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The section on owner's equivalent rent (OER) is worth finding in the long article: OER accounts for about 1/3 of the CPI. However, when you view OER in light of the housing bubble around 2006, CPI was negligibly affected.

IMHO, it is a large signal that CPI fails to accurately describe consumer inflation for a large segment of the population.




But in 2008 the housing bubble popped and the prices came back down to 2004 levels.

Wouldn't you say then that the CPI was correct not to adjust too far to account for it?

And if you think housing right now has increased a lot and the CPI isn't taking that into account, perhaps that says something about what is to come....


> Wouldn't you say then that the CPI was correct not to adjust too far to account for it?

My point was it missed the largest housing cost rise in multiple generations, despite housing being ~1/3 of the CPI. That it then also missed the downward correction is just more evidence that the CPI is uncorrelated to housing costs.




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