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Politics : Ask Michael Burke -- Ignore unavailable to you. Want to Upgrade?

To: BGR who wrote (78597)	3/26/2000 8:11:00 PM
From: Michael Bakunin	Read Replies (2) \| Respond to of 132070

Bukun, I think it's worth looking at the methods being employed to generate CPI statistics before accepting them on face, especially when the face seems a little crooked. I think the issue is marginal cost versus aggregate cost. The Bay Area shelter component is up 6% YoY; that means rents and equivalent rents for the whole population, NOT the rent for a newly vacated apartment. The CPI shelter component accurately reflects aggregate cost, but does not (and rarely will) reflect the margin due to the illiquidity of the real estate market. The shelter component of the CPI will lag the actual market, and tend to dampen marginal fluctuations. And when the market is trending strongly, as it is now, better to measure shelter changes on the margin. I maintain that your sense of security from potential future inflation is misplaced. The risks are real, and growing. -mb