[HN Gopher] US annual inflation declines to 7.7% in October vs. ...
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US annual inflation declines to 7.7% in October vs. 7.9% expected
Author : ericliuche
Score : 376 points
Date : 2022-11-10 13:33 UTC (9 hours ago)
(HTM) web link (www.bls.gov)
(TXT) w3m dump (www.bls.gov)
| nightski wrote:
| Looking at the macro picture is so misleading. The only
| categories that are really down are natural gas, used cars &
| trucks, and apparel. Everything else is up but it is being masked
| by the huge drop in natural gas prices (which is due to the
| situation in Europe).
| [deleted]
| advisedwang wrote:
| Weird that gas prices dropped, I would have thought they'd be
| up. Any insight?
| nightski wrote:
| From what I understand there was a lot of fear due to the
| conflict this summer. So Europe bought a ton of overseas
| liquefied natural gas and stocked up as much as possible. So
| much so there are tankers sitting in the ocean being used as
| temporary storage.
|
| However currently temperatures are moderate and demand is
| pretty low. There's optimism for a mild winter and users have
| done a good job of reducing demand.
|
| So at the moment there's a situation where Europe has too
| much gas in anticipation of future bad things which is
| driving a slump in prices.
|
| This will probably change.
| pmoriarty wrote:
| I was just reading _" Ray Dalio on the Downturn: 'There's a Lot
| More to Come'"_[1], which said:
|
| _Inflation in the United States has risen 8.2 percent in the
| past 12 months. While the Federal Reserve's long-term inflation
| target is 2 percent, Dalio predicted that the central bank will
| go for a more realistic target of around 4.5 to 5 percent.
|
| Based on those numbers, he believes the real interest rate could
| land in between 4.5 percent and 6 percent. "Six starts to break
| things pretty bad," Dalio said. "The vicinity of 4.5 and 6 may be
| the number in terms of cracking the thing."_
|
| [1] -
| https://www.institutionalinvestor.com/article/b20hpgzhxph5h5...
| carom wrote:
| Ray Dalio has been calling for a massive unwinding for a long
| time. It has gotten really tiresome.
| miked85 wrote:
| jeffbee wrote:
| You only believe in gas prices at the pump? In that case, your
| inflation rate has been zero over the past 14 years.
|
| https://www.eia.gov/dnav/pet/hist/LeafHandler.ashx?n=pet&s=e...
| bamboozled wrote:
| Why is this downvoted ?
| boc wrote:
| Because it's antisocial behavior?
|
| Reflexively casting doubt (without a counter-argument) on a
| number that the BLS has been publishing for decades using a
| transparent methodology isn't helpful.
|
| This number isn't the "how much am I spending on groceries"
| number, it's a much larger snapshot of the price levels
| across multiple industries. Nobody thinks it's perfect, but
| it's _consistent_.
|
| You might not believe it, but Wall Street moves billions
| based on it. That's ultimately the greatest vote of trust. If
| you think it's wrong, you can put your money where your mouth
| is and trade against the consensus. That's the beauty of the
| free market.
| miked85 wrote:
| I don't think suggesting that governments put out economic
| numbers which make them look better is "antisocial
| behavior".
| SantalBlush wrote:
| Statistical methodologies are developed and executed by
| bureaucrats and academics, not politicians.
|
| What most people fail to recognize is that the vast
| majority of US government employees perform their jobs
| across many administrations with consistency. They are
| very much working for the _government_ , and not their
| favorite politicians.
| [deleted]
| hnburnsy wrote:
| Anyone notice that brand name soda (looking at you Coke) has
| increased almost 100% while the generic/house brand has had
| slight increases. I feel like Coke is testing the pricing limits
| of its customers especially with the smaller packaging and these
| prices will not come back down.
| bombcar wrote:
| Prices around here have stayed the same or gone up a bit, but
| the _sales_ have dried up. You could almost always get Coke on
| sale at the grocery store for half the "list price" now that's
| much rarer.
| JKCalhoun wrote:
| Is Pop Shoppe still a thing?
| http://old52blog.blogspot.com/2011/03/pop-shoppe.html
|
| And bring back the "White Label" groceries from the 80's while
| you're at it.
| http://historysdumpster.blogspot.com/2012/08/generic-product...
| boole1854 wrote:
| If you check Coke's financial statements, you'll see that
| although revenue has risen quickly, cost of revenue has risen
| about as fast, leading to relatively unchanged gross profit
| margins (36% so far in 2022, compared with 40%+ in every year
| from 1985-2014 and between 33%-39% from 2015 to 2021). Word
| from industry press is that the rising price of aluminum has
| been a major driver of the increased costs.
|
| I don't know why pricing for the generic brands wouldn't
| increase as much. Perhaps some stores see the large price
| increase in branded soft drinks as an opportunity to get people
| to shift to the store brands and are willing to tolerate lower
| profit margins to see if that strategy pays off.
| hhjinks wrote:
| Generic brands often don't come in aluminum cans, assuming
| the industry rumours are true.
| cglace wrote:
| Care to elaborate?
| staticfish wrote:
| I'm guessing parent resides from the UK or Europe. Mostly
| "own brands" here come in 2 litre bottles
| lzooz wrote:
| In my European country all own brands are available in
| cans.
| vel0city wrote:
| In the US it is usually easy to find generic brand sodas in
| cans. Most large-ish grocery stores have them.
|
| https://www.tomthumb.com/shop/product-
| details.208010001.html
|
| https://www.kroger.com/p/big-k-cola-soda/0001111049680?
|
| https://www.publix.com/pd/publix-cola/RIO-PCI-106059
|
| https://www.walmart.com/ip/Sam-s-Cola-Soda-Pop-12-fl-
| oz-24-P...
|
| https://www.heb.com/product-detail/h-e-b-original-
| cola-7-5-o...
| prepend wrote:
| I've shopped in the US for a few decades. The store brand
| soda has always come in aluminum cans (in addition to all
| the other forms of packaging coke uses).
|
| Also, prices for coke in plastic bottles are also up.
| danuker wrote:
| Store brands have very little advertising costs, for one.
|
| Coke spent $4B on advertising in 2021 [0], which is about a
| quarter of their costs. [1]
|
| [0] - https://statstic.com/coca-cola-advertising-costs/
|
| [1] - https://www.macrotrends.net/stocks/charts/KO/cocacola/c
| ost-g...
| eatsyourtacos wrote:
| I guess I must be wrong, but I'll never understand why Coke
| needs that much advertising. Or anything "that well known".
| The argument is maybe they are that well known because of
| advertising, but I just don't think that's the case. Maybe
| for a crappy product, but not a good product.
|
| With Coke it's the quality (and consistency) of the
| product. I've never tasted anything "as good" as Coke. A
| new fresh cold can has a bite that simply nothing else has.
|
| 4 billion a year on advertising something everyone knows
| about...
| RC_ITR wrote:
| Coke's advertising isn't "hey this is what Coke is" it's
| "hey aren't you thirsty and don't you remember how much
| fun you've had in the past while drinking Coke?"
| eatsyourtacos wrote:
| I've never once grabbed a coke because of seeing a
| commercial. And I barely drink it because I have enough
| sugar in my life and don't want my kids chugging soda all
| day long like I did as a kid.
|
| So I do see your point, I just don't get how that
| influences people. But again, I recognize it must to
| enough of a degree- I just don't feel like I'm one of
| them so it's hard to personally understand. Maybe I am,
| but I think I'm being objective about it.
| RC_ITR wrote:
| >Maybe I am, but I think I'm being objective about it.
|
| Sure, not every person is a Coke consumer. What drinks
| _do_ you drink?
|
| Keep in mind, a _very_ meaningful part of Coke 's (and
| any other CPG company) advertising budget is paying
| grocery stores to put their products in prominent
| locations.
| prepend wrote:
| The only reason you've ever drank a coke is because of
| these ads.
|
| Do you think you're immune to ads? Or that ads don't work
| at all?
|
| I think it's reasonable that you've never seen an ad and
| consciously bought a coke, but that's rarely the point of
| coke.
|
| We're not aware of all our subconscious motivations. I'd
| like to be, but it's usually pretty hard for me to
| understand why I do things at a deep level.
| tekknik wrote:
| > The only reason you've ever drank a coke is because of
| these ads.
|
| This isn't true in all cases. When I first drank a coke I
| was very young and wasn't even aware of advertising. The
| first coke I drank was because my parents took me to
| McDonalds and that's all they sell. Then I found I
| preferred it over Pepsi. Advertising had very little to
| do with my first coke, it was more contracts with fast
| food companies.
| RC_ITR wrote:
| > it was more contracts with fast food companies.
|
| Also known as 'advertising.' (Coke has an insane amount
| of control over how their products are sold at McDonalds,
| down to how the soda fountain equipment can look) Why do
| you think PepsiCo Bought KFC/Pizza Hut/Taco Bell (before
| spinning them back out as Yum!)?
|
| Coke spends money so that every time you are thirsty you
| reach for a Coke, and part of that is the immense amount
| of work they do to make Coke the only beverage available
| in places like McDonalds, AMC, United Airlines flights,
| etc.
| kelnos wrote:
| > _Then I found I preferred it over Pepsi._
|
| You "found" that either because of advertising, or
| because you were primed to like Coke more because of your
| childhood experience.
|
| And the reason McDonald's only sold Coke? Advertising, of
| course. McDonald's believed they were better off selling
| Coke over Pepsi.
|
| Advertising is everywhere. I try to avoid advertising as
| much as possible (adblockers, never watching ad-supported
| TV or movies, etc.) because I know how pervasive ads are,
| and how insidiously emotionally manipulative they can be.
| I know I can't make myself immune to their effects, so
| the best I can do is just avoid them as much as I can.
| llbeansandrice wrote:
| This comment sounds like you're getting a piece of that
| $4bn
| eatsyourtacos wrote:
| Not sure what that is supposed to mean. I'm pointing out
| that it's a high quality product. There's a reason Coke
| absolutely dominates everything else out there. I guess
| to you I'm just a Coke shill though. Ok!
| shawabawa3 wrote:
| He means the reason you think it's a high quality product
| is that the $4B of advertising has had an affect on you
| subconsciously
| TillE wrote:
| Which is a pretty silly claim. There are great colas with
| far less advertisement, but they're small premium brands
| which cost the same or more. Store brands are typically
| awful, Pepsi is bad despite their advertisement budget.
| Aunche wrote:
| In blind taste tests, Coke performs about as well as
| Pepsi. However, people still overwhelmingly seem to like
| Coke, so it's really because they like the brand. If they
| reduced advertising, their brand will slowly be eroded.
| excitom wrote:
| Remember "New Coke"? The Coca Cola people responded to
| taste tests that indicated people like Pepsi better by
| making it more sweet like Pepsi. Sales and PR disaster
| ensued, famous case study in MBA courses.
|
| https://en.wikipedia.org/wiki/New_Coke
| sharemywin wrote:
| still think it was a trick to change the formula of
| "classic" coke to cheaper ingredients.
| phpisthebest wrote:
| I dont know if I am alone but for me I prefer Bottled
| Pepsi over Bottle Coke, but Fountain Coke over Fountain
| Pepsi
|
| I also prefer Mt. Dew over them all so....
| cglace wrote:
| I interviewed a guy who worked at Pepsi. He said their
| own tests actually showed that people enjoyed Pepsi for
| the first sip but then preferred coke when drinking more.
| peteradio wrote:
| Blind tests sponsored by whom?
| mensetmanusman wrote:
| Blind sponsors
| aeyes wrote:
| Coke is only one of their products, they probably need
| some advertising to promote their other 200 brands:
| https://www.coca-colacompany.com/brands
| alistairSH wrote:
| Of course they are. There was a much-watched video that went
| around a few weeks ago that composed quite a few CEOs talking
| about pushing the pricing envelope to take advantage of
| inflation news (effectively saying: "People now expect price
| increases, we can leverage that to our gain!").
|
| https://www.youtube.com/watch?v=psYyiu9j1VI
| dntrkv wrote:
| That's literally how the market is supposed to work and it's
| not a bad thing. This is not some conspiracy. Companies price
| test all the time. They will increase the prices until either
| the consumer won't purchase their product or a competitor
| comes in and undercuts them. Sometimes the market conditions
| favor the consumer, sometimes they favor the company.
| juve1996 wrote:
| The problem is companies are so big and consolidated now
| that competitors can't as easily come in and existing
| competitors were bought out.
| BeetleB wrote:
| I think the restaurant industry is going crazy with this.
| Yesterday I stopped at a food cart. The price of a gyro
| sandwich was $13. It didn't come with fries. I asked how much
| for a side of fries. $6. Throw in a drink and add another $2.
| So a sandwich, fries and drink "combo" is over $20.
|
| And this is from a food cart, mind you - not a restaurant.
| And not a fancy food cart that people drive miles to try
| their unique food. Just a few years ago that sandwich would
| have been $8-9.
| dmix wrote:
| There's not really much we can do about this. Artificial
| price ceilings were tried in Venezuela and it only
| contributed significantly to their massive food shortages
| they experienced.
|
| Most notably it resulted in a big reduction in the _variety_
| of food available because while some of the biggest companies
| could survive with the new lower prices (and work with the
| gov directly to set those prices) the bulk of small /medium
| sized ones couldn't, often as other expenses eventually
| increased while prices didn't.
| aaomidi wrote:
| One thing we can do is give the NLRB actual teeth to
| enforce its laws.
| whimsicalism wrote:
| I agree that that would be a good thing, but it won't
| lower consumer prices.
| aaomidi wrote:
| It would create more competition, and put more money into
| people's pockets.
