US Asset Manager Barry Ritholtz: Four Decades of CPI Method Changes Nearly All Lowered Reported Inflation; 2025 Suspended Collection in Several Metro Areas
Barry Ritholtz, founder of Ritholtz Wealth Management, traces the history of US CPI methodology changes from 1944 to 2025, noting that since 1983 nearly every major technical adjustment moved in the direction of lowering reported inflation, with timing aligned to fiscal or political needs. He argues that the 2025 episode—DOGE-driven staffing cuts leading BLS to suspend CPI collection in several metro areas and replace it with imputation—represents a qualitative shift from 'creatively re-measuring downwards' to 'ceasing to measure entirely.'
ImportanceMaterialEvidenceE3 inspectableWrite-upQuick
US asset manager Barry Ritholtz, in a blog post dated October 19, 2026, made an observation: since World War Two, the US government's every major methodological adjustment to inflation statistics has moved almost entirely in one direction—lowering the reported inflation number.
He traces this line from 1944 to 2025. During World War Two, the Cost-of-Living Index (COLI) understated price increases by 4 percentage points from 1941 to 1944, as goods became unavailable, wages froze, and black-market pricing took over. In 1945, the US Bureau of Labor Statistics (BLS) renamed the data series the Consumer Price Index and redefined it as a fixed-basket price index.
Between 1972 and 1975, the stagflation era gave birth to the concept of core inflation. After the 1972–73 food price spike, Fed Chair Arthur Burns had Fed staff strip out food, reasoning it was 'weather, not monetary policy'; after the embargo, energy was removed. Soon after, used cars, mobile homes, and children's toys were stripped one by one until only a fraction of the basket remained. Ritholtz coined the phrase 'Inflation Ex-Inflation' in 2005 to describe this—removing inflation itself from inflation data.
In 1983, BLS changed the housing component of CPI-U from asset price plus mortgage interest cost to owners' equivalent rent (OER). Ritholtz acknowledges this is conceptually defensible—a house is an appreciating asset while shelter is a consumer good—but he points out that the 2002–07 housing bubble did not show up in CPI because rent prices were restrained by millions of Americans stampeding into no-doc, ARM mortgage, home-ownership purchases. The 2021–23 shelter price lag similarly exposed the OER distortion.