The report classifies “liberal” vs. “conservative” states based on recent presidential voting patterns: states carried by the Democratic presidential candidate in the 2024 election are treated as liberal, and those carried by the Republican candidate as conservative. In several robustness checks, the authors also use alternative political classifications (such as historical presidential vote shares) and obtain similar qualitative results.
The analysis relies on year‑over‑year changes in Consumer Price Index (CPI) data, disaggregated to construct: (1) overall (headline) inflation; (2) “core” inflation excluding food and energy; and (3) several component indices, with particular attention to rent and owners’ equivalent rent. Inflation is computed both at the state level (by aggregating CPI micro‑data across metro areas) and at the metro level, and then population‑weighted up to “liberal” and “conservative” groups of states and of cities. The report does not use PCE price indexes; its housing results are based on CPI rent‑related sub‑indices.
“The past year” in the report refers to the 12‑month period ending in November 2025 (i.e., December 2024 through November 2025), matching the most recent month with complete CPI data at the time of the report’s preparation and release in late December 2025.
Housing‑supply elasticity is not estimated directly from local construction data. Instead, the report proxies for it using pre‑existing indices from the research literature that rank metro areas and states by how responsive housing supply is to price changes, based on historical building‑permit and land‑use restrictions data. Locations in the “inelastic” group (tight supply) are compared with those in the “elastic” group to show that rent inflation responds more strongly to macroeconomic stimulus where supply is less elastic. In regressions, the authors also interact the elasticity proxy with national demand shocks to test this mechanism.
The metro‑area analysis is limited to places covered by the CPI’s urban price samples and then grouped by the politics of the state they are in. Large cities such as New York City, Los Angeles, San Francisco, Seattle, Boston, Chicago, Philadelphia, and Washington, D.C. (all in liberal states) are central to the results, because they have both relatively inelastic housing supply and large weights in the population‑weighted averages. Conservative‑state metros such as Dallas–Fort Worth, Houston, Atlanta, Phoenix, and Tampa are included for comparison. The report does not single out one or two metros as sole drivers, but instead shows broad patterns across the full CPI metro sample.
The document is framed as an analytical report rather than a policy blueprint, and it does not lay out a formal package of recommendations. However, in discussing mechanisms it implicitly points to policy levers: it emphasizes that tighter local land‑use and zoning rules, which make housing supply inelastic, amplify the inflationary impact of national‑level stimulus in liberal states and cities. The clear implication is that relaxing restrictive housing policies and increasing housing supply elasticity at the state and local level would help contain future rent and overall inflation in those jurisdictions.