The housing market persistently skews the statistics, because people's housing patterns change over time. During the home ownership bubble of 1996 to 2006, for instance, renters moved into home ownership and rents fell relative to other prices. But the CPI pegged its housing price component to rents. "Booming home prices led to an understatement of total inflation" in that period, he observes.
The opposite trend is taking place now. "Lack of credit has driven people into the rental market, driving up rents and overstating inflation"--that is, for homeowners, who are immune to rent inflation.
"The 2000s truthers were critics of the inflation mathematical model used by the U.S. Bureau of Labor Statistics," he writes. "The 2010s truthers are critics of President Barack Obama, and any economic gains under his watch therefore must be the result of inflation." Secret inflation, that is.
Tim Duy of the University of Oregon notes the implausibility of consumer inflation heating up significantly while wage growth remains stagnant. If prices rise under those conditions, he writes, "demand will soften and so too will any incipient price pressures." That's why Fed Chair