| whimsicalism wrote:
| Putting more money in people's pockets will not reduce
| inflation.
|
| I don't see how it will create more competition.
| satvikpendem wrote:
| Indeed, putting more money in people's pockets literally
| increases prices through higher demand.
| SideQuark wrote:
| Putting more money in people's pockets raises inflation,
| because they're willing to pay higher prices
| alistairSH wrote:
| _There 's not really much we can do about this._
|
| Not directly or quickly, no. Fully agreed that price caps
| and other invasive measures are usually counterproductive.
|
| I was only pointing out that in a market economy led by
| profit-seeking CEOs, pushing pricing up is expected.
| Listening to those clips, they sounds downright
| sociopathic, but it's just another Tuesday in America.
|
| The best way to deal with this is likely ensuring workers
| are paid a fair living wage. And take the appropriate
| measures to curb the worst of the inflation.
| safety1st wrote:
| I don't know. While price controls may not work in the long
| run, if businesses believe that there's a time-limited
| opportunity to raise consumer prices, you could try
| imposing time-limited controls until the opportunity is
| over. You might very well end up with lower consumer prices
| and thinner corporate margins, or at the very least, slow
| the rate at which the price increases occur.
|
| Price controls are a pretty big deal though. Especially in
| a low margin industry you run the real risk of putting
| firms out of business and damaging supply. They're very
| dangerous when done wrong.
| idlehand wrote:
| Most importantly you communicate to investors that your
| government does not respect the pricing mechanism of the
| market. That'll make investors worried about which other
| norms of economic stewardship your regime will violate.
| The uncertainty alone will be a heavy burden for the
| economy of a country that decides to impose arbitrary
| price ceilings on commodities.
| theyeenzbeanz wrote:
| A 20oz bottle is easily 2.29 now compared to roughly 1.79 not
| long ago.
| jackcviers3 wrote:
| I remember when it was $1 for almost 7 years, then went to
| $1.49. It hurt because now you had to feed 2 bills into
| machines that could barely take 1 reliably, and were always
| out of change.
|
| How that didn't drive the price back down to $1 or up to $2
| I'll never understand. It had to have increased labor on the
| parts of the vendors and decreased demand for the vendors at
| the same time. That's about the time I started just stocking
| a 6 pack or 2 liter (depending on which was cheaper per oz)
| in the fridge for the week, too, which drops the unit
| price.it also decreased the total volume of soft drinks that
| I bought.
|
| I don't know how soft drinks can continue to increase in
| prices under that dynamic. My guess is that the majority of
| people just buy it and don't notice anything that costs less
| than $10 anymore, so convenience stores can get away with
| movie theater prices as long as they don't cross that trivial
| threshold. People will pay for convenience under $10.
| kennend3 wrote:
| As someone who use to drink a lot of coke and quit.. this is
| very true here (Ontario, Canada) as well.
|
| I remember buying 2L bottles for $0.99 on a regular basis
| (they often had sales). I don't drink it anymore (one month
| and counting) but i do check the prices weekly out of habit
| and never see it below $2.29/2L now?
|
| I actually just checked and it has gone up in price once
| again, now $2.49/2L
|
| Crazy.
| vikingerik wrote:
| This price has everything to do with what consumers will pay
| for convenience and almost nothing to do with manufacturing
| costs, which are a tiny fraction of that. (Shipping and
| delivery are probably more, both for energy and labor.)
|
| Sellers do not determine the market price for anything.
| Buyers do by what they will pay. Sellers can specify a price,
| but any transaction actually happening is only determined by
| the buyer. (Setting the price can be intended to apply
| psychological manipulation to the buyer, which often works.)
|
| If you are complaining about the prices of anything, your
| complaint is not with the seller, it is with other buyers who
| have proven they are willing to pay it.
| claudiulodro wrote:
| The biggest crock is the increase in price of sparkling waters.
| Literally just carbonated water with a squirt of flavor,
| somehow more expensive than soda nowadays.
| massysett wrote:
| This doesn't surprise me much. Most of the cost of these
| things is the cost of packaging and trucking them around -
| the cost of the sugar syrup in Coke isn't adding much cost
| versus the sparkling water. The soda maker might have a more
| efficient distribution network that allows a lower cost per
| unit. That, and the customer who's buying sparkling water
| (instead of buying soda, or just plain bottled tap water)
| probably is willing to pay more.
| reducesuffering wrote:
| That's probably because the people drinking La Croix aren't
| too price-sensitive. However, if you actually care about
| buying them with little margin, Costco has em for $0.30/can
| and Trader Joe's for $0.40.
| trashface wrote:
| I'm pretty low income ATM and I simply don't buy Coke zero or
| anything like that much anymore. I drink water, or tea. Loose
| tea is still pretty economical, even considering water and
| heating costs.
| javchz wrote:
| Yeah, coke can get expensive. I recommend you try cold brew
| tea, it's almost as refreshing as soda in hot days. You only
| leave water with tea in the refrigerator at night and enjoy
| it the next day.
| zie wrote:
| Or make Sun Tea:
| https://www.simplyrecipes.com/recipes/sun_tea/
| javchz wrote:
| Oh, I didn't knew about that one. I'll try it, thanks for
| sharing!
| cl0ckt0wer wrote:
| "Food at home" is up 12% year over year. Table A in the link is
| good reading.
| prepend wrote:
| I've noticed this with many items. Nabisco Premium Saltine
| Crackers are $4.5 and Publix store brand are $1.5.
|
| I'm not sure how much they've increased as I don't remember the
| old price of crackers but I remember them being really cheap.
|
| It seems odd that the inputs vary substantially between the two
| so is it just that Nabisco has very different labor costs? Or
| are they just jacking up the price because they can?
|
| I suspect store brand have a very fixed cost-plus style of
| pricing where they just sell for a fixed markup over whatever
| their costs are and don't really do market research for price
| points.
| hristov wrote:
| Then buy generic. This is one way to fight inflation. Coke will
| get the message very quickly if their sales start coming down.
| eatsyourtacos wrote:
| >Coke will get the message
|
| Yes, you the single person going generic will definitely send
| a message to Coke!
|
| Hey I get your "sending a message" concept. But you also have
| to be realistic. Coke is almost literally _everywhere_ you
| could possibly go. A lot of times it 's basically the only
| option aside from a grocery store. It's popularity is so high
| and it is to be fair a quality product, that you as the
| individual are never ever going to have anywhere close to a
| material impact no matter how hard you believe.
|
| Also, most people agree it is objectively the superior
| product. So while you may save some money, you are also
| getting a shitter version of something that is already bad
| for you.
|
| Send a message with your wallet- sure. But don't be so naive
| that it will _actually_ have an impact for something like
| Coke. You are honestly just hurting yourself in the taste
| department to save a negligible amount of money. It 's a no-
| win.
| s1artibartfast wrote:
| Why do you think coke cost what it does instead of $10 per
| can? The price is what it is because people are willing to
| pay it. If they don't, the price either goes down or the
| company goes out of business.
| kelnos wrote:
| I bet some people _are_ buying generic now, and Coke doesn 't
| care, because they've done the math, and have decided that
| losing a few customers (perhaps only temporarily) is worth
| the extra revenue generated by the customers who keep buying
| Coke at the higher price.
| juve1996 wrote:
| Yep, americans aren't nearly as price conscious anymore in
| general, and there are just so many that are flush with
| cash now due to cheap money that they still don't care.
| vsareto wrote:
| If you drink neither and choose water, then it'll really come
| down. Bonus: you'll feel better
| beambot wrote:
| That's heretical & anti-consumerism. Be a good citizen:
| Drink your sugar water, blow up your healthcare costs,
| increase money velocity. Broken Window Fallacy for the win!
| supertrope wrote:
| And then your medical expense category of the CPI will not
| go up as much.
| Dylan16807 wrote:
| Are you assuming sugar for "feel better"?
| hristov wrote:
| That's what I do. But I did not want to get too preachy
| towards the GP poster.
| BeetleB wrote:
| Water is healthier, but not a substitute.
|
| Something like Spindrift is a partial substitute.
|
| A _real_ substitute is Izze. Less sugar, but still sugary.
| Tastes awesome - better than Coke.
|
| http://blog.nawaz.org/posts/2021/Dec/taming-my-soda-
| addictio...
| kelnos wrote:
| > _Water is healthier, but not a substitute._
|
| It can be, if you commit to _really_ reducing your sugar
| intake. I did it, 20+ years ago, completely giving up
| soda. My go-to drink for every meal is water, and I drink
| water throughout the day from a large water bottle. I
| still consume sugar here and there in food (or the
| occasional cocktail), but I eat much less of the stuff
| than I used to. It 's hard in the US, where everything
| has so much sugar, but it's doable.
|
| The less sugar you consume, the less your body/brain will
| want and need it. It's like an addiction...
| ragazzina wrote:
| If GP comment is right, and the price of Coke has really
| increased 100%, the sales would have to decrease by half
| before they were hurt in the profits.
| hristov wrote:
| Yeah, but those companies tend to track market share too.
| They certainly do not want to give generic brands too much
| air to grow in.
| maeln wrote:
| I don't drink this kind of beverage, but from what I see in
| restauration, you don't really have a choice. Most fast-food
| and restaurant will have the "known" brand and no generic
| brand, so they will move the cost onto their customer.
| JKCalhoun wrote:
| Yes, restaurants (at least they used to) partner with
| either Coke or Pepsi and get things like free signage, etc.
| in exchange.
| supertrope wrote:
| I understand your point on saving money. Switching to cheaper
| substitutes is accounted for in chained CPI. e.g. If steak
| becomes too expensive and more people buy hamburger instead
| this substitution effect is accounted for in the basket of
| goods. It's very rare for food items to deflate. It's usually
| a slow monotonic upward march.
| BeetleB wrote:
| As a Pepsi guy, I can assure you: Coke drinkers will never
| switch to anything else.
| staticman2 wrote:
| I'm surprised to hear house brand cola still exists. My local
| Giant supermarket no longer ever has any in stock.
| gre wrote:
| What is inflation if not the capitalists raising prices?
| namelessoracle wrote:
| jeffbee wrote:
| In the last USDA retail market report, the national weight
| average advertised price of milk was $2.98/gal, and last year
| it was $2.98/gal. In 2014 it was $3.78/gal.
| hnburnsy wrote:
| Yeah milk is a horrible product to base inflation on as the
| market is not a free marker due to Federal marketing orders.
| I believe its called the Eau Claire rule as Eau Claire was
| once the center of the dairy industry.
|
| https://en.m.wikipedia.org/wiki/Marketing_orders_and_agreeme.
| ..
| sct202 wrote:
| And also milk is often used as a loss leader for grocery
| stores to get people in the door. So 1 chain adjusting
| their promotion strategy can cause what OP is seeing in
| certain regions.
| II2II wrote:
| I agree that inflation numbers aren't reliable on an individual
| basis. What people buy varirs too much across society and
| prices do not go up across all goods at the same rate. However,
| it is a relatively uniform comparison across time. You don't
| run into problems of selectivity. ("Hey, X costs twice as much.
| Inflation is out of control!") You also don't have changing
| purchasing habits skewing the perceived cost of living, if you
| compare grocery receipts from year to year (to choose one
| example).
| roflyear wrote:
| They are calculated the same way each month which is valuable.
| Much more valuable than your anecdotes, which are probably not
| entirely true.
| eesmith wrote:
| Your personal numbers are too variable to draw a firm
| conclusion.
|
| If you live in Louisville, KY, then milk was $3.21 in 2015,
| $2.29 in 2020, and $2.49 in 2022, per gallon - you would be
| paying less for milk now than 7 years ago.
|
| While the simple average for the US was $3.80, $3.51, and $4.41
| for those years.
|
| That's 12% per year across two years, while the linked-to chart
| says 13.2% since last year - quite comparable.
|
| FWIW, the most expensive were (2015) Milwaukee, $4.29, (2020)
| Kansas City, MO, $4.45, and (2022) Kansas City, MO $5.76.
|
| My sources are: "Retail Prices for Whole Milk, Average of Three
| Outlets, Selected Cities, by Months, 2015" -
| https://web.archive.org/web/20170211163314/https://www.ams.u...
| .
|
| Simple average, January 2015, whole milk = $3.80.
|
| Cheapest, $2.62 in Detroit. (When did you pay $2 for milk? I
| used to pay $0.99/gal but that was in the 1990s.)
|
| 2020 numbers at
| https://web.archive.org/web/20201101142332/https://www.ams.u...
| :
|
| > October 2020 Highlights: U.S. simple average prices are:
| $3.51 per gallon for conventional whole milk,
|
| Cheapest, Louisville, KY, $2.29. (in 2015 it was $3.21).
|
| 2022 numbers at
| https://web.archive.org/web/20221109074011/https://www.ams.u...
|
| > October 2022 Highlights: U.S. simple average prices are:
| $4.41 per gallon for conventional whole milk
|
| Cheapest, Louisville, KY at $2.49.
| photochemsyn wrote:
| Some statistical gymnastics have been introduced over the
| years, with the apparent goal of getting lower numbers (COGI =
| cost of goods index, COLI = cost of living index):
|
| > "Over the years, the methodology used to calculate the CPI
| has undergone numerous revisions. According to the BLS, the
| changes removed biases that caused the CPI to overstate the
| inflation rate. The new methodology takes into account changes
| in the quality of goods and substitution. Substitution, the
| change in purchases by consumers in response to price changes,
| changes the relative weighting of the goods in the basket. The
| overall result tends to be a lower CPI. However, critics view
| the methodological changes and the switch from a COGI to a COLI
| as a purposeful manipulation that allows the U.S. government to
| report a lower CPI."
