Deflation Warning: Rents Plunge as Consumer Finances Deteriorate, Risking Broader Price Declines

Market-based rents collapsed by 4.74% in Q4 2023, signaling a potential deflationary shock and recession ahead
Falling rents are a leading indicator of shelter inflation turning negative, which makes up 35-44% of overall inflation
Negative shelter inflation in 2024 could push core CPI inflation below zero, fulfilling criteria for deflation
Deteriorating consumer finances, with many unable to afford rents, is likely causing landlords to drop rents to attract tenants
Deflationary signals contradict recent strong economic data, but align with bond market pricing in rate cuts for 2024 despite Fed's hesitation