The Bureau of Labor Statistics clarified that it does not have a list of so-called "superusers" and that an email sent to the group last week about a key indicator of rent inflation was "an error."
"The staff member was responding to multiple inquiries about rent information," BLS Deputy Director Jeffrey Hill said during a Thursday webinar, referring to Owners' Equivalent Rent, or OER. ), which was an important factor behind January's strong consumer price index.
"In an effort to speed up responses, the employee blindly copied and CC'd some of the requesters and referred to them as superusers, which was a mistake," Hill said. He added that a recording of the webinar will be posted in the U.S. as soon as possible On the Bureau of Labor Statistics website.
Earlier this year, OER's biggest increase since April 2023 confused analysts and questioned whether it was due to a shift in underlying calculations rather than rising prices. The Bureau of Labor Statistics then decided to host a webinar to explain. One recipient said the BLS tried to retract the email and told them to ignore its contents.
At the time, the Labor Department sent an email to so-called "super users" saying that last month's spike in rent inflation was due to a change in the way it is calculated and not necessarily due to rising prices. This has raised questions about the accuracy of the Labor Department's statistics and concerns about whether this internal communication is unfair to most non-"super users". After all, the Fed has always emphasized that it relies on data when formulating monetary policy.
Earlier this week, the Bureau of Labor Statistics attempted to quell the confusion by posting a notice on its website that even revealed normally confidential information about the weight of single-family detached dwellings in the OER compared to multifamily dwellings. Something has changed. Economists, however, remain unsatisfied.
Rob Cage, assistant director of the U.S. Bureau of Labor Statistics, said on a conference call, "This email shows that distribution weights are the main reason for the increase in OER. While this is part of the reason, it is not the whole reason."
Cage went on to explain in very technical detail how the rent measure is calculated and the adjustments made by the BLS, although these adjustments often "fail" because the BLS sample is not fully representative of the housing market. There are not enough single-family detached homes in the BLS sample compared to apartments, where most homeowners live. Cage said:
Given these changes, it's unclear how the OER metric will perform for the rest of the year, he said, "and you can expect some volatility."
Ed Al-Hussainy, interest rates strategist at Columbia Threadneedle Investment, said it was "quite unusual" for the agency to release previously undisclosed details of its approach, information that is critical to the Fed. He said:
"This illustrates the importance of changes in the statistical methodology and weighting of this year's CPI data to policymakers and market participants, and the persistence of housing inflation may have an important impact on the launch and pace of the Fed's interest rate normalization strategy this year."
Article forwarded from: Golden Ten Data
