Moody's Talks - Inside Economics Colyar on CPI, Dietz on Housing
Dec 19, 2025
Matt Colyar, an economist from Moody's Analytics, discusses the quirks in consumer price index (CPI) data affected by the government shutdown, highlighting the misleading drop due to insufficient fresh data. Meanwhile, Robert Dietz, chief economist at the National Association of Home Builders, shares insights into the housing market's tough year ahead while pointing out opportunities, such as the dynamics between existing and new home sales, and the challenges posed by rising interest rates and builder incentives.
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Shutdown Created A Junk CPI Signal
- The October CPI data is unreliable because the government shutdown forced the BLS to carry September prices forward as zeros for most categories.
- That created a downward bias and a level shift that will distort year-over-year inflation readings for about 12 months.
Shelter Distorts Core Inflation Numbers
- Shelter composes a very large share of CPI and carried-forward zeros for October produced an implausibly small two-month shelter increase.
- That makes the reported sharp year-over-year drop in core inflation especially misleading.
Build An Alternate CPI Now
- Construct alternative inflation measures using available third-party price sources and reasonable imputations for missing months.
- Moody's Analytics and other forecasters should publish adjusted CPIs until the BLS series normalizes.