Thread by @ChrisBloomstran

@charliebilello, question for you. Housing is > 40% of the CPI. You show US house prices up 10%. The St. Louis Fed reports a 2.3% increase y/y in avg prices from $384.6k to $393.3k. Rents (below) are down. The CPI is tilted to rental equivalents & includes utilities, etc... 1/

https://twitter.com/charliebilello/status/1359503393975328775

Transportation (eg. airfares, autos) are the 2nd largest component & prices are weakened by the pandemic. Food/beverage is up ~4% so inflation there. Medical and education are each about 7% of the index and prices there are flat. My daughter's $$$$ college had no tuition hike. 2/

I get that the commodities you listed are up a ton but they have a tiny impact on GDP. On housing, Case-Shiller & Zillow do show high-single-digit increases y/y but from an inflation/household affordability perspective don't take the huge drop in mortgage rates into account. 3/

Lumber prices no doubt reflect the homebuilding boom as urbans flee for Miami and Austin. That said, I don't see a big inflation at the consumer level and with government and and corporate debt at extremes see the result there as deflationary. The huge jumps in in Bitcoin and..4/

Ethereum imply more buyers than sellers in a scarce "asset?" and inflation expectations among buyers, but the median family's largest outlays will remain housing, transportation, eating, healthcare and education. Without dramatically higher wages how do you get inflation? 5/

The huge increase in the money supply looks inflationary, but the money base has grown twice as fast. In the banking system at least there is little lending and borrowing, so reserves sit at the Fed. The Fed's balance sheet ballooned to $7.4 trillion but can be much larger...6/

I have a section in my upcoming letter on this but am curious how what look like deflationary inputs (to me at least) become highly inflationary? I presume that's why you noted BLS reported CPI at 1.4% despite cases of higher financial asset & commodity prices everywhere? 7/7