Shelter has a large weight in the CPI basket, and its 12-month increase was 3.6% (comparing to 2.9%)
Rents in San Francisco (and LA) are skyrocketing. And that cannot be easily explained.
Not sure what’s causing this. What do you think?
According to Redfin, the median home sale price was up 1.2% YoY in July 2025. [1]
Im sorry but the single justification for the richest country on the planet still building houses out of wood was that it was cheap and abundant. Now I find theyre importing at increased cost.... so tell me again why you all live in wooden sheds?
When supply is constrained, anything that increases demand - like return-to-office mandates finally bringing back workers who left for other states during the pandemic, or a boom in AI investment causing headcount and salary growth in a small sector that's very geographically concentrated in a single rent market - will greatly increase the price.
That said, it's curious that this CPI news release highlighted "shelter" as a driver:
> The index for shelter rose 0.4 percent in August and was the largest factor in the all items monthly increase.
The US may import a lot of things... but probably not shelter. Wonder how much of rent inflation is driven by fixed rate mortgages from the zirp era needing to be refinanced at today's higher mortgage rates.
- Rents would go down because deportation of illegals will reduce demand
- Prices of goods would skyrocket because of tariffs
But instead, rents went way up.
Could this be driven by the push to return to the office?
The number of people deported is negligible. Around 200,000 people.
Despite all the news and drama, this number isn’t actually very different than normal. Any large country will have a steady stream of deportations if they enforce immigration laws. It has been like this for a long time.
Don’t believe the news and political rhetoric. Look at numbers. Do no trust any political claims without looking at the numbers.
It can increase rents because immigrants build houses and do mental jobs like cleaning.
> Could this be driven by the push to return to the office?
A little. People still want to live in desirable areas for reasons other than work.
> - Rents would go down because deportation of illegals will reduce demand
This was indeed extremely naive. There are not enough people in the US illegally to be a significant factor in housing demand. I'd suggest no longer getting information from whatever source lead you to believe this.
The fact that anyone would think this could possibly be true is an indicator of how strong the propaganda machine is.
Genuinely curious because I've never heard someone state this quite so credulously. How many people do you think are in the country illegally, that they're moving the housing market in a substantial way? In my experience seasonal farm workers (both with status and without) are usually housed in what are essentially dorms. These buildings are borderline illegal from a building perspective and not housing supply you would compete for.
Who are the millions of undocumented people renting a 2000/month 2 bedroom 1 bath condo?
Housing requires construction materials, tools, and fixtures. Tariffs increase the cost of all of these, including domestically produced materials due to the second order effects.
Don’t believe the political rhetoric. They’re making a big show and behaving poorly with the masks and other abuses, but they’re not actually doing abnormally high deportations.
Note that any large country will have a steady flow of deportations due to basic enforcement of immigration laws.
Deporting 100 people working at a factory has a different economic impact than deporting 100 people at the moment they were trying to cross the border.
If people think prices will go up they will insist on bigger raises. It's why expectations can be as important as what 'actually' happens:
ie wood
So I'd naively expect that 99% dwellings are existing housing stock and so might not to be sensitive to increased construction costs, because they've already been constructed.
I was wondering if BLS might use a model of estimated replacement cost in their CPI estimate, incorporating construction costs, but from a quick skim read it doesn't sound like they do that.
For estimating rental costs, they ask people how much rent they've paid this month:
> “What was your total rental payment for this month for this unit? Include any extra charges for garage or parking facilities, but do not include direct payments by local, state or federal agencies.”
+/- a lot of stuff about weighting that I didn't follow.
https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-an...
So instead of a massive inflation bump in one month you may get a sustained inflation rise over 6-12 months for example, which from the consumers POV probably looks just like higher inflation overall
That assums tariffs are consistent. How consistent has the administration been on tariff rates?
Could this be related?
https://www.justice.gov/archives/opa/pr/justice-department-s...
At the same time, though, prices can never rise higher than the consumer is willing to pay. All else equal that ultimately needs to be true, but there are many variables that do not need to remain equal, so it is not a foregone conclusion.
