munKNEE.com Your Key to Making Money
Housing makes up 42% of the Consumer Price Index (CPI) with the rest of it – food, energy, clothing, recreation, education, transportation, toys, cosmetics, etc. – making up the other 58%. [The current] softness of housing prices is artificially suppressing the growth of the CPI inflation rate [but with the coming increase in lumber costs that is about to change. Let me explain] Words: 772
So says Tom McClellan (www.mcoscillator.com) in an article* which Lorimer Wilson, editor of www.munKNEE.com (Your Key to Making Money!), has further edited ([ ]), abridged (…) and reformatted below for the sake of clarity and brevity to ensure a fast and easy read. The author’s views and conclusions are unaltered and no personal comments have been included to maintain the integrity of the original article. Please note that this paragraph must be included in any article re-posting to avoid copyright infringement.
McClellan goes on to say, in part:
Most people have heard about the CPI variant that excludes food and energy but not many people outside the economics community know that the Bureau of Labor Statistics also publishes a long list of alternate permutations of CPI calculations, including or excluding various components. This week’s chart shows a comparison of the CPI-Housing growth rate versus “all items less shelter”, which is that other 58% of the CPI calculation I mentioned above. When we exclude the contribution of the housing price data, we can see that the inflation rate for everything else is already up to 4.68% and this high inflation rate is occurring at a time when the yield on the 30-year T-Bond is just 3.51%, and 10-year T-Notes are yielding just 2.15%!
The chart [above] also reveals that the CPI-Housing growth rate is already working on catching up to where the inflation rate has gone for everything else.
Who in the world is currently reading this article along with you? Click here to find out.
Higher Lumber Costs = Higher Housing Costs = Higher Inflation
If the following chart is correct, the future should bring even higher housing costs.
The chart above shows that the CPI-Housing growth rate follows the movements of lumber prices, with a lag time of about 18 months so the bottom for housing prices in 2010 was just the echo of the bottom in lumber prices in early 2009. The current uptrend for the growth rate of CPI-Housing is following the path of an up move in lumber prices that occurred 18 months before. Lumber prices peaked in December 2010, which suggests that the CPI-Housing numbers should continue rising until around June 2012…
Conclusion
[The higher input from housing prices joining with the already 4%+ inflation everywhere else, [however,] is going to make it really hard for the Fed to live up to its promise to keep interest rates low until 2013.
*http://www.mcoscillator.com/learning_center/weekly_chart/weak_housing_data_conceals_real_inflation/
Related Articles:
1. Real-time Inflation Data is Now Available – Finally
Inflation is a significant measurement for the economic health of countries around the world but rates are often reported weeks after data is collected. To address this problem, two professors at MIT Sloan School of Management have launched the Billion Prices Project which is the first website to publish daily price indexes and provide real-time inflation estimates around the world. Words: 825
2. These Indicators Say Inflation to Go to 4% Soon – and 6% by 2014
In response to the financial crisis of 2008, the Fed injected unprecedented levels of liquidity into the banking system. While inflation has been modest to date, an analysis of similar periods in history shows that it typically takes more than two years for the impact on consumer prices to be seen. Consequently, we are now at a pivotal point in the current cycle as Fed stimulus began more than two years ago. [Let me explain further.] Words: 2750
3. A Hyperinflationary Great Depression Is Coming to America by 2014! Here’s Why
The U.S. economic and systemic-solvency crises of the last four years only have been precursors to the coming Great Collapse: a hyperinflationary great depression. Outside timing on the hyperinflation remains 2014, but there is strong risk of a currency catastrophe beginning to unfold in the months ahead…moving into a full blown hyperinflation [in a few] months to a year… depending on the developing global view of the dollar and reactions of the U.S. government and the Federal Reserve. [Let me go into more detail.] Words: 2726
4. Hyperinflation to Occur in U.S. as Early as 2013! Here’s Why
In our estimation, the most likely time frame for a full-fledged outbreak of hyperinflation in America is between the years 2013 and 2015 [based on 12 warning signs that are on the horizon.] Americans who wait until 2013 to prepare, will most likely see the majority of their purchasing power wiped out. It is essential that all Americans begin preparing for hyperinflation immediately. Words: 2065