• Because of the government shutdown, there is no data on the consumer price index (CPI).
  • Today, based on CPI, was to be the day to compute the Cost-of-Living-Adjustment (COLA) for social security payments beginning next year. The rise would likely have been 1.3 percent to 1.6 percent.
  • A tame inflation permits the Federal Reserve to continue the ultra-loose monetary policy of keeping short-terms rates low and continuing Quantitative Easing (printing of the money to buy bonds) for a longer period.  Low inflation is also good to keep longer-term interest rates low as the lenders do not have to mark-up extra in order to compensate for the future loss in purchasing power of money.
  • With no data, we don’t know what happened last month, but a very long trend is not much impacted by a single month of data. Over the past 30 years, price growths have been the following for select items below.
  • Note that prices more than doubled for all items and services (+133%). Colleges may be ripping off students, particularly acute now given the great underemployment among many recent college graduates.
  • Of note for housing (in green below), rents rose by 167% while home prices rose by 197%. For those locked-in to 30-year fixed rate mortgages, the payment never changed. Property taxes, lawn care, and other maintenance costs no doubt rose, however.