|
| https://www.investopedia.com/articles/07/consumerpriceindex....
|
| It's comparable to excluding long-term unemployed people from
| the unemployment statistics to make that number look better.
| teh64 wrote:
| So you think they are lies because they do not correspond to
| your _individual_ anecdotes? I know economics is sometimes
| derided as a "soft science", but they are a little more
| rigorous than just "1 person and the stores they are in driving
| distance of" being used as a barometer for a country of over
| 300 million people.
| germandiago wrote:
| There is always a preset set of products to calculate
| inflation.
|
| There-in the manipulation comes.
| pavlov wrote:
| The fast food item that was $1 and is now $1.19 -- when was
| that $1 price originally set? Presumably it had held the $1
| price for longer than just a year.
|
| So this argument doesn't really belong in a discussion about
| annual inflation.
| transcriptase wrote:
| So you're saying you don't buy a new TV every time you get
| groceries?
| substation13 wrote:
| Even if you did, the stats are suspect.
|
| They include the screen area of the TV in the calculation, so
| TVs are getting _better_ for the price, but not cheaper to
| the extent being suggested.
| [deleted]
| daniel-cussen wrote:
| bombcar wrote:
| There is no possible way to make an inflation number that works
| for _one_ person, let alone a whole country.
|
| The best you can do is have a statistic that you stay with and
| compare.
| Spivak wrote:
| Yes but that doesn't mean we can't have different baskets and
| look at that. Because "staple inflation" which covers food,
| water, electricity, gas, transportation, rent, and healthcare
| would be more useful measure for most Americans.
|
| 7% inflation with the current basket is meaningless to
| everyone but economists, but 20% inflation on the major
| household expenses tells you how much your bills are going to
| go up in real life.
| lotsofpulp wrote:
| No one is forcing anyone to use one basket.
| orangepurple wrote:
| In the early-1990s, political Washington moved to change the
| nature of the CPI. The contention was that the CPI overstated
| inflation (it did not allow substitution of less-expensive
| hamburger for more-expensive steak). Both sides of the aisle
| and the financial media touted the benefits of a "more-
| accurate" CPI, one that would allow the substitution of goods
| and services.
|
| The plan was to reduce cost of living adjustments for
| government payments to Social Security recipients, etc. The
| cuts in reported inflation were an effort to reduce the
| federal deficit without anyone in Congress having to do the
| politically impossible: to vote against Social Security. The
| inflation-calculation changes had the further benefit to
| government fiscal conditions of pushing taxpayers
| artificially into higher tax brackets, thus increasing tax
| revenues. The changes afoot were publicized, albeit under the
| cover of academic theories. Few in the public paid any
| attention.
|
| Katharine G. Abraham, then commissioner of the Bureau of
| Labor Statistics, laid out her recollections in an August
| 1996 paper:
|
| "Back in the early winter of 1995, Federal Reserve Board
| Chairman Alan Greenspan testified before the Congress that he
| thought the CPI substantially overstated the rate of growth
| in the cost of living. His testimony generated a considerable
| amount of discussion. Soon afterwards, Speaker of the House
| Newt Gingrich, at a town meeting in Kennesaw, Georgia, was
| asked about the CPI and responded by saying, 'We have a
| handful of bureaucrats who, all professional economists
| agree, have an error in their calculations. If they can't get
| it right in the next 30 days or so, we zero them out, we
| transfer the responsibility to either the Federal Reserve or
| the Treasury and tell them to get it right.'"[v]
|
| A further comment was noted in a 2008 San Francisco Chronicle
| article, "In the 1990s, for example, Republicans wanted to
| make changes in calculating inflation along the lines
| recommended by a special commission, including more use of
| quality adjustments. By lowering the official inflation rate,
| such changes promised to reduce the annual cost-of-living
| adjustments for Social Security and other federal programs.
|
| "[Katherine] Abraham, the Clinton bureau [of Labor
| Statistics] commissioner, remembers sitting in Republican
| House Speaker Newt Gingrich's office:
|
| " 'He said to me, If you could see your way clear to doing
| these things, we might have more money for BLS programs.' "
| [vi]
|
| Federal Reserve Chairman Alan Greenspan and Michael Boskin,
| then chairman of the Council of Economic Advisors, were very
| clear as to how changing or "correcting" the CPI calculations
| would help to reduce the deficit. As described at the time by
| Robert Hershey of the New York Times, "Speaker Newt Gingrich,
| Republican of Georgia, suggested this week that fixing the
| [CPI] index, with its implications for lower spending [Social
| Security, etc.] and higher revenue [tax bracket adjustments],
| would provide maneuvering room for budget negotiators ..."
| [vii]
|
| "Alan Greenspan, chairman of the Federal Reserve, is among
| the other Government officials who have spoken optimistically
| about financial benefits of a more accurate [CPI] index ..."
| [viii]
|
| "[E]conomists believe one of the most important [CPI upside
| biases] is when consumers shift their buying patterns in
| response to changing prices, substituting one product for
| another. The [CPI] index is based on a fixed market basket of
| goods and services. But, for example, if the price on an item
| like steak gets too expensive, consumers may switch to
| hamburger." [ix]
|
| The Boskin Commission Report, December 4, 1996, actually used
| steak and chicken for its substitution example. The examples
| used in arguing for changing the CPI clearly were tied to
| prices rising and resulting consumer demand shifting to a
| lower-quality product. Simply put, that was the destruction
| of the cost-of-maintaining-a-constant-standard-of-living
| concept and was the primary consideration of those seeking to
| change the CPI, although other issues would come into play.
| The drive here was as to get a lower inflation reading,
| irrespective of whether the data were "more-accurate."
|
| Reference: http://www.shadowstats.com/article/no-438-public-
| comment-on-...
| starkd wrote:
| Some good points. But, keep in mind, this was in an
| environment with incredibly low inflation. To the point
| many econonomists thought the inflation problem had been
| permanently solved. Of course, they did not factor in
| future reckless spending and QE policies of future
| congresses.
| ludwighere wrote:
| Ludwig Von Mises is sitting in his grave saying: I told you
| it was all relative.
| germandiago wrote:
| Lol!
| transcriptase wrote:
| You could do like Canada and change the basket of goods based
| on consumer purchase data. Conveniently dropping or down-
| weighting items experiencing high inflation that the general
| population can no longer afford.
| throwawayosa wrote:
| Inflation here means a very specific thing. You can check which
| prices they are looking at. How could it be a lie?
| _aavaa_ wrote:
| > You can check which prices they are looking at. How could
| it be a lie?
|
| By excluding prices which make the number look bad despite
| them potentially being the numbers regular people actually
| care about. The same is true of including prices which look
| good but don't matter as much.
|
| And then by marketing that average number as a realistic
| approximation of price increases in day to day life.
| roflyear wrote:
| Who markets the number like that??? This is a way to
| communicate inflation to people. The context is the
| previous reports. If you change the methodology that
| context is garbage.
| lottin wrote:
| Inflation is the change in the price level. The price level
| is not observable, so it needs to be estimated somehow.
| Inferring it from the prices "people care about" is
| ABSOLUTELY WRONG methodologically speaking.
| tokai wrote:
| I have seen products in the stores I use that have gone down
| again. Many stores and producers definitely used this inflation
| to hike their prices way up. How many industries are reporting
| record revenue underscores this further.
| matwood wrote:
| I've been seeing this as well with specials. At the worst
| point is was buy 2 get 1. Now it's back to buy 2 get 2. I
| expect to see by 2 get 3 soon.
| mytailorisrich wrote:
| Inflation and inflation _for staple items_ are obviously not
| the same thing and thus obviously do not yield the same
| numbers.
|
| People and businesses buy much more than staple items and so
| the typical basket of goods and services used to calculate the
| official inflation number includes many more things.
| Prunkton wrote:
| you are describing pretty much the Big Mac Index
| https://en.wikipedia.org/wiki/Big_Mac_Index
| napoleon_thepig wrote:
| The main objective of the big Mac index is not to measure
| inflation, it's to measure purchase parity power by using the
| price of something that is available in almost every country
| and has a very standard quality.
| lukas099 wrote:
| Just consider the same country at two different points in
| time as two different countries and the distinction
| disappears.
| napoleon_thepig wrote:
| Unless the country in question only consumes big Macs,
| using that index as a measure of inflation would be a
| terrible idea.
| P_I_Staker wrote:
| According to the Arizona Ice Tea index, there has been NO
| inflation.
| costcohotdoggy wrote:
| Costco Hot Dog feels the same.
| oblio wrote:
| I know you're both joking, but the Big Mac is a global
| product, unlike both of those.
|
| So despite it still being a joke indicator, it does tell
| us something useful (which is a sort super rough cost of
| living indicator).
| calmlynarczyk wrote:
| That's why the BLS provides data for broken-down categories
| that make up the overall CPI calculation. Groceries saw a 12.4%
| increase in prices from a year ago, with dairy products at
| 15.5%. Restaurant food is up 8.6% for the year. And since you
| don't provide a reference point for when your anecdotal price
| data was taken, there's no way to say if it's in line with the
| official CPI data.
|
| If you follow the official data 3 years back to pre-
| COVID/loose(r) fiscal policy in October 2019, then restaurant
| food prices are up 18.8% according to BLS, which is right in
| line with the Dollar Menu datapoint you provided.
| derriz wrote:
| It's a statistic - representing a selection of goods/services,
| not your particular shopping pattern.
|
| Just because you happen to be a 6 foot tall US adult male,
| doesn't mean that the claim that the average height of a US
| adult male is 5 foot 9 inches (according to google) is a lie.
| matwood wrote:
| Sure, but inflation is percent increase over the current price.
| Is the price of milk at Costco going to be 3.86 next month and
| 4.56 next year?
|
| The MoM and now YoY numbers show the rate is slowing.
| elil17 wrote:
| It's not a lie, it's just not so simple that you can stop
| reading after the headline. This very post includes information
| about category-by-category inflation. Inflation for food has
| been about 10% YOY. Dairy is 15% and fresh milk is 14.5% (13.2%
| for whole milk and 15.4% for 0, 1, and 2% milk).
| tharne wrote:
| The numbers are a lie, or at the very least, vastly
| understate the impact. For example, if I used to buy grass-
| fed beef, but am now buying the grade D crap because prices
| are so high, that doesn't get captured in the inflation
| numbers. And there are a whole host of things like that;
| you'll notice many hotels have scaled back on cleaning
| frequency but the price of a room hasn't gone done, so you're
| paying the same for less. Again, that's not reflected in the
| inflation number.
| tootie wrote:
| The headline inflation number is not at all intended to
| state the impact of anything. It's an aggregate number used
| as an indicator to inform macro policy. BLS reports all of
| the granular data points that roll up to the headline
| number. Your personal experience will absolutely never be
| accurately reflected in a single number for the nation.
| People hone in on food and energy because they buy them
| frequently and demand is inelastic, but they are by far the
| most volatile and can be affected by all sorts of
| heterogeneous inputs. National numbers will be heavily
| impacted by infrequent, larger purchases like housing and
| cars and other durable goods. The affects of inflation can
| hit certain verticals harder or softer. They can also be
| heavily regional. They can affect suburbs differently than
| urban residents (gas in particular doesn't affect subway
| riders).
|
| Go click through the BLS site for CPI reporting:
| https://www.bls.gov/cpi/
| roflyear wrote:
| Stop eating meat. You don't have to eat meat.
| elil17 wrote:
| The way CPI is calculated is complex, but they do try to
| account for substitution and quality changes:
| https://www.bls.gov/cpi/factsheets/common-misconceptions-
| abo...
|
| See "When the cost of food rises, does the CPI assume that
| consumers switch to less desired foods, such as
| substituting hamburger for steak?" and "Is the use of
| "hedonic quality adjustment" in the CPI simply a way of
| lowering the inflation rate?".
| dawnerd wrote:
| Also depends on the geographic region. Soft beverages for
| example in some places haven't changed much but out here on
| the west coast have done from 4 for 10 dollars on sale to 3
| for 15 for 12 packs.
| lotsofpulp wrote:
| Water is dense, and needs a lot of energy to transport. It
| makes sense that if energy costs go up, the price of
| beverages will go up more in places where distances are
| larger.
| bluGill wrote:
| You need to calculate all staples. It is human nature to focus
| on outliers.
|
| Milk is also traditionally a loss leader for stores. 10 years
| ago stores were paying $4/gallon for their milk while only
| charging $2. They made that up by profit on other items you
| bought at the same time as milk. So if stores are changing this
| marketing tactic that alone brings milk to a normal price.
|
| The price of milk is very volatile normally. When there is too
| much or too little rain the price goes up as there is less
| crops for the cow to eat. When rain is in ideal amounts the
| input costs go down and so the price of milk goes down. (milk
| prices are federally regulated so supply and demand do not
| apply!)
|
| Fast food has had the dollar menus for over a decade, just 2%
| inflation over a decade means they should be $1.22 now. I can't
| remember when dollar menus first came out, but I think it was
| closer to 2 decades ago, which would bring the prices closer to
| $1.50 just on modest inflation.
|
| There are a lot more factors like the above that make
| calculating inflation very hard.
| mcv wrote:
| The biggest lie of inflation numbers is that housing costs are
| explicitly excluded, but rent and mortgage are massive parts of
| most people's cost of living.
|
| Edit: I notice this article actually does include rent (but not
| the cost of buying a house), but from what I understand, it's
| usually excluded. Including rent but excluding purchase price
| is also weird.
| jeffbee wrote:
| Housing is definitely not excluded from CPI-U. It's right
| there in the second paragraph.
