I am not buying that inflation is low. Property taxes and housing cost (especially rent) has doubled in last 10 years in New York. I think so has the medical costs. Just because gas prices are low dose not mean inflation is low
https://us.spindices.com/indices/real-estate/sp-corelogic-ca...
The Case-Schiller index the GP was referencing takes CPI inflation into account.
This is why we calculate these numbers using a broad basket of various goods and assets.
The criticism isn't "inflation should be based on NYC rent." The criticism is "the basket of goods weighs nice-to-haves too highly, and important needs like rent/healthcare/education too low".
So while inflation (as officially defined by the consumer price index) is technically low, "real" inflation (as experienced in impacts to citizens cashflow) is significantly higher across the board.
Homeowners don't experience higher housing prices unless they decide to buy a new home. (Though they might have to pay higher property taxes.)
Renters might not experience higher rent right away, either due to rent control, or having a landlord that doesn't raise prices as fast as the market.
If you are going say "but the CPI does measure things that way" you are right. It has been well observed that the CPI had been looking more and more like a cost of living index for years (eg, the hedonics changes). This is why the GDP deflator is used more often to gauge inflation now, except it only come out quarterly with the GDP figures.
http://www.reuters.com/article/us-usa-fed-dudley-ipad-idUSTR...
High(ish) inflation/interest is a really good thing for workers because although repayments on their loan may briefly be high they decline in real terms at a much faster rate. The best bit is the principle declines at a much faster rate too- meaning that a worker can in fact pay off a mortgage in a decade or two.
I just looked up the current rent on the apartment complex I lived in from 2005-2009 in another part of the country. My rent didn't increase in those 4 years I lived there and the current rent is basically the same I was paying back then when you take into consideration CPI inflation.
Two data points, for what its worth.
Now, there are legitimate debates about the imputed rent method by which owner-occupied housing is included in the CPI, but housing is definitely part of the CPI.
[0] https://www.bls.gov/cpi/questions-and-answers.htm#Question_1...
CPI includes both rent costs for actual rentals and imputed rent for owner occupied housing. [0]
> but thats what more than half of average couples combined income is spent on.
More like a quarter. [1]
[0] https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
From what I've seen inflation has been very high for the past 20 years, but has not been evenly distributed at all. The deflationary pressures of offshoring, automation, technological advancement, and device convergence have caused tech, appliances, and gadgets to drop dramatically in price, creating the illusion in many sectors of low inflation or deflation. Offshoring and automation have also held wages down and kept consumer product and service prices from inflating much. The Internet has completely collapsed the price of media (music, TV, news, etc.) too. If you're looking at these things then inflation looks low.
Tuition, health care, housing, and energy on the other hand have all inflated quite a bit. Housing is the big one. In some markets it's at the level of "real estate hyperinflation," rising to absolutely ludicrous 8-15X median income multiple prices. There's also been a lot of asset and stock price inflation and bubbles in things like trendy tech and cryptocurrencies can be considered secondary symptoms of a lot of money sloshing around.
I've heard the present condition described as "in-deflation": deflation in everything you make and in therefore labor, inflation in everything you need such as health care and housing/rent. My hypothesis is that this results from an impedance mismatch between inflationary industrial-era economics and monetary policy and deflationary information-age pressures. Both high technology and globalization are extremely deflationary. We did a ton of QE to re-inflate the economy after 2008 but since high tech and globalization were such powerful deflationary pressures the only place all that money could go was real estate, stocks, and speculative bubbles.
In any case they've pumped so much money into the economy we may now be about to see a little bit of wage growth.
But it (that CPI doesn't including housing costs) is a completely false statement that can only be made (other than dishonestly) if one lacks even a basic knowledge of the matter being discussed.
The fed's monetary policy is taxation without representation.
Same thing in Canada's larger cities (if not a doubling in much less than 10 years), yet we're told the change in the housing component of the CPI is < 2%. Lies, damn lies, and statistics.
* Only two sentences
* Not relevant to the main topic of discussion
* Makes a vague claim
* Unsubstantiated by any source
* Claims that authorities are lying without specifying the particular authorities or particular lie
* Uses a mild swear word
* Resorts to cliche
* Doesn't teach the reader anything new or interesting
* Doesn't reflect any nuance or thoughtfulness
Not saying all these hypotheses are true, but they might explain why your comment was downvoted. I sincerely doubt it has anything to do with your username. Anyway, I hope you don't feel bad about the downvotes. Hopefully your future comments are perceived as contributing more value to readers. :)
Overall the comments on this article feel pretty substandard to me. A fair number of armchair economists are confidently explaining how things are going to unfold and how the system is nefariously rigged. For some reason, it seems the topic of economics brings out a lot of ill-informed speculation presented as fact.
As are many other comments in that subthread. Is conciseness against the guidelines?
> Not relevant to the main topic of discussion
Whether inflation is also understated in Canada and correspondingly low interest rates and their effects is not related to the topic of "The Era of Very Low Inflation and Interest Rates May Be Near an End", as well as the content of the rest of the sibling comments in that subthread?
> Makes a vague claim
False.
> Unsubstantiated by any source
As with most other sibling comments, and not uncommon at all on HN, and also not a violation of guidelines.
> Uses a mild swear word
Wow. https://en.wikipedia.org/wiki/Lies,_damned_lies,_and_statist...
> Doesn't teach the reader anything new or interesting
You assume all readers are familiar with the interest rate and housing price environment in Canada, as well as the fact that inflation numbers are highly suspect? Possible I suppose, but what evidence do you have for this belief (assuming I haven't misunderstood)?
> Doesn't reflect any nuance or thoughtfulness
Perhaps I'm not aware of the nuance, and for that I apologize. I would appreciate if you could point out some of the nuance so I can learn.
> Anyway, I hope you don't feel bad about the downvotes.
I feel bad if the objectivity of the community is decreasing.
> For some reason, it seems the topic of economics brings out a lot of ill-informed speculation presented as fact.
While I didn't link to supporting evidence (I tried to find the "smoking gun" that I'd read before, but could not) have supporting, my words are an understatement of reality if anything.
Also, note that despite disagreeing with you, I upvoted you for actually contributing positively intended criticism, which I appreciate.