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Change Since January 2020

• Case-Shiller National: +52.3%
• Case-Shiller 10-City: +52.0%
• CPI: +22.0%
• Owners’ Equivalent Rent: +26.0%
• Rent +26.4%

Case Shiller 10-City Index

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Three cities in the 10-city index are below levels hit in 2020.

Denver is down 3.4 percent, Las Vegas is down 1.1 percent, and San Francisco is down 8.3 percent. All other cities are at or near peak prices.

Rent, OER, Case-Shiller Percent Change From Year Ago

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Except for a small window of time year-over-year Case-Shiller measures have outpaced the CPI, often dramatically.

Case-Shiller Home Price vs Hourly Earnings, the CPI, and Rent

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Percentage Change Since January 2020

• CPI: 22.8 Percent
• Average Hourly Earnings: 28.2 Percent
• Rent: 26.2 Percent
• Case-Shiller National Home Price: 52.3 Percent

Those numbers do not reflect property taxes that vary by state nor mortgage rates.

Mess Entirely of Fed’s Making

This is a mess entirely of the Fed’s making. And it’s what happens when the Fed, and economists in general do not count home prices as inflation.

Home prices are not directly in the CPI or PCE. The latter is the Fed’s preferred measure of inflation.

Economists consider home prices a capital expense not a consumer expense. The problem is simple: Inflation is not just a consumer price concern!

The Fed ignored obvious inflation in the Great Recession and did so again in the Covid recession.

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Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed

On February 3, I commented Fedthink! The Fed Is Incompetent by Design and Can’t Be Fixed

Regarding Fedthink

Reader: Sometimes I wonder if people like Mish really think that the Fed plays it straight in times like this, versus telling us what is ostensibly the straight dope while they are actually playing some complex metagame.

Mish: I have commented on this before. The Fed believes the nonsense they preach on 2% inflation, inflation expectations, the Phillips curve and other economic nonsense that amusingly even the Fed’s own studies prove wrong.

There is no diversity in thought at the Fed. You get in the position of Fed Governor or President by thinking the same way as the rest of the members.

People confuse diversity with race and sex. True diversity is in thought. But there is no diversity of thought at the Fed. They have all been trained to be ignorant. And you do not get into the group unless you believe the same things.

This we call Fedthink.

The Fed destroyed liquidity in the housing market with massive QE that allowed existing owners to refinance at cheap rates fueling inflation via permanent lower mortgage rate (extra money in pockets), while screwing all potential new buyers with runaway prices and higher mortgage rates.

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