Federal Reserve officials like to call their decisions “data dependent.”

People claim to be data-driven, even when they aren’t. You can sincerely think you are data-driven while looking at data that’s incomplete, distorted, or just plain wrong. We live in a complex world. The kind of measurements that lead to good decisions aren’t easy even when everyone involved means well. Add in the fact that we’re all biased in different ways, and it all gets very complicated, very fast.

Inflation is another common adjustment. You know about “real” interest rates. That’s simply the nominal interest rate minus the inflation rate. If your mortgage is 5% and inflation is 3%, the real rate is 2%.

That adjustment, however, can vary depending on the inflation benchmark you use, of which there are many.

Let’s walk down housing price history lane.

John Mauldin 17 February 2023

https://www.mauldineconomics.com/frontlinethoughts/adjustments-matter