| matthewaveryusa wrote:
| I fee like you're moving the goal post by saying that the well
| defined metric is not representative of your vision of
| inflation. unfortunately every person has a different vision
| and exposture to inflation: folks that rent are going to be
| affected by rent inflation while home owners won't -- how do
| you resolve that? well you slice and dice it and dig in. If you
| think the way you're looking at it has more value than the more
| general cpi number, then you can engage in arbitrage and make
| money by taking concrete action in the market (long food
| commodities/grocery stores short REITs or something.)
|
| Perhaps your angle is more in the vein of Goodhart's law, in
| which case I'm not sure what kind of market moves one would
| make with that information.
| jdlyga wrote:
| "the rate of increase of inflation is decreasing"
| javanissen wrote:
| Not sure if this is quoting that economist from the 70s, but in
| this case it's inflation that's decreasing. We're still just
| talking about the second derivative of prices, not the third!
| passwordoops wrote:
| Funny how markets and analysts lose their minds when the numbers
| don't match exactly the predicted when there are no error bars
| associated to either the estimate or the value. Coming under or
| over is a lot different when we're talking +/- 0.05 vs. 0.5...
|
| And yes, I tried checking. The Fed does put out their data, but
| nary a precision factor to be found
| whimsicalism wrote:
| My guess is that many of the actors in the market have their
| own error bounds.
| ChicagoBoy11 wrote:
| I'm always reminded of economists wonderful sense of humor
| whenever I start seeing decimal points on some of these
| forecasts!
| yCombLinks wrote:
| It wouldn't matter at all if the fed didn't put in a
| prediction. You can calculate what inflation level the market
| is predicting by looking at inflation swaps. When the official
| rates come out the market reacts to divergence from that
| prediction.
| newaccount2021 wrote:
| hnthrowaway0315 wrote:
| The whole "expected" thing is sketchy for me. I probably know
| nothing but why is 7.9% expected, not say 7.5% expected? I think
| a lot of manipulation of those expectations can be done for
| "friends in IB".
| curiousllama wrote:
| Expected is just a survey of those "friends in IB" - it's just
| a benchmark for the media to explain if things are surprising.
|
| Anyone making impactful decisions based on expectations should
| not be making impactful decisions.
| orangepurple wrote:
| mikeyouse wrote:
| snapcaster wrote:
| I remember when shadowstats started getting popular. Have you
| actually looked at their numbers? they're obviously way off,
| inflation is high for sure but according to their numbers a lot
| of things are 6-7x the price they were a decade ago and that's
| clearly not true
| MagnumOpus wrote:
| Shadowstats is bullshit for a number of reasons - you can read
| up on most of them on the official articles and publications
| and justifications on the BLS website -- which are generally
| written by statisticians with maths or econ PhDs with no vested
| political interest, unlike Shadowstats which is written by an
| MBA who needs to sell a newsletter.
|
| But you can very easily debunk Shadowstats by just averaging
| the ridiculous CPI inflation number postulated by the
| Shadowstats dude over 2/3/4 decades, and put that compounded
| rate of 8% into a calculator and multiply it with a wage from
| 1990 or 2000 or whenever... And see that consumer
| goods/services can't have increased by that much or otherwise
| everyone would be destitute...
| parkingrift wrote:
| 8% YoY would indeed be a comical amount of inflation. I don't
| believe shadowstats is implying such an increase.
|
| The reason people don't believe the official CPI numbers is
| because the CPI numbers are not properly weighted for life or
| dollar impact. If we look from 1970 the price of health care
| has increased 54x, a new house has increased 19x, and annual
| tuition has increased 25x. If the price of milk increases 19x
| what do I care? I'll just stop buying milk. I don't want to
| stop being alive, I need a place to live, and I want and need
| an education.
|
| Even the numbers they do include seem gamed or fake. Shelter
| shows a 6.9% increase year over year, but the price of houses
| is up 17% over that same period and the price of rent is up
| 12-30%. I'm sure there is some ling winded explanation for
| how shelter excludes such and such thing, but it just loudly
| screams bullshit for many (most?) Americans.
|
| >And see that consumer goods/services can't have increased by
| that much or otherwise everyone would be destitute...
|
| I think people are pretty destitute to be honest.
| mrep wrote:
| Look at the 1980 based graph [0]. They are definitely
| implying 7-5-10% inflation for the past 25 years.
|
| [0]: http://www.shadowstats.com/alternate_data/inflation-
| charts
| guerrilla wrote:
| > on the BLS website
|
| This is begging the question though. If the problem is BLS,
| then using BLS as a reference that BLS isn't the problem is
| blatantly fallacious. The claim is that BLS is deceiving
| us... so it doesn't make any sense to use them to adjudicate
| whether they're deceiving us or not. You see the problem
| right?
| mikeyouse wrote:
| No. Because the BLS publishes their methodology, back tests
| it, and compares it to other weights and methodologies
| (which they publish full datasets for). You can then
| compare it to other independent measurements like the MIT
| Billion Prices Project and see that over an 8-year period,
| the BLS measurements differ from public pricing info by
| less than 1% which is less than 1/10th of a percent per
| year.
|
| http://www.thebillionpricesproject.com/datasets/
|
| There certainly is room for measurement error in something
| as complex as an inflation index that takes into account so
| many data points and weights, but the answer to resolve
| that complexity isn't "trust grifters selling newsletters
| to goldbugs".
| guerrilla wrote:
| Yes. They didn't refer to the MIT Billion Prices Project,
| they refereed to BLS itself, to debunk the claim that
| they "misused cover of academic theory" _unlike_ what you
| did. You can 't just say someone didn't fail
| epistemically just because you, 10 minutes later, didn't.
| mikeyouse wrote:
| Meh, this is just a different form of an ad hominem...
| There are literally hundreds of pages of documents
| written about CPI justification and process, and several
| documents specifically showing how Shadowstats is garbage
| (e.g. https://www.bls.gov/opub/mlr/2008/08/art1full.pdf).
|
| Take quarrel with the actual research instead of the
| domain they're hosted on since as OP pointed out, many of
| them are published by third party academics with no
| financial or institutional connection to the BLS.
| staticman2 wrote:
| We know Shadowstats is decieving us because they don't
| measure inflation, just add numbers to the official
| inflation numbers. You can read more about it if you google
| the topic. For example:
|
| https://www.bogleheads.org/forum/viewtopic.php?p=1025266&si
| d...
|
| In a more pragmatic sense, if you can't be bothered to
| learn enough economics to evaluate the official number
| (which is understandable) going with the group that sounds
| crazy is a bad idea.
|
| This author talks about outside view dismissals being a
| valid form of evaluating a claim in the context of a cult:
|
| "But the outside view tells you something different. These
| people are wearing funny robes and beads, they live in a
| remote compound, and they speak in unison in a really
| creepy way. Even though their arguments are irrefutable,
| everything in your experience tells you you're dealing with
| a cult.
|
| Of course, they have a brilliant argument for why you
| should ignore those instincts, but that's the inside view
| talking.
|
| The outside view doesn't care about content, it sees the
| form and the context, and it doesn't look good."
|
| https://idlewords.com/talks/superintelligence.htm
| hatware wrote:
| > consumer goods/services can't have increased by that much
| or otherwise everyone would be destitute
|
| Kind of sounds like you already made up your mind and are
| looking for confirmation of that bias.
| somuchfordonor wrote:
| hatware wrote:
| Notice that they attacked the source, rather than
| addressed the argument.
|
| Inflation is definitely higher than 7.7%. Seems to me
| there's a lot more energy going into that propaganda wave
| than anything else.
| staticman2 wrote:
| I don't think learning about the world is about listening
| to whomever is best at arguing, exactly.
| kentm wrote:
| That's not confirmation bias in the slightest. It's taking
| a claim and making observations and then noting that the
| observations don't match the claims.
| hatware wrote:
| They started by attacking the source, I'm not sure why
| you're acting as if that isn't the case.
| mikeyouse wrote:
| hatware wrote:
| > a grifter's imaginary numbers
|
| Can you address the argument without negatively framing
| the source of it?
| mikeyouse wrote:
| hatware wrote:
| > I did later in that same comment!
|
| Look at how self-righteous you are. Blissfully unaware of
| the fallacies you lead with.
|
| FWIW, I have zero context for Shadowstats or anything
| they do. I do know what the US government is trying very
| hard to downplay the true effects of inflation. Then, you
| come along and can't help but ad hominem your way to the
| loony bin. Come on. If you can't make the argument
| without constantly putting down the source, you just
| can't make the argument. Work on it.
|
| > 9/11 truther
|
| You're _undeniably_ controlled by propaganda. I hope you
| get out of the matrix, friend.
| staticman2 wrote:
| Shadowstats has fictional data.
|
| This is like earnestly showing the earth is flat by linking to
| a flat earth web site with fictional data showing the earth is
| flat.
| scifibestfi wrote:
| To be fair, that also describes the official CPI.
| hatware wrote:
| Which is going right over the heads of these bots.
| scifibestfi wrote:
| It sure is. But I get it, they are trying to hold onto a
| shared myth.
| zie wrote:
| If you care this much about inflation, you should calculate
| your own personal inflation rate(PIR). It will be different
| than CPI, because what you buy and what CPI tracks won't be the
| same. Regardless, your own personal inflation rate will have
| actual meaning to you. My PIR in 2021 was 1.6%. So far in 2022
| it's gone up to 6.8%.
| JKCalhoun wrote:
| Sounds like you should put down the Coke. ;-)
| mooneater wrote:
| Does anyone actually think this number is accurate to a decimal
| place?
| wkrsz wrote:
| Why is this causing USD/EUR exchange rate to fall? And in general
| USD to lose value compared to other currencies.
|
| My guess is that expectation of higher inflation was combined
| with expectation of further interest rate increases to combat it.
| Interest rate increases generally make currency more attractive
| for investments from abroad, which increases exchange rate.
|
| This expectation was "priced in" current exchanged rates and now
| the market has corrected.
| sz4kerto wrote:
| You're correct, that's why.
| benjaminwootton wrote:
| That's exactly why. It means US interest rates will perhaps not
| peak as high.
| colechristensen wrote:
| Reporting yearly inflation every month is... confusing at best.
| lazar_guz_kemp wrote:
| Inflation was 0.4% month-over-month. This is the same rate we saw
| las month.
| noasaservice wrote:
| It's not "Inflation". It's straight up wage theft by the rich.
| They're jacking up prices and blaming (hand-wave) Inflation to
| extract more profit. And no, workers wages being bumped up to
| $15/hr is no excuse. Look no further than the profits.
|
| ------------------
|
| "Workers around the world: lost $3.7 trillion in the pandemic
| Billionaires around the world: gained $3.9 trillion in the
| pandemic
|
| It's the biggest one-year wealth transfer in history, yet somehow
| barely anyone is talking about it."
|
| https://twitter.com/danpriceseattle/status/13751892041251143...
|
| ------------------
|
| Iron Mountain CEO says he's been 'praying for inflation' because
| it means he can raise prices
|
| https://www.businessinsider.com/ceo-praying-for-inflation-ra...
|
| ------------------
|
| Leading grocery chains such as Kroger (KR) and Alberstons have
| said in recent days that they expect to benefit from rising
| prices. Sales boomed at these chains and other grocers during the
| early stages of the pandemic, but have slowed down in recent
| months as more people return to eating meals out.
|
| "Our business operates the best when inflation is about 3% to
| 4%," Kroger CEO Rodney McMullen said on an earnings call with
| analysts Thursday. "A little bit of inflation is always good in
| our business."
|
| https://www.cnn.com/2021/06/18/business/grocery-store-inflat...
| photochemsyn wrote:
| Isolated data points aren't really worth analyzing - something
| like a running 6-month average makes more sense. See this 2009
| blog post on how to inflation-adjust current prices/revenues to
| those from decades before:
|
| > "For this exercise, we'll use the annual average CPI-U values
| for 1973 (44.4) and 2008 (215.303). Because the CPI-U includes
| relatively volatile items such as food and fuel, I tend to avoid
| the monthly values with their fluctuations. If you want to adjust
| to the most recent data available, consider averaging the most
| recent six months of CPI-U values."
|
| https://anthonydebarros.com/2009/11/01/adjusting-for-inflati...
|
| This is similar to analyzing climate trends, where you really
| want to look at 5-year running averages (possibly 10-year).
| Generally, 'response time of the system to forcing' is what
| matters, in both cases.
| abeppu wrote:
| > Isolated data points aren't really worth analyzing -
| something like a running 6-month average makes more sense
|
| Isn't the YoY inflation definitionally equivalent with running
| (geometric) mean of the past 12 (annualized) monthly increases?
| seydor wrote:
| So, when will the US Fed announce its own layoffs? They need to
| contribute to bringing down inflation.
| keewee7 wrote:
| It's a bit higher in Denmark and I have a little too much stored
| as fiat in the bank. What is a safe asset to store value while
| inflation is >10% in a developed country?
| [deleted]
| Gustomaximus wrote:
| I think its a hard call.
|
| Real estate is inflated. Stocks are too, but seems less so than
| property, at least in Australia.
|
| Traditional flight to safety like gold has significant gains
| last few years so are you buying another peak?
|
| Meanwhile you know cash is devaluing 5-10% per year.
|
| For my non-expert opinion I think Australia shares are fairly
| good relatively currently, but I say that as an Australian. Its
| reasonably valued compared to some of the markets, stable
| govt/economy with low govt debt as western nations go (consumer
| is high though). Shares will probably return dividends around
| 3-5% per year on a market tracking ETF, which should offset
| some drops while the market and inflation, and then you are in
| market for the turn as as the cycle flips and inflation has run
| I could see some sharp gains as companies revalue to the new
| cost bases.
