Business headlines say that inflation is down, yet countless Americans are struggling, particularly with finding somewhere affordable to live.
How do we reconcile these seemingly contradictory notions? First, lower inflation means prices are rising slower, but still rising. Second, housing inflation is being undercounted by official government metrics as much as 4-to-1.
The consumer price index from the Bureau of Labor Statistics is designed to measure the cost increase of a common basket of goods. Surprisingly, though, it doesn’t include the cost of housing.
The CPI tries to capture consumption, but not anything considered an investment, which would include a home and any improvements to it, like installing a swimming pool. Similarly, things like the chlorine tablets used to maintain the swimming pool are also excluded since they’re considered part of an…
