|
| Monday, February 11, 2008 |
| All kinds of fun at the Boston Fed website |
Every so often I visit the Federal Reserve Bank of Boston to see what kind of new statistics and articles they have published (ah, juicy numbers to crunch!). Today I played with the New England Economic Indicators Interactive tool and built this little chart:  This shows consumer prices for Boston (Food, Shelter, Fuel & Utilities) from January 2003 - November 2007. It is interesting to note how Shelter - which gets a lot of news coverage - has dropped very slightly and is still much higher in 2007 than it was in 2003. Fuel and Utilities which also gets a lot of press coverage for its wild gyrations is on the whole living up to its "getting more expensive" reputation. Food was a bit of a surprise - it is like the stealth expense - always going higher - never lower and sneakily and almost unnoticingly taking more and more of your paycheck. |
| posted by Boston Gal @ 3:28 PM *
* Subscribe to Boston Gal's Open Wallet |
Links to this post:
|
| 4 Comments: |
-
Indeed - food is the sneak attack. Makes it hard to believe that the Fed excludes food from its core inflation index b/c it is too volatile. Really? Too volatile or too inexorable?
-
Nice to know what amusements you find, Boston Gal, when you are sick and fighting a cold. I don't think even I could get into a spreadsheet while sipping Nyquil.
Hope you are feeling better.
-
There seems to be some inconsistencies in the data. Is there lag from when they report? Fuel prices are known to increase in summer driving months but the last two year don't show that increase. May 06 and 07 show steady or slight decline. I don't know the Boston real estate market well, but I do have some anecdotal evidence that differs from the Fed report. A friend sold a condo in the North End, one block from wharf, for a modest profit in 2005. She owned it since 97 and put two new bathrooms in. Her profit doesn't match up with the increases the Fed specified.
-
The reason shelter didn't rise very fast from 2001-2005 and the reason it hasn't decreased since 2005 is because the Fed calculates shelter costs based on the costs of renting, not buying.
http://www.post-gazette.com/pg/06177/700833-28.stm
As a result, owners' equivalent rent has become a hot topic on Wall Street. One argument is that owners' equivalent rent understated the cost of housing during the recent real estate boom and may be increasing now because the housing market is weakening.
How can that be? The Bureau of Labor Statistics has used owners' equivalent rent to calculate the cost of owning a house since 1983, when it replaced an index designed to represent mortgage carrying costs. The thinking behind the change was that owning a home is part shelter, part investment.
Owner's equivalent rent computes what homeowners would pay to rent their housing. It's based on a sample of rents with the estimated value of any utilities provided stripped out.
One problem: When the housing market was booming, the cost of buying a home escalated, but the cost of renting did not. It was a simple supply and demand equation, as the demand for homes from buyers was great, but the demand from renters was not.
Owners' equivalent rent for 2004 increased 2.3 percent. But the price of buying a home in 2004 increased 11.17 percent, according to data from the Office of Federal Housing Enterprise Oversight.
|
| |
| << Home |
| |
|
|
|
|
Indeed - food is the sneak attack. Makes it hard to believe that the Fed excludes food from its core inflation index b/c it is too volatile. Really? Too volatile or too inexorable?