I think his numbers are very suspicious. He purports to be recreating the CPI the way it was before they started using owner’s equivalent rent — ie, when they were using home prices instead of rents to measure housing costs. And yet during the massive bust in housing prices, the spread between his methodology and the current CPI never changed. It just doesn’t add up. It seems more like he has just calculated a delta between BLS CPI and his CPI, and he just adds that number to the CPI whatever else is happening.
I’ve emailed him to ask about this but never heard back. I’ve also asked many people who follow his work and nobody has an answer.
It’s too bad because building a better inflation measure would be a worthy project. But until someone can explain the discrepancies above, I have to assume that his numbers lack validity.
