Mismeasuring Inflation
A brief excerpt of this analysis originally appeared in Barron’s, January 23, 2016
The Bureau of Labor Statistics’ (BLS) inability to keep up with the hot market for home rentals is causing inflation to be underestimated and may contribute to a delay in the decision to continue to raise interest rates by the Federal Open Market Committee (FOMC). There is reason to believe that a flawed survey methodology is causing the government to underestimate housing inflation. Instead, data from the newly institutionalized single-family rental industry show that core inflation is indeed further above the FOMC’s 2% target than government data might suggest.