is thebonly justification we can give a check mark for the truncation report?
“Second and more important, Truflation looks at mortgage rates. Those are relatively constant.”
Anything above the real rate of inflation is actual inflation. You can ignore an absolute value if it is constant, but you can’t ignore a *rate* if it is constant from year to year. Their methodology is inherently flawed.
No it’s not. Those that keep saying that all price rises are inflation are flawed.
“Inflation is 2.06 Percent, Anyone Believe That?”
My rent increases 8% on May 1, so no.
Price rises in rent are due to unprecedented illegal mass immigration, not “inflation”.
What’s integrity’s officially recorded date of death?
Here’s a way to test the 2%….
Decrease interest rates… and let’s see if hyperinflation begins…
yes let’s… because it won’t begin, because there’s no moneyprinting either.
The refinancing and velocity of money would increase, if rates fell by 2 %
The refinancing would also create a willingness to pay MORE for a home or apartment, again. (Aka affordability) Low interest rates for 20+ years has messed with what a home should be valued at. And the willingness to pay above asking price.
I’d believe 2% inflation … per WEEK.
What egregious horseshit.
Maths is not egregious – claiming that every price rise is inflation, whilst ignoring all the policy decisions that are creating artificial scarcity or demand, is egregious.
Price rises are not inflation when there is no credit growth. It’s synthetic scarcity.
All scarcity in the last 20 years is artificial or policy driven.
Even look at cochise prices.
The cost of producing one kilo is still below $30/kg and yet thanks to scarcity it still fetches above $60k per kilo on the streets. 😒
Pure BS, similar to the other ridiculous articles on the subject, written by those with an agenda, rather than truth.
That’s the complete opposite of the truth… those who keep saying there is inflation, when the price rises are clearly to do with policies like unprecedented illegal immigration, and foreign policy that pushed up energy prices, have an agenda, rather than truth.
Immigration yes. Has a hand in inflation or scarcity.
Let’s remind others here, during 2020 to 2022 M2 doubled.
The money supply doubled in 18 months.
As Mish would say in other comments.
Let that sink in.
Inflation lags years behind. Inflation is a direct result to money supply expansion, without the economy growing.
Immigration? Perhaps is also a simple part boffins the equation? Adding more consumers. Renters, buyers of cars, services, goods? Adds more to the growth portion of gdp? Diluting the money supply problem? (Aka inflation due to the massive money supply increase)?
The other day i saw a video by a woman who had just bought an apple at Whole Foods. She said it cost her $7.
Truflation is a one word oxymoron.
No it isn’t, it’s the antidote to all the imbeciles who keep saying “printer go brr” and who keep saying that every price rise is “inflation”, when it’s very obvious that neither of those things are true. There is no money printing, there is no expansion of money supply, there is almost no inflation.
Again. Inflation lags behind.
The doubling of the money supply between 2020 and 2022 , was MASSIVE.
We have both inflation and erodingbof purchasing power of the US dollar. It will take years to find equilibrium. Values will slowly inch upward.
Is the ignore option available. There is one condescending ahole here I would love to block
Just one? I have a much longer list!
why don’t you both just ignore yourselves? how old are you that you need a special needs button?
What’s really funny is watching the latest speaker of the house need Democrat support to pass legislation. He knows the truth about Russia and Ukraine and can no longer deny it.
NDAA 2013 allows the government to propagandize to us. Russia Russia Russia is a propaganda routine. As Goering said, it is easy for the government to get the public to do it’s bidding. Make them feel theatened. We had Covid lockdowns over a virus which wasn’t really very deadly. They even had to gin up the number of cases and deaths. How do we go from Russia couldn’t win the war in 3 days, to Russia is a threat to roll over Europe and into Paris, as Hitler did? Propaganda.
Any authoritarian country with nuclear weapons is a threat. I was never one to underestimate Putin. My graduate research was on the GRU cybersecurity units abilities to take down power grids. This was in 2012 before anyone knew where Ukraine was on the map.
The deep state is quite authoritarian. What was it that Schumer warned Trump about? In fact they were even illegally spying on him. The interesting thing is that no authoritarian country has used nuclear weapons against another, as of yet. It isn’t just the GRU that can take down power grids. Biden has been allowing terrorists to come across the southern border. Some have been intercepted, but not likely all. Even Wray is warning about it. But the mass illegal immigration agenda supercedes national security.