|
| Also I think a FSTE tracker wouldn't be so bad. Since Ukraine
| and general market drops these are off their peak pricing. US
| Id avoid as I think there's a bunch more to unwind both in the
| market, politically, plus govt debt (heading for 140% of GDP
| and showing no signs of slowing) so I would be hesitant market
| tracking there until things stabilise. That said there will
| always be amazing companies ongoing in the US if stock picking.
|
| Im so far from an expert, so take all this with a shovel of
| salt. Keep things diverse. But overall I think a Aus/Eur market
| type tracker is probably a reasonably safe bet at the moment
| for a uncertain and unprecedented enviroment, and take the odd
| punt on companies that you think are getting trashed and fear
| has over taken. Keep some level of cash as if the markets do
| tumble you want to be able to go in, or generally have options.
|
| I know nothing. Good luck.
| quonn wrote:
| > Real estate is inflated. Stocks are too, but seems less so
| than property, at least in Australia.
|
| But are they? To me many stocks look comparatively flat over
| 30 years given the fact that they should point upwards just
| to correct for inflation in the currency they are denominated
| in and even more upwards when taking into account
| productivity gains.
| andy_ppp wrote:
| Yes property, shares, gold, here is a fantastic breakdown on
| inflation and the COVID stimulus:
| https://www.youtube.com/watch?v=Qlr5Vzrextk
| fullstop wrote:
| Thankfully you're no longer earning negative interest on your
| bank account.
| aabceh wrote:
| It's funny how people freaked out over the -0.1% interest
| rate but don't care about having money in the bank when the
| inflation is at +10%.
| fullstop wrote:
| Absolutely.
|
| I don't live where negative interest is a thing, but it
| seems like that would encourage people to keep money
| outside of banks.
| fleddr wrote:
| How does that stop the money from being less valuable?
| fullstop wrote:
| I'm not discussing inflation here, just the concept of
| negative interest on bank accounts.
|
| If you had a pile of cash, it would remain a pile of
| cash. If you had 100,000 euro in the bank that might be
| 99,000 euro after some time because the bank essentially
| charges you a storage fee as interest rates are negative.
| Conversely, the bank would essentially be paying you to
| take out a loan.
|
| Maybe I'm misunderstanding how it works since it's never
| happened in the USA, but I think that I have it right.
| See https://www.investopedia.com/articles/investing/07091
| 5/how-n...
| fleddr wrote:
| Got it. I was confused because the parent to your post
| suggested people are cool with storing money on the bank
| with 10% inflation. That makes no sense to me because
| when you convert it to cash, the inflation still applies.
|
| As for negative interest rates, here in the Netherlands
| banks didn't dare to go negative, even if conditions
| would warrant it. Perhaps because it might trigger a bank
| run.
| landemva wrote:
| Thus many EU countries reduced the maximum note value,
| reduced allowable amount for buying things in cash, and
| .se has mostly eliminated cash with everyone using cards.
| akmarinov wrote:
| Real estate probably for medium term, stocks for long term.
| cko wrote:
| Depends on your time horizon.
|
| In the very short term, inflation linked bonds as other
| comments mention.
|
| In the 15+ year bracket, probably equities.
|
| Perhaps real estate at a low mortgage rate but it's not very
| diversified.
|
| Gold is commonly touted as an inflation hedge, but that's over
| a much longer time horizon, probably longer than most people
| are alive.
|
| In the end it really depends on the cause of inflation -
| expected vs unexpected, supply vs demand side.
| patall wrote:
| Is gold still the inflation hedge? One the one hand yes, but
| if i.e SpaceX starship is a total success, asteroid mining
| could be the black swan for that. Though I may be totally
| wrong (and off by orders of magnitude) about that.
| landemva wrote:
| Gold hedges government.
| zmaurelius wrote:
| High dividend stocks have been a good bet and hedge in previous
| downturns. Individual stocks will have high variance, but a
| basket of high dividend stocks would be worth looking into.
| tharne wrote:
| The usual stuff - gold, silver, real estate.
| riffraff wrote:
| Inflation linked government bonds from developed countries and
| your local currency or USD/EUR denomination, depending on your
| country you may get some tax advantages if you buy local ones.
| But you should probably have done this long ago, now it may be
| a bit late.
| yourapostasy wrote:
| While that is better than nothing, for example US citizens
| are limited to only $10K USD in I-bond purchases per year per
| Taxpayer ID Number (TIN). Some people run their I-bond
| purchases through LLC's they control as well, but I don't
| know how the IRS would treat a fleet of LLC's set up purely
| just to get a TIN to use for buying I-bonds.
|
| Oil and copper tends to follow inflation, but they're highly
| volatile so you can't rotate into them expecting good
| liquidity. If you hold say $100K+ USD you want to rotate and
| re-deploy after the carnage with fairly liquid assets at
| relatively low risk, then I can't think of much beyond take
| the hit in a conservative cash and select bonds positioned in
| a capital preservation posture, or Benjamin Graham-style
| conservative value equities.
| __derek__ wrote:
| There's no need for byzantine approaches to buying Series I
| savings bonds when you can get 1.5% real yields on TIPS.
| __derek__ wrote:
| There's no need for byzantine approaches to buying Series I
| savings bonds when you can get 1.5% real yields on long-
| term TIPS.
| nemo44x wrote:
| Do you have inflation protected bonds? In the USA you can buy
| I-Bonds (max $10k/year per person) that pay interest at the
| current inflation rate.
|
| But what is considered "safe" really has a lot to do with your
| timeline. How soon do you want to access the money? If it's in
| tears then index funds are likely a good buy today.
| coffeebeqn wrote:
| There are also TIPS which don't pay as well but you get back
| 80-90% of inflation as a dividend
| 988747 wrote:
| Poland offers something similar, but with a twist. On the
| plus side, the amount you can buy is unlimited. However,
| interest rate is fixed in the first year, at 7% (which is a
| far cry from 17.9% inflation). From the year two the interest
| rate is inflation rate + 1% premium. You can buy either 4 or
| 10 year bonds.
| rufusroflpunch wrote:
| Demand destruction is setting in.
| fasteddie31003 wrote:
| RANT: This inflation and coming recession is entirely on the
| hands of the current leadership in the Fed and Treasury. Their
| super-low interest rates over the years are coming full circle.
| We live in a centrally planned economy. My advice to the Fed is
| to set the Fed Funds Rate to equal inflation! This will stop the
| wild swings in the economy and keep inflation in check. When the
| Fed Funds Rate is lower than inflation there is an arbitrage
| opportunity for anyone who has access to this money to invest it
| broadly into the economy and get a positive return. I actually
| think this is a huge source of income inequality because only the
| most wealthy have access to this arbitrage opportunity, but that
| is another rant.
| arcbyte wrote:
| Yup they should have been raising rates ~2013. US government
| should also have been starting to pay down debt in that time
| frame too. It's like blind men are at the wheel of the economy.
| throwingrocks wrote:
| Yeah....and the inflation we're seeing elsewhere in the world
| is just a coincidence.
| coffeebeqn wrote:
| EU had negative interest rates for a decade. Low interest
| rates during the good times is definitely a mistake You end
| up paying for eventually
| kmonsen wrote:
| That's the thing that makes me question the whole
| Keynesian/ interest rate setting problem, you cannot know
| if you are living in good times are bad times. That
| requires knowledge of the future.
|
| Let's say all of this is due to the war in Russia, or in
| some alternate reality China carpet bombs Taiwan, if you
| thought you were living in bad times before the event you
| are in for a rude awakening. It's the same as black swans
| and cannot really work over time.
| coffeebeqn wrote:
| You know if unemployment is low and the economy is having
| solid growth at the time.
| starkd wrote:
| The US Dollar is a world currency.
| germandiago wrote:
| there is some truth in that rant. The inflation, btw, can be
| imoorted via currency exchange.
|
| For example, anything for which you pay in dollars (a strong
| dollar now) is more expensive. If you add the exchange rate
| to the fact of the inflation itself you end up paying the sum
| of both differences.
|
| The strong dollar is also the reason why EU has no choice but
| to follow the interest rate escalation from dollars: if they
| do not do it, people run away to buy follars because the euro
| suffers depreciation.
|
| Complex topic, with more ramifications than it looks at
| first.
| FollowingTheDao wrote:
| "Elsewhere" they have also had 0% or even negative Central
| Bank Interest rates.
|
| https://pearsonblog.campaignserver.co.uk/wp-
| content/uploads/...
| HideousKojima wrote:
| Seeing as every single central bank has similar monetary
| policy to the US, and almost all governments in Europe and
| elsewhere injected huge amounts of cheap/free cash into their
| economies in attempts to counter the economic effects of
| lockdowns/Covid, it's anything but a coincidence. It's a
| confirmation that such policies do in fact cause inflation.
| throw0101a wrote:
| > _Their super-low interest rates over the years are coming
| full circle._
|
| Super-low interest rates have very little to do with it. The
| Fed rate has been low for over a decade and inflation has only
| appeared recently:
|
| * https://fred.stlouisfed.org/series/FEDFUNDS
|
| Similarly neither has QE done much about consumer prices.
| People predicted the almost end of the financial world when QE
| started years ago and not much has happened in the intervening
| years; from 2010:
|
| > _We believe the Federal Reserve 's large-scale asset purchase
| plan (so-called "quantitative easing") should be reconsidered
| and discontinued. We do not believe such a plan is necessary or
| advisable under current circumstances. The planned asset
| purchases risk currency debasement and inflation, and we do not
| think they will achieve the Fed's objective of promoting
| employment._
|
| * https://economics21.org/html/open-letter-ben-
| bernanke-287.ht...
|
| Neither does money supply: Japan's M2 has been rising for
| decades and they've had low inflation (and even deflation) in
| that same period:
|
| * https://fred.stlouisfed.org/graph/?g=PA7P
|
| The current situation is _partly_ due to velocity and the
| cheques that were sent out by the _Treasury_ (not Fed) earlier
| in 2022. But _also_ due to _supply-side_ stuff life oil (see
| RU) and food (see RU). An SF Fed report estimates about half of
| the current US inflation is on the supply side /chain side of
| things:
|
| * https://www.frbsf.org/economic-
| research/publications/economi...
| eloff wrote:
| Simple rules don't work with something as complex as the entire
| economy.
| mouzogu wrote:
| 0.2% less than expected and s&p pumps 5%. f* this timeline.
| Kukumber wrote:
| At what cost? "allies" as collateral damage, the US seems to be
| playing the solo game, not sure if that's gonna serve them well
| when they'll decide to go frontal with China, since their
| "allies" won't be able to be used as proxy anymore, too weak and
| no morale
|
| The US announces retreat
| sidewndr46 wrote:
| Who set the expectation of 7.9%? I've never expected my money to
| lose value every month.
| sillysaurusx wrote:
| The fed.
| nemo44x wrote:
| This is especially good since it was a year ago we started to
| notice inflation rising rapidly. If this print was higher than
| expected it would have indicated something really bad. With this
| print we could be on the path to healthier inflation in the
| coming year.
| nivenkos wrote:
| The US has it easy, since the inflation was largely caused by
| lockdown stimulus, and also benefits from being the global
| reserve currency so it can leverage cheap imports as the interest
| rate rises increase the value of USD.
|
| I wouldn't be surprised if it's better in a few months,
| especially with the growing protectionism in the anti-inflation
| act, etc. and acts against Chinese competition, etc. keeping more
| industry in the US.
| dangerwill wrote:
| I too watch/read Peter Zeihan and think he has some insights,
| but please don't take it all on face value (industry is
| probably not coming back to the US in force, and shifts from
| China will be slow and painful)
| phpisthebest wrote:
| There was no Anti-Inflation Act, there was a spending...
| SPENDING bill they claimed would lower inflation because it
| also included a very limited amount of deficit reduction which
| 1 week later they had spent like 3 times on new programs
| including the Student Loan Cancellation which reversed any
| inflation reduction the original bill could have had (which was
| nill in the first place)
| Jerrrry wrote:
| You are correct the anti-inflation act is hot garbage, and
| accelerated inflation immediately.
|
| You are incorrect about the exact specifics about the Direct
| Student Loan program refunds - anyone who had made payments
| during the pandemic can be refunded.
|
| You are still generally correct though - inflation is caused
| by several things, M1 and M2 money supply, employment,
| demand, supply, and sentiment.
|
| Everyone not paying their loans decreased demand for jobs, as
| that was the primary motivator for many to work.
| Additionally, the money printed and disbursed to colleges not
| being paid back leads to another increase in money supply,
| since the money never gets repaid, and a few select loan
| companies are now holding very large U-O-ME's, which the
| department of education seemingly is going to average between
| all of us, by forgiving it, further adding to the printed
| money pile.
| ceejayoz wrote:
| How did student loan cancellation reverse inflation reduction
| when it's on hold due to legal challenges? No one has
| received a penny.
| whimsicalism wrote:
| Wealth and income expectations play into current savings.
|
| I expect my savings to go up by $20k thanks to this, so I
| will shift some of my current savings to spending.
| ceejayoz wrote:
| > I expect my savings to go up by $20k thanks to this...
|
| You rate the risk of SCOTUS rejecting the program at 0%?
| whimsicalism wrote:
| No, but I do rate it low.
|
| Regardless, it will shift my consumption patterns.
| [deleted]
| koolba wrote:
| > No one has received a penny.
|
| The Biden administration mailed student loan checks to
| people (conveniently set up to arrive just before the most
| recent midterm): https://www.foxbusiness.com/personal-
| finance/student-loan-re...
