For a good laugh read http://www.signonsandiego.com/news/business/20070930-9999-1b30inflate.html Did you know that housing prices are not included in CPI, only rents?? HAHAHHAHAHAHAA I about spit my coke out.
They will only add it in if house prices crash to really low levels and it makes CPI look lower. Lets face it, the substitution game they are playing is simply fraud. The CPI number is virtually useless. They should be sued for publishing fraudulent numbers like this.
Yeh they should. Thats total BS to keep the average person living in a dreamworld . Its just a matter of time before they wake up though.
I'm surprised you didn't know that already. You know the justification - bubbles in certain markets don't necessarily affect the masses' bottom line (which despite some of your idea being valid, is also true). If housing doubles and 80% of the population doesn't participate in buying a new home, but rents run up only 10% (which is the sort of scale to what actually happened y/y), should CPI account for the full spike? rents are more normalized. Just imagine CPI with the housing # this past few years. It would have screamed through the roof a few years ago; now we'd be showing substantial deflation. How are the fed economists supposed to stick to 2-3% targets with such a volatile data series as you suggest? what you suggest would mean that the fed should essentially be in the business of making sure nothing appreciates past 2-3%/yr ...
If they fudge these numbers again and signal LOOK no inflation the grain and energy futures will keep moving higher. It's a clear signal the goverment could care less, we all know how the daily cost of living is rising like a rocket.