Open mics are an accident, preparing questions for a phone survey are not.
This survey was metiuclously planned and executed, and then the results were marketed and published.
So the question is: why did the NAR reverse course on it previous message that housing is hot, there’ll be a soft landing, and this is a good time to buy? I remember last month Lereah first mentioned that rising interest rates could hurt housing, sort of hinting that the Fed should stop raising rates to save housing and the economy.
The Senators questioning Bernanke brought this up. Sarbanes had been lobbied by the NAHB, and showed a chart that showed new home starts falling off a cliff. He said that the NAHB explained to him that the drop in housing sales is causing rents to go up, raising the CPI, causing the Fed to raise rates to reduce CPI, lowering housing sales and creating a vicious cycle. From this comment I realized that the industries are definitely lobbying these senators.
Bernanke’s response was the CPI is only one indicator they use, and that the PCE is more accurate since it excludes rents. He emphasized repeatedly that they look at many factors, not just the CPI. They consider the markets, anecdotes, statistical modeling, prediction of future events, surveys of consumer perception of inflation, and many data inputs of wages, productivity, purchasing prices… So he’s really not a dufus who just looks at CPI, he’s too smart for that.