|
| The checks are "rebates" for people who paid their student
| loans during the moratorium. The idea is to reimburse those
| people and add back their student loan debt so they can
| claim the maximum $10K / $20K amount of the forgiveness
| program.
|
| It's hard to argue that's not inflationary.
| ceejayoz wrote:
| That's not the student loan cancellation program.
|
| Those are people who overpaid during the pause in
| payments. It's as inflationary as getting a tax refund in
| April.
| koolba wrote:
| > That's not the student loan cancellation program.
|
| It's directly related to the student loan cancellation
| program as it's intended to maximize the amount of
| cancellation for people who paid during the moratorium.
|
| > Those are people who overpaid during the pause in
| payments. It's as inflationary as getting a tax refund in
| April.
|
| It's not overpayment. It's just payment because it's
| money those people owed on their loans. A payment pause
| doesn't mean the money is not owed, it's simply delayed.
| soared wrote:
| No checks were delivered because it's still going through
| the courts though, so this likely hasn't had much of an
| effect yet.
|
| Additionally it's only for people who paid their loans
| during the pandemic and have less than $10k in their
| current loan balance. The check is for whatever amount
| would return their balance back to $10k.
| mikem170 wrote:
| I'm not following your point about student loan debt
| relief impacting the economy. It seems that money has not
| yet been released yet. From your link [0]:
|
| > "If you made voluntary payments during the payment
| pause (from March 13, 2020, through Dec. 31, 2022) and
| your current loan balance is below the amount of debt
| relief you'll receive, after you successfully apply for
| and receive debt relief under the administration's debt
| relief plan, we'll automatically refund the amount you
| paid during the payment pause (only up to the remaining
| amount of your eligible debt relief)," the Office of
| Federal Student Aid states on its website.
|
| > But that plan is currently being challenged in court. A
| federal appeals court on Oct. 21 issued a temporary block
| on the student loan forgiveness program as it considers
| legal challenges raised by six states: Nebraska,
| Missouri, Arkansas, Iowa, Kansas and South Carolina.
|
| I didn't see anything corroborating your statement that
| checks were mailed out. Maybe I missed something?
|
| It's my understanding that the pause in student loan
| payments was initiated prior to Biden becoming president,
| along with the trillions of dollars of stimulus given to
| small business owners and individuals, as alluded to by
| the top post in this thread.
|
| [0] https://www.foxbusiness.com/personal-finance/student-
| loan-re...
| thehappypm wrote:
| People don't need to make payments, why bother making a
| payment if its going to get forgiven?
| ceejayoz wrote:
| The payment pause on student loans ends in a month and a
| half (and is a separate program that's been around since
| the start of the pandemic). The legal battles over the
| forgiveness program are likely to go far beyond that, and
| lots of people have loan balances well over the $10k
| proposed forgiveness.
| prepend wrote:
| I'll be surprised if it actually ends. They said it will
| super duper definitely end, but there have been many "end
| dates" over the past two years.
|
| I feel silly because I paid off a student loan during
| this period and if I had paid nothing it would have been
| forgiven.
|
| The rational action is to pay nothing as long as
| possible.
| tomcam wrote:
| I would bother to make my payments because I would feel
| like shit if I took that much money from the American
| taxpayer without paying it back.
| prepend wrote:
| I don't think that's how interest works.
|
| The government stopping charging interest. They don't
| care if you pay or don't. You aren't taking any money
| from the taxpayer.
|
| Also, the "taxpayer" charged me 6% internet when the
| prime rate was 2%. Did it make you feel like shit because
| you, the taxpayer, were gouging student borrowers?
|
| The discussion isn't about never paying back. The
| discussion is about not paying back during the 0%
| interest period when the gov asking not to pay back.
| whimsicalism wrote:
| the govt is forgiving $20k/per person with pell grants of
| loans.
| rank0 wrote:
| And you'd be a sucker for not taking tax credits the
| government has legally granted you.
|
| It's the governments fault for making terrible loans and
| forcing taxpayers to absorb the risk. Don't be mad at
| people for receiving...be mad the government is offering!
| whimsicalism wrote:
| My partner and I make $420k gross. it's ridiculous the
| government is offering us another $20k because we
| graduated school in the last 2 years. still going to take
| it, of course, but simply bad policy.
| ceejayoz wrote:
| Making $420k with student loans is a pretty clear edge
| case, and we often find that trying to means-test these
| sorts of things winds up making things worse, not better.
| whimsicalism wrote:
| I find the arguments against means-testing less
| compelling for one time transfers.
|
| Large income and large student loans is actually very
| typical for early-career doctors and many other
| professionals who have very high expected lifetime
| income.
|
| FWIW, this transfer was means tested - it's just that
| they consider the lesser of 2021 & 2020 income and we
| were in school in 2020.
| whimsicalism wrote:
| Why not start donating extra tax to repay any public
| school expenses you acrued as a child?
| Pigalowda wrote:
| I haven't been paying anything since non-penalized
| forbearance started. Why pay when interest is 0% and
| there's no penalty for not paying?
|
| I've been using money that normally goes to loans for other
| bills. I imagine plenty of other people are buying more
| stuff with the money so i imagine it does contribute to
| inflation
| scythe wrote:
| This is a potential contributor to inflation, but it
| wasn't part of the student loan forgiveness bill, and
| instead supports the proposition that inflation is mostly
| related to COVID-19 measures, which include this
| forbearance.
| tomcam wrote:
| > Why pay when interest is 0% and there's no penalty for
| not paying?
|
| Just spitballing here... But maybe you should pay because
| you promised to pay it, the costs were borne by the vast
| majority of taxpayers who did not take out such loans,
| and because tradesmen and other perfectly deserving
| parties do not get access to such easy money?
| bdowling wrote:
| If the government decided it wants me to receive loan
| forbearance at 0% interest, then it's my civic duty to
| accept it.
|
| After all, I don't want to be labeled some kind of
| troublemaker.
| mrtranscendence wrote:
| > the costs were borne by the vast majority of taxpayers
| who did not take out such loans
|
| The sheer amount of interest I have paid, and will pay,
| on my student loans makes me think the costs will in fact
| be borne by me.
| amscanne wrote:
| An economic strategy should not depend on people behaving
| irrationally.
| Pigalowda wrote:
| It might hurt to spit ball a little bit harder here, but
| just so you know, penalty free forbearance is going to
| end very soon. And just like that all of us dirty debtors
| will begin repaying.
|
| If the government wanted us to repay during this period
| it would not have automatically turned our payments off
| and told us multiple times it turned auto-debit off.
|
| What kind of absolute fool would restart payment during a
| 0% interest penalty free forbearance? That's having a
| loan that's much less than the inflation rate. Why on
| earth except based on irrational internet principles
| would an individual restart payments on a loan like that?
| Very little spit balling went into that original
| comment..
| [deleted]
| del_del wrote:
| It seems like a logical consequence of the Permanent Income
| Hypothesis. If you expect your disposable income to rise by
| 500$ per month you'll spend more money this month, even
| though your disposable income hasn't risen yet.
| roflyear wrote:
| I wish the political people would go away from HN. The forum
| is becoming a rough spot.
| debacle wrote:
| Discourse on reddit has eroded from brigading and
| censorship and so this is the result.
| roflyear wrote:
| Yah, I suppose. It isn't like there isn't censorship on
| HN tho. Probably more extreme than Reddit in a lot of
| cases.
| fundad wrote:
| raising corporate taxes is anti-inflationary
| UncleOxidant wrote:
| > I wouldn't be surprised if it's better in a few months,
| especially with the growing protectionism in the anti-inflation
| act
|
| Wouldn't protectionism be inflationary?
| allemagne wrote:
| Absolutely. Higher prices for the same goods, plus a stimulus
| to domestic industry.
|
| Unless you are a savvy technocrat who knows where production
| bottlenecks are better than the market does, protectionism is
| just a welfare program at best and a cynical rent-seeking,
| vote-buying scheme at worst.
| jklinger410 wrote:
| > since the inflation was largely caused by lockdown stimulus
|
| This is a widely disproved myth.
| randomdata wrote:
| The first order reason for inflation is, of course, a
| willingness to spend more. Prices flat out can't rise if
| buyers balk at a seller's higher expectations. Plain and
| simple.
|
| But it is well understood that said willingness changes on
| what buyers believe[1]. If they believe that lockdown
| stimulus is causing inflation, it will cause inflation. The
| mere existence of lockdown stimulus won't cause inflation,
| but the emotional response to it very well could.
|
| And given that this appears to be a widely held belief,
| something even some government officials trumpet as the cause
| of inflation, it seems unlikely that it isn't a significant
| contributing factor. How is this dispelled?
|
| [1] https://www.brookings.edu/blog/up-front/2020/11/30/what-
| are-...
| deathanatos wrote:
| One can only balk so much at the cost of housing, energy,
| and food, before one is homeless, cold, and hungry.
|
| Housing has been hard to balk at for a decade for the same
| reason that nobody politically wants to address: a lack of
| supply in the market. Renters are now _doubly_ stuck in
| renting, as home ownership as an alternative market is now
| rendered unaffordable by spiking mortgage rates. (I.e., the
| very "demand destruction" the fed desired. And my landlord
| knows it!)
|
| Energy prices are spiking due to ... a lack of supply in
| the market.
|
| Still, the rate is allegedly +7% YoY, apparently, and my
| rent goes up +9.5% YoY "due to economic conditions", and my
| salary is -1% YoY.
| Jerrrry wrote:
| Please explain how literally directly increasing the M1 money
| supply doesn't cause inflation.
|
| Everyone got money for free. Things that are free, tend to
| have less value.
| tomcam wrote:
| And by "free" we mean "added to the gigantic mountain of
| debt our children must pay off"
| dlp211 wrote:
| This is not how the national debt works.
| concordDance wrote:
| You thinking inflated away or a default? Because those
| who have bought treasury bills are expecting that money
| in a few years.
| dlp211 wrote:
| THere is nothing that says that we ever have to pay off
| the debt. Debt can, and has continued to accrue to this
| nation since its founding. It is middle school thinking
| that debt incurred today must be "paid by our children".
| It's just not at all how the national debt works...like
| at all.
| Jerrrry wrote:
| The government that printed the money was supposed to
| reduce the money supply, while capturing productivity
| from more profitable industries, effectively neutering
| the difference. Turns out it is easier to print money
| than to burn it.
|
| The Fed is trying to command the economy, but ultimately
| people must be more productive for a little less. QE
| easing and asset deflation have some part, but
| unemployment must increase, or we simply won't have the
| "strong labor market" that increased productivity
| requires. We don't have the sentiment or confidence, and
| that is going to be devastating if not quickly corralled
| - inflation can lead to hyperinflation exponentially.
|
| Not for the USD - we have control of the world's economy
| - which is why the MIC complex and foreign policy is
| actually an investment in the largest scale.
|
| That difference, between productivity gains and captured
| output, is the price our future generations pay (in
| inflation) for continuity _now_. But it isn't fair to
| push such a can down the road. Things need to pop sooner
| rather than later, and the Fed would like a "soft
| landing" - no pop, which may not be possible at this
| point.
| jklinger410 wrote:
| You should keep your concern trolling about federal debt
| focused on things that are actually bad and not bail outs
| for citizens who are constantly getting fucked by the
| economy.
| zuminator wrote:
| Pay off to whom?
| carom wrote:
| Various holders of US debt. The federal reserve, foreign
| holders, mutual funds, banks, local governments.
| dlp211 wrote:
| The myth is that inflation was caused primarily by this. It
| wasn't. Inflation is being driven by a combination of
| factors, the biggest being supply chain and war in Europe.
| AuryGlenz wrote:
| Inflation was plenty high before the war:
| https://www.statista.com/statistics/273418/unadjusted-
| monthl...
| barbecue_sauce wrote:
| Not to mention suppliers and retailers increasing profit
| margins surreptitiously under the guise of "inflation".
| sicp-enjoyer wrote:
| That's just how inflation works. The supply side is
| always trying to charge the highest price they can, when
| they can do it successfully that means people have more
| dollars or more demand to throw at those items.
|
| In a non-inflationary period increasing prices will be
| met with less demand.
| UncleMeat wrote:
| Look at the inflation measurements for fuel oil. It swings
| wildly. In September prices went down. In October prices
| went up.
|
| If "more money makes each dollar worth less" was the story
| then we'd see all goods inflate at similar rates. Perhaps
| it'd be delayed from the money printing but we'd still see
| this consistency across industries.
|
| But we don't.
| colinmhayes wrote:
| 08-20 money supply tripled but no inflation.
| randomdata wrote:
| I'm not sure that provides an invalidation. There was
| unprecedented asset inflation during that period.
| Consumer inflation jumped at the same time the market
| realized that they were no longer making money hand over
| fist holding assets, no doubt in response to realizing
| that the only way to make money going forward was to
| produce something of value and charging accordingly.
|
| You can print money endlessly, stuffing it into people's
| bank accounts limitlessly, and as long as they don't
| spend it you won't see inflation. But once they do start
| to spend it, the capacity to spend is magnified. Stocks,
| real estate, etc. provided essentially that bank
| account... until now.
| mrtranscendence wrote:
| Everyone got a relatively small amount of money for free.
| It was nowhere near the amount that would be necessary to
| cause this amount of inflation.
| AuryGlenz wrote:
| Plenty of people got a lot more than the usual stimulus
| checks. People with multiple kids got quite a bit. I'm a
| photographer and was able to collect unemployment on
| weeks I didn't make enough, or spent enough on expenses
| to offset my profits.
