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Pastimes : Clown-Free Zone... sorry, no clowns allowed
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To: Les H who wrote (171547)6/10/2002 1:23:37 PM
From: Les H  Read Replies (1) of 436258
 
In the early 1980s, the cost of a new car was put on a twelve-year moving average. The true cost is spread out and thus delayed. So the cost of a new automobile is muted for over a decade.

The housing component is grossly misstated. This component is about 40 percent of the total index. In 1983, real estate was mostly replaced by rents. The idea behind this decision was that a house is an investment and not a part of the cost of living. So real estate is an investment while rents are seen as the cost of housing. This may not be accurate. Rents are controlled in many areas and are not an accurate representation of price trends.

The housing component is derived from the Federal Housing Administration (FHA). The FHA sets a maximum price of $60,000 on a house. This is obviously very low and not representative in most parts of the country

billmeridian.com
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