Opinion: The U.S. economy’s real issue is the housing shortage, not inflation.

Opinion: The U.S. economy’s real issue is the housing shortage, not inflation.

California Gov. Gavin Newsom approved two measures in September 2021 to address the state’s housing crisis. The most populous state in the US is struggling with soaring home prices, an affordable housing shortage, and persistent homelessness. The government data released recently reveals a national housing shortage, driving inflation rather than broad-based price increases. Inflation over the past year was 3.1%, prompting the Federal Reserve to keep interest rates elevated. The rising cost of “shelter,” including rent paid and estimated rent for owner-occupied homes, is the main driver of inflation, unlike the previous inflation rates seen after the start of the pandemic.

Since the beginning of last year, most prices have either risen very slowly or not at all. The price of goods, tangible items that consumers purchase, has remained relatively stable with only a 0.1% increase. The focus on housing costs and the impact on inflation is crucial as the economy continues to navigate through the ongoing housing crisis. The steps taken by Gov. Newsom to address zoning ordinances and increase access to affordable housing are seen as critical measures to tackle the housing shortage in California. By prioritizing affordable housing and addressing zoning regulations, the state aims to alleviate the burden on its residents and their cost of living.

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