
What Many Economists (and I) Got Wrong About This Economy
Plain English with Derek Thompson
Impact of Housing Prices on Consumer Price Index
The Bureau of Labor Statistics removed housing prices from the consumer price index in 1983, resulting in the exclusion of mortgage costs and interest rates. By only considering rent prices and hypothetical rental income for homeowners, the CPI no longer reflects the impact of interest rate changes on housing costs, leading to a lack of responsiveness to interest rate fluctuations.
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