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Eric Remcon's avatar

This article is a long-winded way of saying the housing measure in the Feds inflation index calculation is a lagging indicator (because it is more of a long-term average instead of short-term snap shot). You do a good job explaining that and suggest that a different number might be better (though possibly “noisier”). I don’t know enough to argue for or against a change, but I do have a question that the article does not address.

The Fed managers surely know that it is a lagging indicator, is it your position that they are too stupid or too rigid to let more time sensitive data affect their decision? Or is it obvious (from past moves) that they have not considered it? In other words, the measurement has its flaws (like every other aggregate index) but would a change make a difference in the decisions that are made?

I’m not trying to me argumentative or dismissive of your point. It is an honest question because I don’t know anything about what drives the Fed.

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Carl Tuesday's avatar

Just as a data source for those curious: AEI's housing center sucks up a big pile of data and has it in some (potentially) useful formats -

https://www.aei.org/housing/housing-market-indicators/

Focused on housing sales and related items, while also making clear that housing markets vary wildly across geographic areas even though there is some coupling to broader economic trends.

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