This May Make Robert Shiller and SocSec recipients happy…

but it doesn’t do that much for the rest of us. Via The Ambrosini Critique, Scott Sumner discovers there was no housing crash:

The BLS claims that housing prices are up 2.1% in the last 12 months….According to the BLS, housing makes up nearly 40% of the core basket of goods and services.

Further reading gets us to the base of the claim: Owner-Equivalent Rents went up 2.7% in the past year. CR was all over this in April and May. Take a gander at this chart–from the CR posting in May:
Price-to-Rent Ratio

So while the ratio has gone from 1.4 to 1.1 (which would be more than a 21% decline), almost a whole 10% of that change has been because the base (rent) has gone up. The other 19% of decline doesn’t matter for BLS in(de)flation calculation purposes.

No one better tell David Malpass or his investors at Encima Global (motto: “Failing Up is Always an Option”; see the Forbes article link at the left side of the Encima page).

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