It's like converting a bank account to Lira and thinking it makes you richer.
Interests rates are lower, so the sticker prices on tuition and housing and -- to some degree -- medical expenses are higher.
But how does CPI measure these things? It takes EVERYONE'S mortgage payments (which don't change anywhere near as much as sticker prices), lumps them together, and then takes the average. This makes sense. Mortgage payments (and rent) make up a huge percentage of most American's monthly payments.
Sticker prices on houses don't.
Inflation isn't meant to measure if things are getting more expensive for new homeowners (or any subset of the population). It's meant to measure if prices are increasing for the country as a whole. Just because houses cost double today what they did 8 years ago, it doesn't mean EVERYONE is paying double for housing.
If you took the sticker prices on houses (which is largely meaningless -- very few people buy houses in cash), this would be a metric that made people struggling to buy a house feel good. But it wouldn't help the Fed in anyway do its job of maintaining a steady rate of inflation so that we have a stable environment to invest in / allocate capital efficiently and effectively.
Yes, something needs to be done about housing market cycles and how much damage they cause to the economy. But putting sticker prices in inflation is not the solution.
I'm not positive how tuition is factored into CPI -- but I'm pretty certain it's a function of your loan payments.
The medical industry is batshit insane in this country, and I have absolutely no idea how this is measured. The only way I can think is that it's a function of how much you and your insurance pay for a bill. The sticker price on medical expenses is basically a made up number.
The problem is the grand-parent-post's use of this number to claim it indicates almost everyone, or at least "the typical person" is twice as well off now as 1973. And worse, doing so implies nothing needs to be fixed.
>Yes, something needs to be done about housing market cycles and how much damage they cause to the economy.
Housing market cycles do harm without fixing the underlying problem. They disrupt the larger economy but only shave of 10%-20% of home prices and then only temporarily. This failure to reduce housing costs is a problem.
Consider that in 1970 with a 30 year fixed at 8%, home prices sat at 65,000 adjusted for inflation. Rates were near double that in 80's yet, adjusted for inflation, homes were over 90k. Today, with about 4% interest, median price exceeds 250,000. Evidently total housing costs exceed wage and inflation over time. Evidently prices do not genuinely cycle. Evidently interest (our sole economic tool now) does not affect this overall trend.
So the issue arises in a generation or two. It seems there is magical thinking that history is over and this will just take care of itself and that mass ownership of land is somehow an inevitable law of nature. It seems more likely that the last 80 years were a fluke requiring careful maintenance which has ended.
>sticker prices on houses (which is largely meaningless -- very few people buy houses in cash)
The sticker price of a home directly relates to financed cost as well as cash.
Not that those aren't luxuries, but for the most part they are considered to be part and parcel of modern living. California has free cellphones for poor people because it's considered a necessity.
Cell / Internet I would agree are general requirements in the modern world for the most part. But it's also important to understand their impact on quality of life. There is a hugely understated value in the fact that an individual can have access to almost the entire knowledge base of humanity in the palm of their hand, and it's damn cheap for what it is. The closest comparison in 1970 would have been a full encyclopedia set which were actually pretty comparable in cost to a phone/laptop + internet service, yet obviously far more limited.