I'm Thinking That Someone is Juicing the Statistics

Hmmmmm………It turns out that the latest inflation figures include some odd numbers, specifically, it it includes a value for owners' equivalent rent that is significantly lower than it should be.

Seeing as how Trump fired the head of the BLS because he did not like the numbers that he was getting, it seems to me that having such a number as an outlier, as it is a completely synthetic metric. 

Because of this, it is an easy place to mess with the numbers, because there is no underlying reality to them.

The delayed release of the Consumer Price Index today, cobbled together with perhaps not all the staff and means that the Bureau of Labor Statistics has normally available due to the government shutdown, was perhaps the best that could be done under the circumstances.

But there were a few things that were off, the most important of which was Owner’s Equivalent of Rent (OER), a huge component in CPI, accounting for 26% of overall CPI, for 33% of core CPI, and for 44% of core services CPI: It was a massive historic outlier.

OER rose by only 0.13% in September from August (blue line in the chart), according to the BLS today, compared to 0.38% in the prior month, and compared to the 12-month range between +0.27% (May) and +0.41% (July). Something went wrong there, and given its huge weight, OER significantly pushed down the month-to-month readings of overall CPI, core CPI, and core services CPI. 

If this situation with OER hadn’t happened, the inflation readings today would have been a lot hotter than they were, particularly core services CPI where OER weighs 44% and core CPI where OER weighs 33%.

OER is not a measure of rent. The measure of rent is the Rent CPI. OER is a stand-in for the costs of homeownership. OER indirectly reflects the expenses of homeownership such as homeowners’ insurance, HOA fees, property taxes, and maintenance. It’s the only measure for those expenses in the CPI. It is based on what a large group of homeowners estimates their home would rent for, with the assumption that homeowners would try to recoup their cost increases by raising the rent.

If I were to try and mess with the numbers, this is actly the thing I would use.,