Okay was reading something on housing data and core inflation FRBSF Economic Letter: The Housing Drag on Core Inflation and see this:
One way to consider the effect of the price of housing on core inflation is to calculate a core PCEPI that excludes housing. This is done in Figure 1, which contains three time series. The first is 12-month growth in the core PCEPI. The second is a comparable measure of inflation for the housing component of the core PCEPI. The final time series is a core PCEPI that excludes housing expenditures.
What does PCEPI mean? I dunno. So I emailed a former econ professor...
The acronym means "Personal consumption expenditure price index."
This is actually a great concept, since there can be major biases in
the usual CPI, which uses fixed weights on spending categories
that can greatly understate the ability of consumers to adjust to relative
price changes over time. By contrast, the PCEPI is a "chain" index
that updates the weights on spending categories
regularly. The issue with housing is that, frankly no matter what price
index is used, housing is enigmatic since it is not bought and sold as
regularly as most other goods and services, and clearly serves as a
major source of wealth for home owners. So it, like volatile items like
food and energy are sometimes given special treatment (and even
ignored) when computing "core" inflation rates.
The acronym means "Personal consumption expenditure price index."
This is actually a great concept, since there can be major biases in
the usual CPI, which uses fixed weights on spending categories
that can greatly understate the ability of consumers to adjust to relative
price changes over time. By contrast, the PCEPI is a "chain" index
that updates the weights on spending categories
regularly. The issue with housing is that, frankly no matter what price
index is used, housing is enigmatic since it is not bought and sold as
regularly as most other goods and services, and clearly serves as a
major source of wealth for home owners. So it, like volatile items like
food and energy are sometimes given special treatment (and even
ignored) when computing "core" inflation rates.
Where would I be without the Internet? Call it what you may... "Socialism" or "government intervention in the economy" or "government funded Research and Development" the internet and computer has dramatically improved my access to education and cut down on the time it takes to learn. Anyways just a by the by if you were wondering what PCEPI means....
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