The 2022 food crisis offered pretty good motivation for consumers to pay more — people were truly worried about going hungry there for a while, albeit thankfully that concern didn't last long. I'm not sure tariffs offer the same kind of motivation. I expect there is a strong "Haha. No. I'm not paying more for this arbitrary reason that can be (and probably will be) reversed on a whim." sentiment out there right now.
ahhh, the naivety of youth. not only can they, they have.
Was under the impression that 2-3% is the target. Less than that is bad. More than that, also bad.
Might not be at the 2% target, but at least looking at the graph, 2.9% isn't making me panic. Maybe the panic is warranted, I don't know.
https://www.cnbc.com/2025/09/11/consumer-prices-rose-at-annu...
Edit: Although maybe it does get more worrying if the hypothesis is that reducing rates will result in upward pressure on inflation. That could be worrisome.
Who is this "you" that you talk about?
There were many folks talking about all the 'saving money' was just a veneer; a sampling:
* http://archive.is/https://www.theatlantic.com/politics/archi...
* https://www.epi.org/blog/doge-is-not-worth-engaging-you-cant...
* https://www.msnbc.com/katy-tur/watch/doge-isn-t-about-money-...
Even the libertarian Cato Institute:
* https://www.cato.org/blog/six-ways-understand-doge-predict-i...
The hypothesis of an 'ideological purge' was fairly common.
Inflation is running at an annualised 4.8%. The 2.9% number is backward looking.
Sure monthly inflation is more volatile, but the direction of travel is up, and that running average of 2.9% will be increasing slowly as it incorporates the recent higher prints.
Edit: the seasonally adjusted change is 0.4% actually, with the monthly change 0.3%
https://www.federalreserve.gov/economy-at-a-glance-inflation...
The motivation for 2%/year is that when inflation is lower, businesses and consumers tend to hoard more cash, instead of spending or investing it, reducing economic activity, and when inflation is higher, it tends to become self-reinforcing and can spiral out of control: Businesses raise prices and employees demand higher pay to keep up with expected rising costs. Deflation (prices decreasing every year) is undesirable, because it forces businesses and consumers to spend and invest less, but no one ever wants to earn less (e.g., employees don't like pay cuts), so deflation tends to shrink economic activity even more, and in the worst case, can induce a depression, with businesses spending and investing less because consumers are spending less, and consumers, in turn, spending less because businesses are spending and investing less. I'm of course oversimplifying, to keep things short.
Inflation remains above target, but thankfully, as of now, it doesn't appear to be self-reinforcing. I mean, I hope it isn't: https://news.ycombinator.com/item?id=45182111
Because of jobs data, it will 100% cut interest rates in the next 2-3 FED meetings with inflation clearly showing an upwards trend.
US could print money for over a decade because of China exporting deflation to it and the world, now that China is an enemy, it's up for a rude awakening.
Monetary policies matter, the Dollar will suffer great debasement (it already is).
Imagine how many dollars are in supply around the world, and now the world is quitting the dollar.
There'll be too many dollars for too little demand. Fasten your seatbelts...
The country will become industrialized for the wrong reasons -- by becoming poorer.
bix6•1h ago
buellerbueller•1h ago
The capitalists don't care about the labor market as much as they do the stock market. In Trump's crazy Tilt-a-Whirl Policy and Tariff Generator (TM), what business would invest in expansion beyond what is necessary to grease the palms that need greasing? Way too much uncertainty. Time for stock buybacks.
gruez•1h ago
AI and AI related companies are the opposite of this.
buellerbueller•36m ago
AI companies are an existential threat to those who don't control the AIs. All of the "good AI" scenarios that the AIcolytes espouse assume we have bent AI to our whims permanently.
goalieca•42m ago
baby-yoda•41m ago
https://www.cmegroup.com/markets/interest-rates/cme-fedwatch...
bix6•27m ago
baby-yoda•9m ago
In the time since I originally posted that the 400-425 basis point level has dipped another 2%, with that amount going towards a 50 basis point cut. Very muddy waters indeed.
Powell has been adamant about fighting inflation so I struggle to understand how the market gives a zero percent chance of status quo.
seneca•38m ago
ksec•4m ago