If i am not mistaken, BLS obtains OER by asking homeowners what they think they could get for rent. This is compared to case-shiller which uses actual prices. And back on November Goldman wrote how the response rate to these surveys is plummeting, which begs the question of why they should be trusted.
If memory serves, that response rate was in relation to the jobs metrics. However, the validity of the OER has long been a matter of debate even without questions about response rates.
Ultimately, the flaw in the OER is that it is a synthetic metric entirely. There is no real world rent data to which it directly correlates. There are private sector metrics which are not synthetic and which show a different pattern of inflation.
Generally, the OER is viewed as a trailing indicator. So the rises it reports in the current reporting period arguably have already happened. One side effect of this is that, if anything, the OER tends to understate housing price inflation.
Thanks Peter. I checked, and this time my memory didn't fail me: the data is collected by survey. Respondents are asked to guess how much their owned home would rent for. Then there's various tweakery - changes in index weightings. This time around, the weighting of car prices is down, "shelter" higher. And then the seasonal adjustments. All of which is a long way of saying I think it's something of a fake and bullshit number. Garbage in, garbage out.
Forward-shifting a portion of the energy price deflation - so that’s how they got their numbers! As always, you have answered questions and explained things clearly, Peter, so thanks again!
You are right that both malice and stupidity are possibilities. But I think you’re being generous and gentlemanly in assessing this; their track record of malice, spin, and propaganda lead me to suspect that it’s highly likely that deliberate manipulation of the data is an ongoing practice in most official releases. Okay, you can play good cop, giving them the benefit of the doubt, and your readers can play the bad cops and lean in, saying, “how gullible do you think we are, wise guy?”
Yes, your being fact-based and gentlemanly while most others on Substack are throwing tantrums are two of the 10,000 reasons why you are magnificent - and you are. So here’s me being told to report to the HR office, but jeez, if a girl can’t give an inappropriate compliment to a man on Valentine’s Day, when can she?
If i am not mistaken, BLS obtains OER by asking homeowners what they think they could get for rent. This is compared to case-shiller which uses actual prices. And back on November Goldman wrote how the response rate to these surveys is plummeting, which begs the question of why they should be trusted.
If memory serves, that response rate was in relation to the jobs metrics. However, the validity of the OER has long been a matter of debate even without questions about response rates.
Ultimately, the flaw in the OER is that it is a synthetic metric entirely. There is no real world rent data to which it directly correlates. There are private sector metrics which are not synthetic and which show a different pattern of inflation.
Generally, the OER is viewed as a trailing indicator. So the rises it reports in the current reporting period arguably have already happened. One side effect of this is that, if anything, the OER tends to understate housing price inflation.
Thanks Peter. I checked, and this time my memory didn't fail me: the data is collected by survey. Respondents are asked to guess how much their owned home would rent for. Then there's various tweakery - changes in index weightings. This time around, the weighting of car prices is down, "shelter" higher. And then the seasonal adjustments. All of which is a long way of saying I think it's something of a fake and bullshit number. Garbage in, garbage out.
"It is quite conceivable the BLS has been both malicious and stupid with its adjustments to the historical data."
Or, stupid and malicious, a trait with this administration. Malicious is the intent, and stupidity intervenes.
Mr. Kust, well done!
Forward-shifting a portion of the energy price deflation - so that’s how they got their numbers! As always, you have answered questions and explained things clearly, Peter, so thanks again!
You are right that both malice and stupidity are possibilities. But I think you’re being generous and gentlemanly in assessing this; their track record of malice, spin, and propaganda lead me to suspect that it’s highly likely that deliberate manipulation of the data is an ongoing practice in most official releases. Okay, you can play good cop, giving them the benefit of the doubt, and your readers can play the bad cops and lean in, saying, “how gullible do you think we are, wise guy?”
It's not a question of giving them the benefit of the doubt.
It's a question of realizing that there's no good evidence of actual malice. If I can't prove it I don't assume it--but I don't reject it either.
Yes, your being fact-based and gentlemanly while most others on Substack are throwing tantrums are two of the 10,000 reasons why you are magnificent - and you are. So here’s me being told to report to the HR office, but jeez, if a girl can’t give an inappropriate compliment to a man on Valentine’s Day, when can she?
I resemble that!
(And thanks! Happy Valentine's Day to you as well)