Bottom line, our government propagandizes to us. Thus they cannot be trusted that they are telling us the truth. As NSA’s Binney warned, we have a turnkey totalitarian state. All they need to do is turn the key. After Covid, that is no longer a far fetched idea.
Show us the paper… you can’t have been the only author… or did not get published?
It doesn’t matter how many different measures of inflation there are. They are all just best guesses. Only to be revised later. I find it best to take them all with a grain of salt, and focus more on the trends over time.
If you want a better measure of inflation, just ask Spencer to create one. According to him, he is smarter than “every economist”. With a genius like that commenting here, he should be able to provide us all with an accurate inflation calculation each month.
Maybe he could also give us some investment advice based on his extensive knowledge. Which would be better than what he normally does; which is to constantly complain, while promoting cult conspiracies.
I hope that everyone made a lot of money from all the oil stocks I have recommended over the last several years. Other than those here who said oil was going back down to $40.
Certainly higher energy prices will help keep inflation higher as well. I’m still expecting a WTI range of $80 to $100 through the rest of this year. Which will result in large cash flows for most oil companies.
I wonder if Biden will want to tap the SPR again to help voters before the election? Or he might be able to convince OPEC to open the taps a bit. Either seems like a possibility to me. We don’t want prices going too high as it will curtail demand.
Yes, still making money on oil stocks, love the volatility…I collect the dividends every quarter, sell calls on those oil stocks on rallies and collect premium then buy them back when oil goes back down. Rinse and repeat.
BP recently jumped close to $40 and I sold 20 contracts on that baby at 41 strikes and banked 30% after it dropped. I also closed my SPY Sep 2024 put positions on Friday after banking 20%. I’ll get back into SPY puts as soon as the market rallies again.
And with everyone whining about insurance companies, I’m knee deep in picking up shares because one man’s whining is another man’s profit portal. …$ …$
Well done MPO. You provide more investment ideas than anyone else here. Sadly, the majority of commenters here are cult morons who I would love to block out with an IGNORE button. Still, it’s worth it to frequent the site for Mish’s insights and for the occasional nugget of investment wisdom that appears in the comments section.
Here’s a piece of advice. Don’t read the comments. I would think someone as smart as you could do that but evidently even you get suckered.
Another note for you and MPO. There are plenty of people here who make money on stocks. We don’t feel the need go brag every 3 seconds.
I skim the comments looking for investing nuggets of wisdom. Doing that has made me millions in profits over the last 5 years. I see no reason to stop. I would just like to optimize my skimming; which is why I want an ignore button to completely block the cult morons who “never” contribute anything worthwhile.
You are correct about one thing. I DO occasionally waste some time commenting about some things. But only when I have a little bit of “spare” time. Most of the time, I am too busy to read each post that Mish provides, let alone comment.
It appears to me that a few people spend a good chunk of their day commenting here. Yikes! I guess they have nothing better to do.
Not like you eh, how many comments have you not posted today?
Who is “bragging” about anything? I share successful and unsuccessful trades. If you recall I shorted homebuilders and lost $20k, do you think that’s bragging?
There have been YEARS of comments here all whining about the Fed, the President, Congress, gov agencies like BLS and they have all accomplished NOTHING!
What does make people’s lives matter is more money and that’s where the focus should be.
Casual never recommends any investments because he doesn’t have any. Or he is afraid to be wrong. Either way; he is pretty useless.
You are right. I have no recommendations on investments as i dont handle any of it myself. I pay others to do that for me. I don’t buy individual stocks or any derivatives. That is for people who want to be busy watching the ticker. I do have a day job but that pays full time and I do about 2 hours of work a day. Most of my free time is spent raising my kids and making sure they are a better version of myself and my wife and do something worthwhile for humanity.
That is one of the few comments that you have made that is worth reading. Looking after your family is far more important than writing useless comments on a blog.
Why would anyone give you free investing advice on the comments of a website?
More to the point, why would you even take free investing advice from the comments of a website?!
LOL, you really have lost credibility here, yet you’re probably going to keep proclaiming your genius and nagging for a special needs button.
AFAIK this isn’t a blog about making money. I’ve been reading Mish for 25 years now and it was never about making money. This is the last place I would come for pointers on making money via stocks.
