April CPI down (slightly), as expected.

[pdq]

CPI again mostly driven by gas and (surprise!) “rents”, which may be up due to higher mortgage costs the Fed has pushed.

Housing and gas costs continued to be a main driver of overall price increases, as they have for a while now, and together accounted for more than 70 percent of the monthly rise. The shelter index, which is made up mostly of rent, was up 5.5 percent over last year, and continued a streak of 0.4 percent monthly increases.

I think (not an economic statistician) that CPI “rent” includes “owner’s equivalent rent”, which is based on a survey that asks homeowners how much they would rent their house for, if it was for rent. It’s a sketchy, indirect method that other countries don’t use, and if we used their standard inflation measures, we’d be considerably lower - some say already at the golden 2% target.

FWIW, I also say this as a owner of several rental houses/duplexes/triplexes, and I have not seen rent prices soar (or really, change at all) in our market. But that may be local.

For more than a year, economists have argued that the official statistics in the consumer price index are delayed and aren’t accounting for real-time measures that show rents falling in many places. But the shift still hasn’t shown up, puzzling policymakers and experts who concede that the longer progress takes, the harder it will be to wrestle overall inflation down.

Personally, I think inflation essentially normalized in 2022, and we (or the Fed) have been chasing our own tails since.

Anyway, because the monthly (M/M) number came in at 0.3 rather than 0.4, it looks like the S+P may set a new all-time record today.

Woo-hoo. I blame Biden.

[Acer]

If we drop interest rates, would we not goose real estate demand? Supply is still short, and if not rising prices are surely sustained even with the interest rates we have. It took a while, but finally even in my rust belt city offers are coming in instantly and above asking price. I don't know about rents.

[pdq]

I think (again, not an economist, but...) actual rents, not "owner's equivalent rents") depend on costs for the lessor, the main one being mortgage/financing cost. I'm just saying I think if the Fed started to drop rates, mortgage rates would follow, and pressure to increase rents would dissipate.

BTW, as far as I can tell, the S+P is hitting new all-time highs today (at least so far - as I write this, it's at 5279, which is the new 52-week high).

All the indices are green. Basically worthless meme stocks, on the other hand, like GME (-30%), AMC (-26%), and DJT (-1.4%) are having a tough day.

Pump, then dump.

Edit: NASDAQ also setting new highs. Bidenomics is a disaster.

:RollingEyesSmiley5:

[Ted King]

pdq wrote:
I think (again, not an economist, but...) actual rents, not "owner's equivalent rents") depend on costs for the lessor, the main one being mortgage/financing cost. I'm just saying I think if the Fed started to drop rates, mortgage rates would follow, and pressure to increase rents would dissipate.

BTW, as far as I can tell, the S+P is hitting new all-time highs today (at least so far - as I write this, it's at 5279, which is the new 52-week high).

All the indices are green. Meme stocks, on the other hand, like GME (-30%), AMC (-26%), and DJT (-1.4%) are having a tough day.

Pump, then dump.

I don't doubt that a drop in interest rates would help the problem of rent being too much, but I think other than costs to the rental owner is market competition. If you own a unit that is up to be newly rented, I suspect you'd look at what similar units are costing in rent so as to maximize your return on investment.

[gabester]

I wonder how much of rents being higher is due to RealPage (that rent-price-fixing data brokerage) use by larger corporate landlords? I'd bet you take that out of the equation and inflation drops to zero instead of pure monopolistic profit going into one company and their subscriptor landlords' pockets.

[pdq]

Axios:

The intrigue:

Housing is the wildcard that might keep inflation from returning to a more palatable level. It was the largest factor in core CPI's 0.3% monthly increase.

Rent prices rose 0.4% for the third straight month — a still-rapid pace that does not reflect the disinflation trends seen in private sector data.

Fed chair Jerome Powell told reporters earlier this month that he was confident housing disinflation would eventually show up in the government data, "but not so confident in the timing of it."

Yup. Our measure should show it any day now.

[pdq]

CNBC:

Among other consumer staples, grocery prices decreased by 0.2% from March to April, meaning they deflated rather than inflated, according to CPI data. “Food at home” prices rose 1.1% in the past year.

“Food inflation has basically gone to zero,” [chief economist at Moody’s Analytics. Mark] Zandi said. “I think that’s really important for most American families, not only for their own financial situation but because of how they perceive the economy.”

Meh. I still hear plenty of complaints about how food is so expensive!

Processed, maybe. In restaurants, yeah. Grocery staples, not so much.

[Speedy]

I hate shrinkflation, just saying.

[Tiangou]

gabester wrote:
I wonder how much of rents being higher is due to RealPage (that rent-price-fixing data brokerage) use by larger corporate landlords? I'd bet you take that out of the equation and inflation drops to zero instead of pure monopolistic profit going into one company and their subscriptor landlords' pockets.

My rent has gone up nearly 30% in 3 years and all of the corporate properties within 30 miles are priced similarly.

All use RealPage.