Bill Ackman slams US government for understating inflation

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Hedge-fund billionaire Bill Ackman slammed the US government for lowballing inflation, noting that its estimates have drastically understated the surging costs of housing nationwide.

“Housing inflation is unlikely to abate based on supply and demand trends,” Ackman posted in a Friday evening tweetstorm. “The inflation that households are actually experiencing is raging and well in excess of reported gov’t statistics.”

The Consumer Price Index — which measures the change in price of a basket of consumer goods and services over time and is monitored by the Bureau of Labor Statistics — is “extremely imprecise,” the Pershing Square Capital Management boss said.

Roughly 30 percent of the CPI data comes from an informal estimate about the cost of housing via the Owners’ Equivalent Rent. Ackman suggests the OER estimate — which estimates the cost of housing is up roughly 3.5 percent year over year — is woefully understated.

Instead, Ackman points to the largest owner of nationwide single-family rentals as a far better measure. Ackman said this group estimates housing is up 17 percent year-over-year.

With this more accurate measure of prices and inflation, Ackman said the core CPI (CPI minus food and energy costs) would have increased 9 percent in November rather than 4.9 percent. And the CPI would have increased 10.1 percent in November rather than 6.8 percent, according to Ackman.

Earlier this month, BLS announced inflation was at its highest level since 1982.



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