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2012-05-02 — iaconoresearch.com

... aside from it being far more expensive to live in the U.S. than what the government says it is in the "official" inflation data (it wouldn't be the first time this has happened), if rent increases of 5.6 percent were to be used to calculate the inflation rate, some simple substitution reveals that, suddenly, year-over-year inflation today would be 3.8 percent rather than the 2.7 percent reported last month.

More importantly, for Federal Reserve policymakers who prefer "core" inflation (i.e, excluding food and energy) where rent and the nefarious "owners' equivalent rent" contribute 40 percent to the total, instead of 2.3 percent, so-called "core" inflation would be 3.7 percent, the highest level in 20 years!

Surely, there are important reasons for the difference between the 5.6 percent median rent increase reported by the Commerce Department and the 2.0 to 2.5 percent rate from the Labor Department... but can any of them fully explain why the Commerce Department data is about 150 percent higher than the Labor Department data that is used to calculate the inflation rate?

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