The author of this piece, David Goldman* has been quite vocal (and quite accurate) about inflation not being "transitory." (I think the word deserves the scare quotes by this point, don't you?)
He has also been among the voices pointing out that the shelter component of the CPI, rent and owners equivalent rent, is not reflecting the real-time high-frequency data that we get on rent increases and house price appreciation.
Although he does not go this far, saying instead that shelter inflation will show up later this year, I am starting to wonder if there isn't a methodological flaw in the CPI.
From Asia Times, February 10:
This leaves the Fed in a pickle: Interest rate hikes won’t do much except reduce demand, producing stagflation
US stocks took a nasty turn downward after the Bureau of Labor Statistics announced a higher-than-expected 7.5% jump in consumer prices over the last 12 months, the worst inflation in forty years. The month’s gain of 0.6% for the Consumer Price Index also translates into an annual rate of 7.5%.
Most worrying about the inflation report was the dog that didn’t bark, namely shelter inflation. Although the shelter component of the Consumer Price Index did rise in January, it showed an annualized rate of just 3.7%, much lower than the nearly 20% price gains for home prices and 13% hikes in residential rents during the past year.
Monthly changes in the Zillow national rent index predict changes in the CPI rent component with lags of up to eight months, as we noted last August 27. But rents didn’t drive the January jump. Instead, price increases were distributed across the board.
Average real weekly earnings have fallen by 3.1% over the past twelve months, the worst year-on-year change since the series began in 2007. The fall in inflation-adjusted weekly pay in January was more severe than during the 2008 financial crisis. In a tight labor market, that sets in motion employee demand for pay increases. Those increases in turn raise employers’ costs and motivate further price increases....
....MUCH MORE
January 22Its almost as though he's trying to tell us something.
"More inflation shoes to drop on NASDAQ by end-2022"
Soaring rent increases will hit the Consumer Price Index with a lag of up to eight months
January 20
David Goldman Looks At The Housing Component Of Official Inflation Statistics
October 2021
"Inflation depresses – later will clobber – stocks"
September 2021
Prices: "Rent blowout mysteriously missing from US report"
August 2021
"Home rents set to turbocharge US inflation"
*Our boilerplate mini-bio on Goldman:
...The author of this piece, David Goldman, is Deputy Editor (Business) at Asia Times.
Prior to taking that position he was:
- Global head of credit strategy at Credit Suisse
- Global Head of Fixed Income Research for Bank of America
- Global Head of Fixed Income Research at Cantor Fitzgerald
In addition to apparently not being able to hold onto a job I think one of his requirements for moving on was a "Global Head" title. (JK, young Master. G.)