This blog is about economics (and politics). Let’s define economics:
economics /ĕk″ə-nŏm′ĭks, ē″kə-/
noun
“AFAIK this isn’t a blog about making money. I’ve been reading Mish for 25 years now and it was never about making money.”
Then you’ve been doing it all wrong for 25 years. It’s no wonder you dont know how to invest for yourself. Such a lost opportunity but there is always time to correct it.
25 years and you haven’t gotten any investment ideas here? I have been here less than 5 years and gotten dozens of great investing ideas from Mish and many commenters here. The sad part is that I have to wade through far too much other garbage from all the whiners, complainers, haters, and conspiracy cultists. That’s why we need an ignore button.
“We”? I don’t think you speak for anyone but yourself.
You say all that whilst showing yourself to be a whiner, complainer, hater, and “genius” (LOL). I can’t be bothered to read all the many comments you made (whilst claiming to not make many comments), to work out whether you are conspiracy theorist, but you certainly come across as a bit of a fantasist.
Yeah, don’t read them, just comment instead without reading, and then complain about not being able to ignore people with a special needs button, that’s the way to do it.
Obviously not you Papa… you’re not a moron at all, you’re a “genius”, aren’t you?
Insights good or bad show or reveal where everyone’s head is at? Maybe not accurately, but none the less a general idea.
Thanks for the share papa Dave.
As for investments.
My crops are being planted next month. The usual food commodity is planned. Retail Prices are looking strong.
Fertilizer inputs stable.
Diesel tank filled.
Manure price is up!
And the price of goats are also up.
Looking to be a good year.
(Now, with the higher revenues forecasted for 2024, will I have enough tovre crop for 2025???)
You’re welcome.You are a farmer in Ontario Canada? What type of crop? Plus goats? Interesting.
IIRC, Spencer is the guy who has posted about C.H. Douglas who advocated social credit. C.H. Douglas is an obscure heterodox economist who pretty much nailed it on how the economy actually works.
An obscure economist. So Spencer parrots an obscure economist and then claims he is smarter than every other ….. economist. Lol!
So where is his inflation calculation? I just want him to prove it with an accurate inflation calculation. Instead of whining incessantly about other people’s calculations while claiming superiority.
What a useless f*ck.
I thought you didn’t make whiny comments dave? I thought you skimmed the comments looking for investing nuggets of wisdom, making you millions in profits, rather than being a moron who “never” contributes anything worthwhile?
I see what you did there… you put down a poster you didn’t like, and then promoted your own “genius” in their place… and you want an ignore button because you are incapable of just ignoring someone?! What a ridiculous fellow you are.
I am concerned that truflation does not take into account trading down the quality curve. If I trade down to a generic food, buy a lower quality automobile tire or raise my deductibles(to reduce sticker shock) on auto or homeowners insurance does truflation adjust this transaction price? They say they measure millions of prices for goods & services. What if most consumers are trading down to match their lower level of income relative to “street” inflation to make ends meet. Is this consumption pattern re-weighted in their pricing model?
A single inflation rate makes no sense except for elections. The party in power wants a reasonable number, the party attempting to gain power wants a higher rate. A basket of inflation rates provides useful measures to consumers and perhaps producers. To understand the basket of measures, taxes and government subsidies should be also adjust the measures. The measures should also reflect location especially for housing and energy costs.
Inflation measures are also retrospective. Maybe a futures market (perhaps one already exists) would provide a prediction of future inflation. Major new sources of inflation are coming in travel, health care, and government (taxation, business regulations, and energy).
The other side of inflation is shortages. When prices increase, political action increases for price controls. The result of price controls is inevitably shortages. I see a moderate term future of shortages as government continues to increase regulations and price controls. The future of health care is shortages except for those who can pay beyond government price controls. The future of energy may be shortages in areas with strong political control of energy policy.
Another way to think about living costs is winners and losers. Winners are individuals/households with no mortgages, conservative government, stable energy prices, moderate climate, and good health insurance. Losers are renters in congested urban areas, families subject to high education costs, and low/moderate income beyond most government subsidies without employer provided health insurance.
I don’t think most voters care about the number, they care about how they feel when they have to pay for things. The party in power can generate all kinds of pretty numbers, like the CCP does, but people on the ground know how they feel about prices.
