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Politics : American Presidential Politics and foreign affairs -- Ignore unavailable to you. Want to Upgrade?

To: DuckTapeSunroof who wrote (36035)	7/24/2009 7:07:22 PM
From: TimF	Read Replies (1) \| Respond to of 71588

I thought you liked Shadowstat's data. According to them (going by the chart at your link) consumer prices are still climbing. Bear in mind the government considers housing a capital good not a consumption item. Actually it considers housing to be both. In the broadest sense, housing would include rental housing which would (for the consumer) be considered a consumption item. Even owned housing is partially treated as a consumption item (through "Owners Equivalent Rent"). I'm not sure that "Owners Equivalent Rent" is the best way to make that distinction, or that the break down between investment and consumption is necessarily correct, but the general idea, that housing value is in part a capital good is IMO correct. The indirect effects of a decline in housing prices, particularly a big decline from bubble levels, can slow down the rest of the economy and produce a reduction in inflation, or cause deflation, but I wouldn't consider the direct effect so strongly when your measuring consumer prices.