Group 1 - The combination of tariffs and immigration policies is creating significant challenges for the Federal Reserve's monetary policy, limiting the space for interest rate cuts [1][6] - The U.S. housing market is experiencing a "vicious cycle of supply and demand imbalance," exacerbated by low housing inventory and high material costs due to tariffs [3][4] - The tightening of immigration policies has resulted in a labor shortage of over 300,000 in the construction industry, increasing labor costs and delaying project timelines [3][4] Group 2 - Rising housing costs are contributing to persistent inflation, with the median price of new homes exceeding $430,000, a 42% increase since before the pandemic [4] - Shelter inflation, which includes rent and equivalent rent, has shown a year-on-year increase of 5.5%, contributing over 70% to the core CPI increase [4][5] - The affordability of home purchases has reached historically poor levels, with the average monthly payment for a median-priced home rising to $2,860, a 63% increase since 2020 [5] Group 3 - The Federal Reserve faces a dilemma: cutting interest rates could further stimulate rising home prices, while maintaining restrictive rates could increase the risk of an economic downturn [6] - Research indicates that a 1% increase in tariffs could lead to a 0.4% decrease in residential investment and a 0.2% increase in unemployment [6]

Core Viewpoint - The article emphasizes the complexity of price level formation and regulation in macroeconomic management, advocating for a broader price index system that combines various economic indicators to better reflect the overall economic situation [2][6][7]. Group 1: Price Index System - A comprehensive price index system is necessary to accurately gauge macroeconomic conditions, moving beyond the reliance on CPI as the sole indicator [4][7]. - Current indicators like CPI (0.5%), PPI (-2.3%), and GDP deflator (-0.7%) show discrepancies that suggest a need for a more integrated approach to price measurement [5][10]. - The integration of both stock and flow price indicators, as well as financial and real economy indicators, is essential for effective macroeconomic analysis [6][7]. Group 2: Micro and Macro Price Index Divergence - There exists a divergence between micro and macro price indices, particularly during structural changes or technological innovations, which traditional methods struggle to capture accurately [9][11]. - The introduction of new products and technologies can lead to an underestimation of price increases, complicating the understanding of actual economic conditions [9][10]. - The current economic environment in China, characterized by rapid industrial upgrades and shifts in consumption patterns, necessitates a nuanced understanding of price dynamics [11]. Group 3: Historical Insights and Policy Implications - Historical experiences indicate that managing deflation is more challenging than managing inflation, with different impacts on producers and consumers [13][14]. - Effective price governance requires not only short-term policy measures but also medium-term structural reforms to address underlying market distortions [15][16]. - The importance of restoring corporate vitality and ensuring efficient resource allocation is highlighted as crucial for overcoming economic stagnation and enhancing wage levels [16].