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Inflation Bombshell: A Market-Based PCE House Rent Measure May Be Coming

by Tyler Durden By Joe Carson, former chief economist at Alliance Bernstein The Bureau of Economic Analysis (BEA) is researching the shortcomings of the owner s rent price index it gets from the Bureau of Labor Statistics (BLS) consumer price index as it plans to change its source data for housing services in the GDP accounts. Shifting to a market-based measure of owners rents in the PCE inflation measure would be an inflation bombshell. Assuming everything else equal, a market-based measure of owners rents would permanently lift the PCE inflation, especially during expansions and the dwindling supply of homes for rent, and put an end to the Fed s elusive chase for 2% inflation. The level of official rates would be markedly higher and sit above inflation rather than below. Could a simple change in the measurement of reported inflation end the decades-long bull market in bonds and equities?

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