Joey, there is however one interesting observation that goes against your optimism here.
The difference between cumulative rent increases on zillow etc al(up 25-30%) is much higher than the cumulative cpi shelter/rent (up 17%) since Feb 2020.
To me, this suggests that either the zillow index needs to fall(unlikely at <4% Unemployment) or cpi shelter still has room to run. What do you think? Is there another explanation?
Thank you for the work. One quick question - you talk about how it is the growth rate of gross labor income that matters more than level, which makes sense. It also makes sense to me that NTRR would then lag the growth rate in gross labor income by a small margin on the way up as gross labor income has to rise at least coincidently with if not before new leases are signed at more expensive levels. But then that begs the question of why/how NTRR is already back to 0% year over year growth while gross labor income is sitting at ~6% year over year? Even in quarterly annualized terms, gross labor income growth is still positive ~4.5% while NTRR must be negative? Is there some component of the 2nd derivative of gross labor income that matters (deceleration of gross labor income growth from >12% to ~4.5% in qoq annualized terms)? Curious how you square that circle and explain how NTRR yoy% is already at 0% with gross labor income growth still reasonably positive.
When I look at CPI month over month in the months leading up to March 2020 I see inflation…it just never showed up in the YoY numbers because of the deflation in March, April, May 2020. That deflation also meant we would always have what looked like inflation in 2021 once those MoM numbers fell out of the YoY. We also had inflation in 2006 and 2007 that people seem to have forgotten about because of what happened in 2008.
Hi Joseph-Great data points and observations. Is there any data gathering that could track property taxes as a percentage of rent figures? These tax numbers are exploding, in particular, in Democrat run jurisdictions. Sort of the silent component of rent increases. Thanks and much continued success. Best regards, Matt
The Most Important New Disinflation Indicator
Joey, there is however one interesting observation that goes against your optimism here.
The difference between cumulative rent increases on zillow etc al(up 25-30%) is much higher than the cumulative cpi shelter/rent (up 17%) since Feb 2020.
To me, this suggests that either the zillow index needs to fall(unlikely at <4% Unemployment) or cpi shelter still has room to run. What do you think? Is there another explanation?
Thank you for the work. One quick question - you talk about how it is the growth rate of gross labor income that matters more than level, which makes sense. It also makes sense to me that NTRR would then lag the growth rate in gross labor income by a small margin on the way up as gross labor income has to rise at least coincidently with if not before new leases are signed at more expensive levels. But then that begs the question of why/how NTRR is already back to 0% year over year growth while gross labor income is sitting at ~6% year over year? Even in quarterly annualized terms, gross labor income growth is still positive ~4.5% while NTRR must be negative? Is there some component of the 2nd derivative of gross labor income that matters (deceleration of gross labor income growth from >12% to ~4.5% in qoq annualized terms)? Curious how you square that circle and explain how NTRR yoy% is already at 0% with gross labor income growth still reasonably positive.
Thanks in advance
Clear thinking and writing! Excellent! 🙏🏽
Another terrific review of the ups and downs of our head-scratching economy Joseph. Thanks for all of your hard work.
Excellent work and presentation. I appreciate your insight and intellectual honesty. Thank you.
Enjoyed and shared! :)
YES!!!! This is ABSOLUTELY what I wanted to hear. Thank you for putting in the effort to dig deeper down.
Hi Joseph, is the NTRR data updated and published somewhere or are you recreating those indexes yourself? thanks!
When I look at CPI month over month in the months leading up to March 2020 I see inflation…it just never showed up in the YoY numbers because of the deflation in March, April, May 2020. That deflation also meant we would always have what looked like inflation in 2021 once those MoM numbers fell out of the YoY. We also had inflation in 2006 and 2007 that people seem to have forgotten about because of what happened in 2008.
Insightful stuff. Makes a lot of sense.
Hey mate, I like your work. You down for a cross recommandation ?
Hi Joseph-Great data points and observations. Is there any data gathering that could track property taxes as a percentage of rent figures? These tax numbers are exploding, in particular, in Democrat run jurisdictions. Sort of the silent component of rent increases. Thanks and much continued success. Best regards, Matt
What does the third chart look like with a monthly cadence?