Look Ma, No Inflation

The Fed began a 2-day meeting today with many members in search of inflation. I happen to have a few charts for the Fed to ponder.

Medical Premiums

The feature chart on Health Insurance Premiums is from the National Conference of State Legislators. Those not in a company plan and not getting rebates report increases of 50% or more.

Yet, the BLS tells us the Medical Services CPI rose only 1.7% over the last year. Medical Care Commodities (drugs) rose only 1.0%.


The Index for Shelter rose 3.2% according to the BLS. Primary rent rose 3.8% with Owners' Equivalent Rent (OER) up 3.2%

The BLS does not consider home prices as part of the CPI. Instead, here is the exact question the BLS uses to determine rent increases: "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?"

OER has the largest weight in the CPI at 24.583%.

Not Inflation

The folks at the Fed do not count a penny of that as inflation. Instead, it's called a capital investment.

Not all of that rise represents inflation. Homes are bigger, with more features and better windows, better layouts etc. That said, the bulk of the rise is indeed a function of inflation.

Case Shiller

The Case Shiller index measures repeat sales of the same house. Improvements or degradations may or may not be accurately priced in but the index provides another look at what inflation might be.

Case Shiller Year-Over-Year Increases

In November of 2012, year-over-year inflation topped 5% and from then until now, never dipped below 4.3%. Home price inflation is currently 6.0% rounded to the nearest tenth.

The BLS says shelter is up 3.2%.

The Fed cannot find inflation. It thinks inflation is too low. Collectively, they are crazy.

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Mike "Mish" Shedlock

Comments (30)
No. 1-25

In 2006, 2008, and 2009 -- premiums paid by employees under employer plans went up 6.5%, 7.1% and 7.5%... in the most recent three years those premiums went up 9.1%, 9.6% and 10.1%. Under what warped version of math does this constitute a "slow down" in premium growth since obamacare started? What school of stupid are these "journalists" attending that ~7% is less than ~9.5%? Its one thing to spout propaganda, but this is just stupidity.

And those numbers don't count the portion of premium increases absorbed by employers -- which makes the increase in premiums MUCH higher. As Mish alludes to, those buying obamascam policies on their own (aka small businesses and their employees) have seen premiums climb 30-50% per year (plus deductible increases).

No matter what one's politics, these idiots claiming that obamacare slowed cost growth are too stupid to be employed. This is basic math that these morons are failing. 9.5% is greater than 7% (if the graphic is believed). Individual premiums are climbing 30%... while GDP is supposedly growing 3-4% nominal. Only a blithering idiot would suggest obamacare is anything other than an epic disaster....

And Congress exempted themselves, so obviously they don't believe in obamacare either. Its time to admit the entire concept of "free" medical care (when doctors don't work for free) was a scam. Obama is a con man, and if you are a democrat -- obama's lies are the reason you must salute Trump today.


Mish sorry if I offended you- I don't quite get it but I just now noticed this purple dot and since you have exposed my name so I guess you are ready to remove me from your blog, and if that's the case please go ahead and remove me. Strangely enough this may have something to do with something I said the other nite about you that was supposed to be a compliment, but I was glad you removed it since my growth pick was so wrong. Honestly don't know what I said that was so offensive but a remark u made later about oil prices after some guy u like agreed with me on some comments I made about Corporate options. You still will be my first read every day and have really enjoyed making comments, yet sorry you ovbiously r ready for me to leave.If not what can I do?


Medexman...look closer. Those numbers are not annual increases YoY.


what they are is the percentage of US median income...so every year it becomes a larger net percentage of income, but the annual change is in the range of between 0.2 and 0.9 percent actual increase annually.


Well Gondwana has a purple dot. Mish my wife thinks I'm half crazy after being married 49 years and when things do go right I think I've offended someone or ther's a conspiracy. Please forgive my waste of your valuable time and please remove me if it will help you.