|
| That means all of my usual expenses during that period
| were paid for (unless I made nothing or too much that
| week), plus a lot of weeks it made sense for me to get
| new equipment.
|
| In many states, people on the low end of the earning
| scale made more through unemployment than they did
| working. I have two friends with small businesses that
| had a hard time getting people to come back to work for
| that reason.
| fundad wrote:
| Now multiply that by every large corporation with their
| tax cuts since 2017. At least a lot of the money was
| borrowed at very low interest rates (from ourselves).
| bt4u wrote:
| ionwake wrote:
| In many European countries inflation is at 15%
|
| If it reaches 20% that means every 3.5 years your cash reserve
| loses half its value
|
| Mean someone correct me if I'm wrong I think that is astounding
| aeternum wrote:
| I think people are underestimating how much the cost of energy
| impacts inflation.
|
| It used to be primarily labor costs, and labor/wages is still a
| major part. However with automation some labor is being
| replaced by automation and thus converts what used to be labor
| cost to energy cost.
|
| European countries are not in great shape from an energy POV.
| onlyrealcuzzo wrote:
| And yet solar radiation falling on just 1% of Spain, Italy, &
| Greece - even in the Winter - can power >50% of Europe (and
| >100% in the Summer).
|
| Europe already gets ~12% of its energy from Nuclear, ~5% from
| hydro.
|
| Solar energy will not be a problem in the future - neither
| will sourcing the remaining 33% of energy from other
| renewables, nuclear, and fossil fuels.
| rank0 wrote:
| I don't understand how you can be so optimistic about
| energy security in Europe. They're in the midst of an
| energy crisis right now...
|
| The infrastructure they have now is literally insufficient.
| hankchinaski wrote:
| assuming that the inflation rate remains the same for the next
| 3.5 years. Which seems unlikely
| kshacker wrote:
| It appears to be more like tectonic plates shifting.
| Sometimes they shift a bit, a few aftershocks and pretty much
| back to normal order. But sometimes it kills a few hundred
| thousand, changes the landscape that even after the
| aftershocks subside, it leaves behind quite a different
| world. 20% loss against dollar for 2 years without reversion
| will end up creating quite a different world.
| dntrkv wrote:
| As the other poster pointed out, that's primarily due to the
| energy costs and those will most likely come down. For a more
| accurate look at inflation, you should look at core CPI which
| excludes energy and food which can be volatile. This number is
| closer to around 5% in most of Europe.
| fleddr wrote:
| Ah yes, inflation is just fine if you exclude housing, energy
| and food, the 3 things sustaining everybody's life.
| dntrkv wrote:
| Shelter is included in core inflation.
|
| Where in my post does it say that inflation is just fine?
| The point is that the crazy 15% numbers we are seeing are
| mostly due to energy prices, which are extremely volatile.
|
| We should strive to get an accurate picture of the current
| state of affairs, not be overly optimistic or pessimistic.
| paxys wrote:
| Seems like these days there are more people who want the economy
| to fail just to be able to make a point about the political party
| they support.
|
| I'm personally ecstatic that inflation seems to be softening.
| It's likely that there will be another couple interest rate hikes
| regardless, but there does seem to be a "back to normal" in the
| (distant) horizon somewhere.
| register wrote:
| So a mere 0,2% delta led to a 6,4% increase in the Nasdaq. I
| really can't understand...
| Zigurd wrote:
| Several commenters have provided various reasons year-over-year
| numbers are, to put it mildly, difficult to interpret.
|
| Another reason is that a major war in Europe started within this
| year, adding to the difficulty of Y0Y comparisons. The principal
| weapon deployed against the aggressor is economic warfare to
| collapse Russia's economy. That has only recently made an impact
| that can't be denied in Russia.
|
| Meanwhile, the war has directly cut food exports from Ukraine and
| both directly and indirectly disrupted food and fossil fuel
| markets in many regions, mostly toward higher costs and trade
| substitutions that also mostly lead to higher costs.
|
| Interest rate rises are probably needed but the causes of
| inflation are mostly outside central bankers' control.
| flavius29663 wrote:
| You can't blame US inflation on the Russia war, this is a DNC
| misdirection. For the US at least, it should be a minor factor.
|
| The US were trading very little with Russia to begin with, even
| before the war. Russia's economy before the war was still
| smaller than California, New York or Texas. Waging economic
| warfare on a medium economy like that should not wreak the US,
| Europe or the World economies.
| richiebful1 wrote:
| Agreed with one caveat: energy. Some countries in Europe
| depend on Russian gas for a significant percentage of their
| energy. Europe is desperate for LNG and is outbidding other
| gas importing nations, driving up prices.
| happyopossum wrote:
| Yet natural gas prices here in the US slumped last month...
| dalyons wrote:
| Energy and food prices are global, regardless of who trades
| with who. Try to be less nakedly partisan.
| flavius29663 wrote:
| But again, Russia is a small fish in the world economy, the
| US+EU have a combined GDP of 40 trillion dollars, you
| cannot say that waging economic war against a 1.7 trillion
| economy is causing such damage.
|
| Like you said, the Russians still sell energy and food
| worldwide, even if Europe and US buy less (or at all), so I
| don't buy this explanation.
|
| > Try to be less nakedly partisan
|
| This is a talking point from DNC, I was trying to show how
| flawed it is. If that makes me partisan, fine. It means
| we're ready to swallow any bullshit that comes from the
| party/government, as long as it makes us feel good.
| Zigurd wrote:
| Commodities are fungible. The US makes lots of oil and food.
| The companies that make these things sell them to all comers
| at global prices.
| lunaru wrote:
| It bears repeating because this is a common mistake in inflation
| discussions: a decrease in inflation metrics means price
| increases are slowing down, it doesn't mean that prices are going
| down (that would require a negative CPI print).
|
| Also, this number is year over year, so the decrease just means
| the price increases between Oct 21 and Oct 22 are not as steep as
| between Sept 21 to Sept 22, which is not hard to achieve because
| Sept 21 to Oct 21 had a bigger month over month jump.
|
| The right way to interpret this number is that high prices have
| plateaued a bit. Yes that means your groceries are going to be x%
| higher than in 2020. Short of deflation, they always will be.
| danielmarkbruce wrote:
| You could just say: CPI is up 0.4% month-over-month. It gets
| reported.
| lottin wrote:
| Year-over-year inflation doesn't tell us anything about whether
| prices are going up or down _right now_.
| giantg2 wrote:
| No historical data is going to tell us the future. But it can
| give us an idea of the trend, which is useful since in a
| large system like the economy the trend tends to change
| relatively slowly as compared to individual compentents.
| lottin wrote:
| A statistic is only useful if you know how to interpret it.
| Case in point: you can have double digit year-over-year
| inflation, while simultaneously _falling_ prices for the
| last 11 months.
| giantg2 wrote:
| This doesn't make sense. Falling prices for what? CPI is
| a measure of cost of a basket of goods. You can't have
| net aggregate falling prices and a rising CPI unless you
| are measuring different prices.
| danielmarkbruce wrote:
| CPI up 20% month on month in month 1. CPI down 1% month
| on month for the remaining 11 months. That would result
| in what they are saying.
| giantg2 wrote:
| Ah, so not mismatched prices/goods, but mismatched
| temporally.
| danielmarkbruce wrote:
| It's just about how are you measuring the slope? Like,
| when you first learn derivatives and the math teacher
| draws a line between two points on a curve, then draws
| another from points closer together, then draws the
| tangent, then goes through how you get to a derivative
| function etc.
|
| The yoy is just using two points very far apart. The mom
| is using two points closer together. It would be nice but
| practically impossible to measure it instantaneously, mom
| is about as good as we get.
| fragmede wrote:
| I can get the prices for goods online, and then get them
| delivered to my house. Getting the CPI more often seems
| entirely feasible to me if we really wanted to.
| danielmarkbruce wrote:
| Maybe. But online isn't the only place to buy, and to
| arrive at a single number they do all kinds of
| adjustments to account for seasons, locations etc.
|
| If you are right, I'd guess the cost benefit probably
| isn't there regardless.
| dcow wrote:
| Which is still stupid to even be arguing about. It's like
| people are trying to find a problem with data that is
| objectively reported by arguing that if you change the x
| axis you get an entirely different conclusion. No shit...
| that's how data works.
| danielmarkbruce wrote:
| No one is suggesting there is a problem with the data.
| They are discussing how best to interpret it.
|
| And nobody is suggesting changing the x-axis. It's still
| time. The distinction people are making is which points
| does one use to calculate the slope? The most recent two?
| The most recent one and the one from a year ago? What are
| the implications of each?
| dcow wrote:
| From what I can gather you're trying to suggest that
| prices are going down because "recently" they have been
| (which isn't even true MoM they've still increased).
| That's a pretty sloppy and inaccurate statement without a
| very precise definition of recently, which has been
| omitted. And YoY it's not true.
|
| I didn't see any thread of discussion that you're
| alluding to where people were trying to interpret what
| the data actually means. There was simply a word of
| caution about making sure not to let the headline confuse
| you. Then some incorrect and sloppy comments appeared
| like "actually this is incorrect data because the price
| is trending down MoM don't be fooled". That's an entirely
| different thing. Hence why you see all the people trying
| to explain how it's silly. I didn't introduce confusion
| by changing the slope calculation... I'm just responding
| to it trying to clean up the mess it's made.
|
| I'm seriously confused: what is your actual point?
| danielmarkbruce wrote:
| No, definitely not, and they haven't, not yoy or mom.
| Terrible gathering.
|
| The comment was in response to a comment that was
| speaking to nuance and basically said there's even more
| nuance. It's right there to see.
| alooPotato wrote:
| Anyone else feel like this is such a dumb way for the general
| public to track inflation. Like, a simple line chart with the X
| axis being time and the Y axis being the price of a basket of
| goods would be so much clearer
| boppo1 wrote:
| That's why we don't use it.
| idontpost wrote:
| Victerius wrote:
| For the mathematically inclined among us, dp/dt is still
| positive. It's d^2p/dt^2 that is slightly negative.
| compumike wrote:
| For the mathematically inclined, here is a graph of 1/p over
| the past year:
|
| https://totalrealreturns.com/s/USDOLLAR?start=2021-11-10&end.
| ..
|
| or over a longer time period:
| https://totalrealreturns.com/s/USDOLLAR
|
| (this site is my side project)
|
| If "p" is the relative price level index (CPI-U in this
| case), then "1/p" represents the relative purchasing power of
| a single dollar over time -- explained on homepage in more
| detail.
| redox99 wrote:
| Not really.
|
| It means CPI_oct22 - CPI_oct21 < CPI_sep22 - CPI_sep21
|
| d^2p/dt^2 isn't necessarily negative.
| OscarCunningham wrote:
| 'Inflation is slower now than it was this time last year.'
| Victerius wrote:
| Oh, right. I mixed it with month-on-month inflation.
| contravariant wrote:
| Though the mathematically inclined should also know that
| we're not looking at dp/dt, we're looking at p(t) - p(t-T).
|
| The difference is important, especially because we're looking
| at a yearly increase _every month_. The derivative of the
| annual inflation is not d^2p /dt^2 but (dp(t)/dt -
| dp(t-T)/dt).
| queuebert wrote:
| Anyone who's ever had to numerically estimate second and
| higher derivatives from noisy data can appreciate how
| difficult the Fed's job is.
| FollowingTheDao wrote:
| And I find it hysterical that the 10 year Bond dropped 4%
| because of this. They think this is the peak, as in the Fed
| will stop raising interest rates and inflation will only get
| lower from here.
|
| A good time to but the 10 year Bond IMHO.
| datalopers wrote:
| Why would you suggest buying a bond on the exact day that
| yields just plummeted.
| FollowingTheDao wrote:
| It is funny to me that this does not make sense to you.
|
| Do you think I should have bought it when the price peaked?
|
| What I am saying is that the "market", which is now
| controlled by AI reading newsprint, is wrong and that 10
| Year Bonds will increases again.
| datalopers wrote:
| I don't think you understand how bonds work. However I do
| agree that yields will increase and this is temporary.
| FollowingTheDao wrote:
| ?
|
| You don't think I know how bonds work? Yet you agree with
| me?
| NavinF wrote:
| > the "market", which is now controlled by AI reading
| newsprint
|
| You might as well say "I don't understand how bonds
| work". It's fewer words.
| germandiago wrote:
| Well explained. Idk for english-speaking countries or your
| country of origin but the average spanish is an absolute
| illiterate in economy.
|
| These explanations are very necessary so that people develop an
| intuition of what is going on.
| giantg2 wrote:
| Many Americans are illiterate on numbers and the economy too.
| I still remember the classic example that a burger chain
| released a 1/3 pound burger to compete with another chain's
| 1/4 pound burger, and many people thought the 1/4 pound was
| bigger...
|
| Edit: there are some people saying it's a myth, or not a
| complete picture. Looks like we don't have the data. But my
| point is that we aren't very good with numbers or economics.
|
| https://www.scientificamerican.com/article/fractions-
| where-i...
|
| https://www.stlouisfed.org/on-the-
| economy/2018/september/how...
| BolexNOLA wrote:
| I've always thought this was somewhat apocryphal/a myth.
| Did it actually occur?
| turrican wrote:
| Sadly, it is true. The chain was A&W:
|
| https://awrestaurants.com/blog/aw-third-pound-burger-
| fractio...
| sillyquiet wrote:
| this is a 'haha Americans so dumb' myth that's been blown
| up - it's the result of a NY Times article that outline a
| private restaurant chain focus group result.