Obviously, inflation is calculating past data, and can only project that forward a short way, like with weather forecasts, because there are too many variables that become too wide ranging after a certain point ahead.
What you correctly observe is that prices are data about scarcity, and when you look around your economy, what scarcity do you see?
Housing is an obvious one… and how many new people are there all of a sudden, looking for housing? What specifically is making the house sale and rent prices rise? Is it an imbalance of demand and supply of buyers and renters? Is it some legislation that has been introduced that could be removed? Is it some variation in energy costs that are the result of sanctions and environmental policy? Is it just debt and the price of getting credit? Is it that banks are not lending so much because they are nervous? Is it in fact that there is a reduced amount of credit in the economy? If there is a reduced amount of credit, then there is a reduced amount of money supply, so how does a smaller amount of money chase prices up? It doesn’t… it’s not inflation.
Inflation needs there to be more money supply chasing fewer goods in the market and supply chain to chase prices up.
People keep saying there is money printing, but they don’t seem to understand that bank reserves aren’t real money, they don’t enter the economy, they can’t be used. Money is credit extended by banks, and banks are not extending credit so much because they are nervous of defaults on credit… so what does that tell you about the economy? What do the credit markets – the bond markets – the 10-year UST say?
How about that 2-10 inversion…
Why people keep banging on about inflation, when it clearly isn’t there is either an agenda, or they just don’t dig into the numbers, or understand them. You don’t need to be financial whiz to understand maths and mechanisms.- show, don’t tell.
Interesting. So the average Trueflation rate is the total of the year’s monthly inflation sums divided by 12. .Their low was 1.9, or 22.8% inflation for the year when multiplied by 12. Their high was 4.48 or 53.76% for the year. The average govt. reported rate for Trueflation was 3.5 or 42% for the year. Truflation’s dubious average rate was 2.7 or 32.4% for the year. Right Mish? Or according to the reported average govt. rate, the dollar declined in purchasing power value by 42 cents versus Trueflation’s 32 cents .Ah, the costs of empire and amendments 13, 16, and 19, and the failure to enforce the first 10 amendments and the 14th, the latter allowing for heels up VP Kamala. .
2.1(ish?) year over year? Maybe. It’s not far off HICP inflation (sans OER). Problem is the last 3 months rolling average of HICP is a distance above that, so current inflation at 2%? No. Definitely not. I’m worried about the recent acceleration there. Services excl housing isn’t going the right way. Sad fact we are trying to avoid is that bringing down inflation, especially housing, necessarily requires some increase in unemployment. With higher rates reducing home building, you have to decrease demand faster than supply. That requires less household formation, which requires a little financial stress. Kind of asshole answer but the market is kind of an asshole.
FYI – the .3 weight on housing for rental is too high. 30% tends to be a policy limit where landlords decide a renter can’t afford that unit. As such, it’s more of a maximum than an average. Other than HCOL areas, it’s not a good number for that usage.
My grocery bill begs to differ.
Gas is $4.28 a gallon.
House insurance went up 12%, and I was lucky.
Car insurance went up 20%.
But the electric rate only went up 3%. That is still more than 2%.
Here is some strategy for you.
Buy oil company stocks that pay dividends, enough shares to pay for your gas.
Buy insurance company stocks that pay dividends, enough shares to pay for your insurance.
Buy utilities, they are at a great discount right now, enough to pay utilities.
Buy food company shares (Tyson, ADM, Conagra, etc).
Do these things and inflation becomes mostly irrelevant.
Most people don’t have several hundred thousand of dollars to do your strategy.
I didn’t either, you take one step at a time. The alternative is to stop buying all the stuff. Whining accomplishes nothing.
Buying into a melt-up is a decidedly risky strategy – as is taking investment advice from randoms in the comments of a website.
Whine and dine.
That’s a good strategy and It pretty well describes what I do other than owing a couple small businesses (another good hedge).
My concern isn’t for myself. I see inflation destroying people and killing the American dream. Most people don’t have a lot of options.
Knowing that it is an intentional government and Fed policy, is awful.
You would get blamed by Dave and MPO for thinking about anyone but yourself. God forbid you should spend any time on anyone but yourself.
