Inflation is bad… so much worse than the official numbers admit.
Dissecting all the gimmicks the Bureau of Labor Statistics (BLS) employed to understate the official inflation numbers would take pages and pages than we have this week. However, one of the more egregious examples concerns its “Shelter” component which is supposed to measure how much it cost to own or rent property in the U.S..
Now, “Shelter” comprises almost 33% of the CPI. So, it’s a MAJOR component of the official inflation number. And as such it is massaged to UNDER-state inflation in a MAJOR WAY.
The BLS counts “Shelter” via two different measures called “Rent of Primary Residency” and “Owners Equivalent Rent.”
Rent of Primary Residence is meant to represent what you would pay to rent a residence including extra charges such as parking or garage facilities.
Owner’s Equivalent Rent is meant to replicate your cost of owning a home based on what you could potentially rent it out for.
The BLS calculates both measures via public surveys. Setting aside the fact that NO ONE wants to talk to the BLS about their expenses (which renders them highly accurate), the BLS still massages the data it does collect to an absurd degree.
Case in point, according to the BLS, Rent of Primary Residence is up only 2.4% over the last 12 months while Owner’s Equivalent Rent is up only 2.9%.
In the REAL world, apartment rental costs are up 8% to 20% depending on the specific market. And Home Prices are up 20% in the last 12 months.
Even if you already own a home, meaning that you don’t need to buy one so the rise in home prices doesn’t hit you right now, you’re still paying more in property taxes and other items related to the spike in home prices.
Put simply, unless you live in a cave, your real-world Shelter expenses are up triple if not quadruple the BLS’s claim of ~3%. And remember, Shelter comprises almost 33% of CPI!
So, what would happen to CPI, which is already clocking in at 5.4%, if the BLS were to use ACCURATE REAL WORLD data for its Shelter component?
It would tell us that REAL inflation is at 7.95%.
It’s terrifying, but it also presents us with an extraordinary opportunity.
During the last major bout of inflation in the 1970s, smart investors locked in gains in the QUADRUPLE digits (1,000% or higher). And THAT version of inflation was the kind the Fed could stop!
So, you can imagine the profit potential of this crisis today.
I outline five investments that could explode higher as inflation rips through the financial system in a Special Investment Report titled Survive the Inflationary Storm.
To pick up a free copy, swing by