Of course the consumer price index, out this morning, doesn’t show land prices or land rents. That is, cost of getting access to land is buried in all the other figures.
Much is being made of the year-to-year decline, which is largely due to the drop in petroleum (and gasoline) prices. Of course this is reflected in housing costs, which include an energy component. But the main piece of housing costs is “shelter cost.” Under this, “rent” and “owner equivalent rent” increased 3.2% and 2.1%, respectively. Because most Americans are “homeowners,” the latter figure has a large impact on the total CPI. The actual cost of purchasing a house and lot may have declined, but the CPI’s housing cost is based on what you might have to pay to rent a unit like the one you are buying.
The price of used cars also dropped, probably because fewer people are interested in buying one. But the cost of what BLS calls “education” increased 5.6%.
For some reason BLS seems not to have yet posted the sub-national data.
I should have known about this, but I just discovered that BLS has been publishing a C-CPI-U index. I had seen the term “chained index” around but didn’t realize what it means. This index has a direct month-to-month link to what consumers report that they’re actually buying, rather than using a fixed marketbasket as the conventional CPI’s do. Thus the chained index measures the cost of living– what people actually spend to live– rather than consumer prices. BLS says the chained index is expected to generally be lower than the conventional index, and that has been the experience since it was introduced. However, it seems to me that when the chained index is lower than the conventional index, that means people are finding ways to live cheaper (presumably because their real incomes are declining). If people’s incomes were increasing, relative to the cost of living, wouldn’t the chained index rise faster than the conventional one, as they choose more luxuries?
If I am correct, and the indexes are correct, then real incomes are declining.
BLS explains their chained index here. Actual data seem to appear only in the detailed reports, which are here.