You’ve got it backwards. MPO and I are both trying to show people the way out of their predicament. In fact, we are the only ones doing so. Everyone else here merely whines and complains and hopes that voting for “whoever” will somehow fix things. We are simply saying that no politician will improve your life. Only YOU can improve your life. So stop complaining, get off your arse, and work to improve your life, because no one else will.
Where’s your investment advice website Dave?
BTW, your American accent is slipping, mate.
No website. Too busy for that. This comments section will have to do. No doubt about it, eh? Thanks mate! Cheerio!
Sheitt! Only two things I’ve noticed here in LA that are cheaper right now are cheese and legal weed. Everything else is seemingly going up closer to 10% per annum.
Lolololololololololololol … Sigh.
What’s really happen is the Fed changed policy to be okay with some inflation after covid in favor of lower unemployment. They didn’t act soon enough to raise rates in 2022. The Fed is trapped trying to manage the public debt issue, inflation and economy. They won’t have a choice soon and be forced to raise rates and kill the economy after the November election.
They are stuck. If they raise or keep rates this high the US will sink into a debt death spiral. They will resort to yield curve control. I suspect that will tank the dollar like what’s happening in Japan. Don’t know how to invest in this situation.
Rates this high are more the norm. We will be ok. Figure 2% inflation, 0.5-1.0% real interest, and a 1.75% term premium. Gets to a 4.25-4.75%10-yr UST. Not that far off. 6.35-6.75 30 year mortgage rate. Again, not all that far off.
Agree. I guess you could short stuff but you would have to not sleep well and become a 24 hour trader like some here.
When the yield curve inversion uninverts, then a few months later, bond yields fall, and layoffs start… that’s the pattern; at the moment it’s all a bit strange… there is huge and growing debt, all kinds of bad policies in effect, and the yield curve is not uninverting. All of that suggests that the can is being kicked down the road as hard as possible, but that also suggests that problem is going to be much worse when it arrives, so expect a stock melt-up, then crash.
There has to be some “inflation rate” to make people spend; and there has to be some “unemployment rate” to make people work… the impetus of the economy is the carrot of prosperity and the stick of destitution.
The central bank is just waiting for the bond market to tell it what to do.
The obvious thing that governments will have to do, is cuts… the bulk of debt is simply in propping up unsustainably large governments, and they are all trying to encourage and allow illegal immigration to keep propping up the bloated state.
Governments are drunken sailors, and the public are galley slaves chained to an oar. In that metaphor, you start to wonder if it’s better to jump ship or to mutiny!
All of this is such a waste of time people will vote their pocketbook … The true rate of inflation over the last 12 months is probably over 10% but nobody’s ever going to agree to that except the people who are paying it …
I saw a lady pay $24 for 2 lb of pumpkin granola cereal at sprouts this morning.. She drove off in her Mercedes. No pain for these folks.
and they are how many percent of your economy?
OT. I think you need a post on the commercial real estate crisis
link to finance.yahoo.com
link to businessinsider.com
New York, Florida, Texas and New Jersey also saw notable increases in commercial foreclosures last month.
Probably one of the reasons why banks aren’t lending so much, and why credit is contracting, and buyers are more scarce…
Does income get factored in ?
A measure of inflation should aim to reflect the purchasing power of the dollar at the present time compared to some time in the past.
What can a dollar buy today versus 5 years ago?
And, as usual for this kind of thing, taxes have zero weight!
Really good article. As you write, there are innumerable problems with reducing the state of things to this single national price measurement.
And ignoring the housing bubbles is sloppy, dishonest and frankly incredible.
The current bubble is Kindleburger, South Sea Bubble kind of insane.
But what cannot continue will not continue. in the 1950s housing bubble, you had rising incomes with flat housing prices for like 20 years I read that evened things out in the end
How will this one play out?
All I can say is the Bang Point is coming. We are in the middle stages of the Fourth Turning The denouement I though was 15 years out now looks like it will happen within the next 3-5 years. And the results of whatever “election” we have coming in 7 months now will not make much of a difference at all.
Hopefully something better emerges on the other side. Not all that hopeful though. I fear for my children.
Yeah as I tell my family there is no good solution. I feel the US economy is going to capitulate sometime in the next 3 years. It won’t be pretty. It is possible the US is taken over by China soon bc of of the debt issue. There has been a lot of pretending going on. The wealthiest Americans are increasingly fleeing the United States and turning in their citizenship. This is another sign that the end is closer than further.
