An Inflation Time Bomb Is Hiding in Home Insurance
Affordable home insurance is becoming harder to find, and not only in the usual disaster zones.
Photographer: Sean Rayford/Getty Images
A standard complaint people have about economic data, especially inflation data, is that it doesn’t reflect their own experience and is therefore wrong. This might annoy the economists, politicians and policymakers who are trying to use these numbers to make big decisions about the economy, but every now and then the complaint is spot-on.
In fact, some of those policymakers just pinpointed a big blind spot in inflation data. The price measure the Federal Reserve watches when deciding how to set interest rates catches only about half of the increase of home-insurance premiums in recent years, according to a new study by the Dallas Federal Reserve Bank. This raises the risk the Fed might not take that inflation seriously enough.