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News Link • Housing

Why the Fed Chases Its Tail: Rent Measures vs. Case Shiller

• https://www.themaven.net, by Mike Mish Shedlock

Data courtesy of the RENTCafé and the BLS Owners' Equivalent (OER) via Fred the St Louis Fed repository.

The Owners' Equivalent Rent (OER) Calculation method is absurd.

The expenditure weight in the CPI market basket for Owners' equivalent rent of primary residence (OER) is based on the following question that the Consumer Expenditure Survey asks of consumers who own their primary residence:
"If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?"

OER is the largest single component in the CPI. It makes up 24.28% of the index. The CPI category, rent of primary residence is 7.8% of the CPI.

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