You obviously don’t know much about China’s debt issue… China is imploding economically because of debt and fake reporting. The CCP is getting desperate, because young people won’t work, and money is drying up.
I finally agree with Scott Craig LeBoo. All of this adjusting and trying to count when one could more easily have families that track EVERY expense they pay and calculate those families’ inflation to get a represenative figure.
I just looked at a past order from 3 years back and the items were 65% higher and 88% higher. One could easily do that for homeowners, medical insurance, dr. office visit, rent, etc and we wouldn’t be anywhere near the “official” figures.
Making price calculations YoY this difficult is silly and we can know this is true because everyone one talks to says the same thing…7% my arse, 4.25% who are they kidding, 2.04% ok come one now that’s just ridiculous. Regardless of their political affiliation. This is just the government and Fed talking their book and justifying some aggregate monetary decision that will a) keep banks profitable and solvent; b) keep the U.S. government able to run and fund deficits one more day/week/month/year; c) inflate GDP and perpetuate the inequality gap by the very asset holders that benefit from inflation; d) keep the housing and stock bubbles from popping and causing massive damage that was all unnecessary had they never let them inflate to begin with.
JM&J Mish has written how many pieces on inflation recently but the most important one is the Unhappiness/Two-Population-Group disparity pieces. Folks are angry as they’ve been priced out of life, liberty and the pursuit of happiness and even those that have been able to stay ahead thanks to the stock and housing bubbles, they know that it’s a mirage and/or know many friends, neighbors and families who are not keeping up. They know that what is happening is wrong and they cannot seem to do one thing to arrest it. Then we see all the political nonsense and lawlessness and the feelings get worse. Congress just keeps on a spending, the President keeps on Executive Ordering enrichment of some and impoverishment of others. All without a fiscal restraint like the faux debt ceiling, which at least forces the silly conversation.
I’m just glad Papa Dave is doing well, I worry about that. And I’m still wondering about MPO’s damn turtles on the way down, whatever that means.
“Turtles all the way down” is a metaphor used to explain the concept of infinite regress, particularly in a metaphysical framework. The phrase refers to an anecdote where someone, usually a member of a so-called primitive tribe, is asked about the origin or existence of Earth, and they argue that the world rests on a giant turtle. When asked what that turtle is sitting on, the reply is “it’s turtles all the way down.”
Infinite regress is a philosophical problem that involves a series of reasoning or justification that can never come to an end. It’s often used to illustrate the “unmoved mover” paradox, which questions the existence of a first cause or a root cause for everything. The metaphor of “turtles all the way down” highlights the idea that there might not be a single, definitive answer to the question of origin or cause, but rather an infinite chain of prior causes stretching out to infinity.
This concept has been discussed by various philosophers, scientists, and authors, including Stephen Hawking in his book “A Brief History of Time.” The phrase has also been used in popular culture, such as in John Green’s novel “Turtles All the Way Down.”
Bill, your homework is to try to see where “turtles all the way down” is applicable to this group. Here are some ideas:
There are more applications but I’ll let you explore those on your own. Personally, I like one that involves “profits all the way down.”
Oh boy. It’s almost impossible to get the folks here (with their early grade school intelligence) to understand reality, science, or common sense when their main focus in life is to follow conspiracy theories in multiple rabbit holes. Now you want to bring Philosophy into it. That’s quite a reach!
Not you eh dave, you’re an implied “genius”… a giant amongst the mental lilliputians here… what’s it like being such a big goldfish in such a small weedy pond, swimming with the pond life?
Actually, I consider myself of average intelligence. But most of the people commenting here appear to be way below average. It’s all relative.
If one chooses to spend some of their life’s fleeting moments in a forum like this, one can scuff about in the muck hurtling (or hurling, in the slang sense) perjoratives and name-calling like a common politician or one can post something that may cause someone else to have an improved life or elevate their mindset.
I can’t help but think of Yertle when the stack of turtles passes by my consciousness. This is a publicThank You to MPO for their comment – it shouldn’t all be investing tips PD 😉
Hmm. I would have thought that investing tips would help “improve one’s life” as well.
