A study links Americans' perception of high inflation to a change in inflation estimation method.
A study by economists Bolhuis, Cramer, Schulz, and Summers suggests that Americans' perception of high inflation may be grounded in reality due to a change in the method used to estimate inflation, potentially causing an underestimation of the true level. The pre-1983 method considered housing costs and interest rates, while the current method relies on rental costs. This difference could explain why Americans feel high inflation despite official statistics showing a decline, as they experience rising costs for essentials like housing and food.
March 28, 2024
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