[JumpCrisscross]

> Healthcare and housing being two big ones

Almost all BLS price indices, including CPI, include housing. (CPI measures the “rent of primary residence, owners' equivalent rent, utilities, bedroom furniture” [1].)

That said, this is the second time I've come across this myth on HN in less than a week. Where did you hear that price indices don't track healthcare and housing costs?

[1] https://www.bls.gov/opub/hom/cpi/concepts.htm#the-cpi-as-a-c...

[Avicebron]

The point isn't that CPI excludes healthcare and housing, CPI shelter sub-index https://fred.stlouisfed.org/series/CUSR0000SAH1 and the medical care sub-index https://fred.stlouisfed.org/series/CUSR0000SAM2 have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated. So if personal spending is weighted towards healthcare and housing (anyone who rents or pays a mortgage below a certain income) then your purchasing power is declining faster than the real wage would suggest.

EDIT: saying real wages is deflated is ambiguous, the headline CPI understates the effective inflation experienced by people whose spending consumption is weighted towards housing and healthcare. So the "real wage" is inflated relative to the lived experience of those people.

[JumpCrisscross]

> have grown ~500% and ~770% respectively in the same time frame. The _overall_ CPI they are blended into grew ~300%, which means real wages are deflated

If you spend a third of your income on housing and 8% on healthcare [1], then those components–assuming your 5x and 7.7x multiples–will raise your cost of living by 2.25x. That leaves 1.75x for the other components (to get to the overall 3x). That sounds reasonable as a median estimate.

> if personal spending is weighted towards healthcare and housing (anyone who rents or pays a mortgage below a certain income) then your purchasing power is declining faster than the real wage would suggest

Sure. If you spend a lot on imported dates, your purchasing power will currently be declining faster than the median American's. This is a problem. But it's almost by definition not one that can be widespread.

> the "real wage" is inflated relative to the lived experience of those people

Well, yes. There are regional CPIs and income-indexed CPIs and all manners of privately-calculated costs of living. Paying attention to lived experiences or whatever is important, especially in politics. But it's no substitute for broad measures when conducting a national economy.

[2] https://www.bls.gov/opub/btn/volume-9/how-have-healthcare-ex...

[Avicebron]

> Well, yes. There are regional CPIs and income-indexed CPIs and all manners of privately-calculated costs of living.

Great. So we agree, you are just dismissing the distributional analysis and equating fungible goods with inelastic ones. You can't substitute away from something like region-locked housing supply so those folks face higher effective inflation (BLS R-CPI-I).[1]

[1] https://www.minneapolisfed.org/article/2024/lower-income-hig...

[JumpCrisscross]

> you are just dismissing the distributional analysis and equating fungible goods with inelastic ones

No, I'm not. You're the one moving goalposts.

The thread started by someone claiming, wrongly, that housing and healthcare aren't included in CPI. (A common myth.) I showed that was wrong. You said it's underweighted. I pushed back. You're now saying it's underweighted for some people, which, like, is how distributions work.

Variance doesn't make a central tendency meaningless. And the truth is for most Americans, real wages are up. Lived experience and all. It's painfully not for a section of Americans in housing markets locked by policy from expansion or in bad health and luck. That's unfortunate and deserves attention. But it doesn't negate the whole.

> You can't substitute away from something like region-locked housing supply so those folks face higher effective inflation

Straw man. Nobody claimed universality.

If we were having a discussion about the Midwest, I'd quote different numbers and reach a different conclusion. That's how scoping works. Americans, as a whole, have experienced real wage growth since 2000. That doesn't mean literally every single American has. And it doesn't mean that people outside America have.