Indeed, which is why I said it shouldn’t *all* be investing tips and ended with a friendly yellow face. There are plenty of financially secure individuals who are lacking in other ways and feel empty/unfulfilled.
Aw, thank you, Bill LeBoo 🙂
Now think about that pricing out on a global scale, and you see why there is such a burst of illegal mass migration… this is due to corruption and incompetence in developing countries, and the concomitant lack of investment in places where real growth could actually help the developed world’s debt crisis. True global leadership would see some kind of neo-colonialist development pact, building islands of prosperity in the developing world, in Africa, Latam, and APac, but instead we see protectionism, which leads to deflation.
There are lies, and there are damn lies and then there are statistics. That is the motto of the economic politburo.
The media and pundits have so over-hyped concerns about inflation. The Fed’s obsession with its arbitrary 2% inflation goal while being coy about what measure they test this against is silliness. Inflation runs between 2% and 3.50%, depending on how one measures it. With inflation within these bounds, the U.S. economy can perform very well as it has in the past. Most U.S. consumers can navigate inflation at these levels by making prudent choices. Where I live, even though we can afford to shop exclusively at Whole Foods if we choose to, we make a weekly visit to a local grocery discount store (think TJMaxx for food). We can check out with four bags of groceries for under $30. Right now, the media and pundits’ obsession over inflation is not helpful; it actually, in a way, fuels inflation by creating a sense of urgency to make purchases today for fear that those purchases will be much more expensive tomorrow. The Fed also creates housing-related inflation by keeping rates too high, locking up existing home inventory, suppressing supply, and increasing prices.
Yea its all the media and pundits obsession that is the problem….
Why are the multiple food banks I have visited and talked to since January having nearly double the number of recipients in 2024 compared to the last 2 years and 30%-40% HIGHER than the 2020/2021 scamdemic unemployment debacle which was also record levels of needs based recipients?
What is “inflation” if you use the formula used just 16 months ago when the govt/BLS/FED changed in Jan 2023?
What is “inflation” if you use the formula used in the 1980s before it was changed? When the govt/BLS/Fed told you it topped out at 9% in 2022 the actual number was over 19% using the 1980s formula
If you don’t like the crushing cost of living through real inflation, just change the formula…..
Now go enjoy whole foods and pay $30 for some milk and bread……. I get fired up when people even slightly try and downplay the destructive real cost of living inflation that is destroying people daily
It’s been said that economics is politics by another name. I can’t help but think that whoever is responsible for truflation must be benefiting from the current chaos and want to convince others that everything is great.
FOFL. He must work at the BLS during the day producing fake numbers and then spends nights and weekends producing more fake numbers. What a joke.
The only way to measure “inflation” is thru statistical and common sense means. In any survey/polling you read about, statistics says the number 2,000 keeps popping up as the most accurate sample size to extrapolate to a larger group of people (namely 340 million Americans). Then you literally have to track every penny they spend – the persons will take care of finding the better I-Phones/”hedonics.” Trying to figure out how rising college costs and rising health care costs (called “sometimes” costs) all figure into food and shelter figures will never work. Hire 2,000 families, track every penny they spend and you’ll get a real number.
That’s a very good idea. I would like to see what results this would bring.
BLS could just buy that data from the NSA …
Or they could get their own staff to generate it.
By continuously under reporting inflation GDP magically goes up! Real GDP has been negative for years… look around empty buildings, filth, disappeared middle class.
Agree. This is a little discussed fact of under-reporting inflation and explains the malaise across the country (namely, real GDP has been falling since at least 2020).
Unfortunately, under-reporting Inflation has soooo many benefits to USG (smaller tax bracket adjustment, smaller TIPS adjustment, improved real GDP, reduced SS adjustments, …).
I wonder, does anyone see any benefits accrued to the Uniparty in the case of over-reporting Inflation?
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“it is difficult to get a man to understand something, when his salary depends on his not understanding it.” – Upton Sinclair.
More importantly, under reporting inflation has the side affect of reducing the amount of money people on fixed income have to spend. That specifically affects Social Security increase which are tied to inflation rates but also covers guaranteed COLA raises for union contacts and pensions etc.
How are you measuring “real” GDP if not with some kind of inflation number?!
Truflation is a joke.
No, truflation is a punchline. “Moneyprinting” is the joke.
Rinky, your best comment yet!