|
| So tldr; _some_ people in a private focus group
| questioned the value of a 1 /3 pound burger over the same
| priced 1/4 pound burger. It's not indicative of any
| system numerical illiteracy.
|
| I will add there were no actual data released - it's
| solely based on an anecdote from a A&W restaurant
| executive.
|
| https://skeptics.stackexchange.com/questions/28745/did-
| aw-cu...
| A4ET8a8uTh0 wrote:
| I was exposed to this myth in my youth as various
| European nations described their misadventures in the US
| of A or encounters with Americans and as a result came to
| US with wrong expectations. Now that I live here, things
| a little more clear to me. It is a nation of more than
| 350 million people ( depending on how and who you count
| ). Even a small percentage of certifiable idiots will be
| very well represented in terms of absolute numbers.
|
| I would not say Americans in general are dumb though. I
| would say that:
|
| 1) they are under-educated ( and then we can also get
| about the quality of education for those that were
| educated ) 2) they are very heavily propagandized
| bnralt wrote:
| Even more than that, the accounts we get claim that some
| of the people in the focus group said the 1/3 pound
| burger was smaller than the quarter pounder. Even if
| those claims are accurate, it's possible they were
| looking at the diameter, since the 1/3 pounder has two
| smaller patties stacked on top of each other, while the
| quarter pounder is one large patty.
|
| Most places that report on this say that the third
| pounder was cheaper and that Americans preferred the
| taste, but they didn't buy it because of the name and
| their poor math skills. But its name was changed to "Papa
| Burger," and it still didn't become the quarter pounder
| killer it's portrayed as.
| bleuchase wrote:
| Stupid people exist. It's happened. In fact, it's a
| pretty easy mistake to make if you don't understand
| fractions. 4 > 3.
| coding123 wrote:
| And since we don't know the context they could have shown
| a closer up burger, or heck, taller burger that is 1/4
| and a 1/3 next to each other but further away or stepped
| on at which point they were asked, what's bigger?
|
| Also, the 1/4 or 1/3 is referring to the raw, uncooked
| meat only. So in theory you can add 1400 lbs of lettuce
| to make something larger than my car. (Which is terrible,
| since lettuce is where you pick up all the disease these
| days - everyone here should order all their food without
| any lettuce)
| hwbehrens wrote:
| It's hard to find contemporaneous evidence, because it
| was apparently revealed by an internal company focus
| group, but here's [0] the page from the company
| themselves with the claim.
|
| It wasn't revealed at all until the founder's memoirs in
| 2007, and it wasn't reported widely until this [1] 2014
| article.
|
| 0: https://awrestaurants.com/blog/aw-third-pound-burger-
| fractio...
|
| 1: https://www.nytimes.com/2014/07/27/magazine/why-do-
| americans...
| dsfyu404ed wrote:
| >Many Americans are illiterate on numbers and the economy
| too
|
| Many more pretend to be less literate than they are for
| ideological reasons.
|
| >still remember the classic example that a burger chain
| released a 1/3 pound burger to compete with another chain's
| 1/4 pound burger, and many people thought the 1/4 pound was
| bigger.
|
| This trope needs to be taken out back and shot. It wasn't
| that people didn't get it. It's that it was poorly marketed
| and the difference between 1/3 and 1/4 isn't enough to make
| people go to a burger chain that was dying due to low and
| variable quality when they could just go to McDicks and get
| a reliable 1/4lb.
| giantg2 wrote:
| There's certainly more than just the number confusion,
| but I specifically remember the case study we were
| looking at included a survey where a sizeable number of
| respondents said 1/4 was bigger than 1/3.
| moron4hire wrote:
| I don't know anything about this particular one, but just
| because it's a case study in a textbook doesn't mean it's
| true. There are lots of untruths that get propagated long
| after they've been debunked.
| dcow wrote:
| But they're citing a survey where people literally didn't
| get it. That, if not made up, factually supports the
| claim that some people really do think 1/3 is less than
| 1/4.
|
| I really liked the 1/3 pound "thickburgers". I don't
| think it was just some dying chain trying to spread
| rumors about how stupid people didn't understand their
| marketing and that's why they "died" (they're still very
| much alive last I checked).
| andsoitis wrote:
| > But they're citing a survey
|
| Then it should be possible to point to said survey...
| dcow wrote:
| If you had the survey in hand you could point to it.
| Proprietary information is not news and exists even in
| academia (cf. scihub).
| giantg2 wrote:
| Sure, but there's nothing presented to debunk this so
| far. So far all the "testimony" shows it to be true, but
| it could be propaganda.
|
| The larger point is that it does demonstrate what the
| actual data shows - that the US has a sizable portion not
| good at math/fractions or finance.
| lordnacho wrote:
| I have a degree in it and I often don't feel that I know
| anything. For a guy who did a lot of STEM economics is a
| pretty odd subject in many ways. A mixture of interesting
| insights, strange models, and a lot of soft talk.
| Ar-Curunir wrote:
| I.e. the rate of price increase has slowed, not the price
| increase itself
| maratc wrote:
| Prices are still increasing, and they are still increasing
| fast. It's just that recently, they increased even faster
| than now.
| WanderPanda wrote:
| You mean a negative CPI growth / CPI decline, right? With a
| negative CPI stuff would be free + we would be getting money on
| top (on average) :D
|
| I think the best way to understand it is to just look at the
| index itself [1] and not the first or second derivative.
|
| [1] https://tradingeconomics.com/united-states/consumer-price-
| in...
| amanj41 wrote:
| Couldn't some goods in the basket be slightly negative while
| others are positive? For example if rent went down relative to
| last year's baseline but groceries, gas, etc were all very much
| up.
| kelnos wrote:
| Sure, but this is still exactly what we want to see. If the
| target is 2%, YoY metrics moving in that direction is a
| positive step.
|
| The only thing we can hope for is that, as inflation numbers
| continue dropping back toward "normal", wage increases will
| eventually catch up and make those already-higher prices less
| difficult to swallow. Of course, it never works out that
| neatly.
| [deleted]
| msoad wrote:
| Inflation over the last year was 7.7% - if the October rate
| holds for a year, it will be under half of the last years
| inflation rate coming in at 3.6%
|
| That's the number that matters in a forward looking instrument
| like the market
| danielmarkbruce wrote:
| This isn't right. It could in fact mean prices are going down.
|
| Had we just reported a month on month -0.4% instead of 0.4%,
| the yoy rate would have been reported as 6.9%. A headline of
| 6.9% would mean prices are actually going down.
| meragrin_ wrote:
| Anything positive YoY means prices have gone up overall over
| the last year. For prices to have gone down in general over
| the last year, the YoY would have to be negative. A headline
| of 6.9% would mean prices have gone up.
| danielmarkbruce wrote:
| The slope of price v time would be going down if they'd
| posted 6.9% yoy.
|
| The discussion is around how the numbers should be
| interpreted. There isn't confusion around what they have
| literally reported.
| dcow wrote:
| Nope. You are continually overlaying data with different
| X axis and trying to draw conclusions and sound
| authoritative and it's just sloppy and irresponsible.
|
| The _instantaneous_ slope would be negative if the last
| month happened to observe a slight decrease, true. But
| the slope of the line between last year and this year
| would be positive.
|
| Both statements can be true:
|
| 1. prices just fell slightly since last month
|
| 2. prices have risen overall since last year
|
| EDIT: you edited your comment I'm not going to update
| mine.
| danielmarkbruce wrote:
| Same x axis - time. CPI is a time series, you get a point
| every month. Everyone is trying to draw conclusions, it's
| the point of this thread.
|
| >> The instantaneous slope would be negative if the last
| month happened to observe a slight decrease, true
|
| This is sloppy. It's fine, it's a forum, we aren't
| writing academic papers.
|
| Nobody is trying to figure the slope of the straight line
| between the two points, that's what is already reported.
|
| Yes, both can be true.
| dcow wrote:
| Sigh. Obviously we're talking time here. The _scale_ on
| the X axis, the interval that appears on the graph
| between two points, is different if every unit is a month
| vs a year. Months and years are different _units_ of
| time.
|
| IDK... nobody is really trying to figure out how to
| interpret the data. People were just commenting that
| "declines to X%" actually still means that it's gone up
| YoY and not that it's declining YoY and here you are
| yelling that actually it is declining because _recently_
| it went down. Which is false, YoY.
| danielmarkbruce wrote:
| Scale is the same. The CPI reports every month. It's one
| chart, a single index, one point per month.
|
| They just take the recent point and the point from a year
| ago and do the math and report the change. For mom they
| do the recent point and the one before that, do the math
| and report.
|
| Some people actually know what the CPI is, how it gets
| reported, and understand the shortcomings of said
| reporting. If you aren't one of those people, it's silly
| to go around correcting others.
| dcow wrote:
| I... do... know that. That's why I'm trying to clear up
| the shitstorm you're causing by deliberately being
| provocative. You sound like a manager trying to deceive
| reports into thinking they don't need an inflation bump
| this year because "look inflation is lessening" or
| something.
| colinmhayes wrote:
| You're just talking about different time frames. Yearly
| inflation can be positive and prices can also be lower than
| they were last month. Ergo prices are going down but
| inflation still positive.
| nashashmi wrote:
| Also it is worth mentioning that part of the major reason
| accounting for inflation is car price. It's going down now as
| chip makers produce more and prices go down further.
| onlyrealcuzzo wrote:
| It's also going down because it's a debt market and financing
| is more expensive w/ used car interest rates at 9% instead of
| 4% and new cars at 5% instead of 0%...
| nemo44x wrote:
| Hopefully that helps with new car pricing. Dealers are still
| selling well above MSRP.
| Der_Einzige wrote:
| Car lots need to be knocked down a peg or ten. Car sales
| folks are the scummiest folks on earth and they have been
| empowered by this disaster of a market for too long.
|
| The overwhelming majority of car sales people know almost
| nothing about cars. That's already how you know that their
| industry is basically useless.
|
| It's also extremely predatory. Anyone trying to pay a 30K
| mark up on a rav4 prime is being swindled (even if they
| think they're not). You (the sales person) should prevent
| obviously stupid car sales (or shit like 25% apr hellcats
| to US soldiers), but of course not, they're greedy!
| nemo44x wrote:
| I don't buy cars often but it seems like the last decade
| or so, the major dealers anyways, don't play a lot of
| games like they used to. They put a decently fair price
| out there and can maybe knock a bit off but with some
| much information about cars today (CarFAX, BlueBook,
| searching online) it's really difficult to swindle
| people. So they just list a fair price and go from there.
|
| They make a lot of their money today selling warranties,
| service packages, and financing.
|
| I was looking a few weeks ago and the sales associate
| mentioned that it's starting to come down but they've
| just struggled so much at getting enough inventory that
| people were willing to bid up from MSRP. He advised me
| it's still a bad time to buy a car and that next year
| will probably be better.
| staringback wrote:
| They are only selling well above MSRP because people are
| willing to buy well above MSRP
| nemo44x wrote:
| Well, yeah. There was an imbalance in the market between
| the supply of cars and the demand from consumers for
| cars. People were willing to spend more than ever,
| especially with super low interest rates making it nearly
| free to borrow money.
| bryanlarsen wrote:
| I expect the number of car sales in the US to go down
| significantly like it has in Europe. Interest rates are one
| major factor, but another is the electric transition.
| Anecdotally I know quite a few people that aren't buying new
| vehicles right now. They're the kind of people that buy a new
| car every 10 years or so, and are delaying their purchase or
| buying used. They realize it's a bad idea to buy a new gas
| car but aren't yet ready to buy an electric car because they
| don't understand them yet, they're too expensive, have a
| massive backlog, or don't come in the style/variant they
| want.
| massysett wrote:
| Why is it a bad idea to buy a new gas car? ExxonMobil is
| not going to stop pumping oil out of the ground.
| colinmhayes wrote:
| Gas exploration is way down. No gas production won't
| stop, but supply growth seems to be completely stalled
| while demand is not due to developing countries
| continuing to get richer. Gas will likely continue to be
| expensive as we transition away from fossil fuels.
| twobitshifter wrote:
| Gas prices ice bans and global warming. If you buy a gas
| car today, I wouldn't expect much in terms of resale
| value.
| bryanlarsen wrote:
| My reasons: in 10 years time most local gas stations will
| be closed, 95% of the demand for used cars will be for
| electrics and 97% of the supply will be gasoline so the
| car will only have its scrap metal value.
|
| But most people aren't thinking that far ahead. They just
| know I can recharge my car for $10 but it costs them $100
| to refill theirs. They know that electricity prices are a
| lot more stable than gas prices.
| hotdogrelish wrote:
| I agree with your general sentiment, but I think this
| timeline doesn't necessarily extrapolate well for the
| United States. The average age of a vehicle on the road
| in the US is about 12 years - aftermarket suppliers as
| well as oil/gas companies have a very strong incentive to
| plan that far ahead in order to keep up with the demand.
| Especially given that the quantity of gas vehicles on the
| road will be, as you say, such a large percentage of the
| market.
| bryanlarsen wrote:
| Miles/year of old cars is a lot less than new cars. So
| demand for gas in 10 years might be about half of what it
| is now. Some stations will still do well, but a lot of
| marginal stations will disappear.
| ajross wrote:
| > The right way to interpret this number is that high prices
| have plateaued a bit.
|
| This part is true.
|
| > that means your groceries are going to be x% higher than in
| 2020
|
| But this part jumps right back into the much bigger fallacy
| that inflation represents a change in value and not price!
| Sure, groceries are higher in price, just like your assets are
| higher in value (on average) and your wages are higher (on
| average).
|
| But in any case, your notion that inflation isn't
| instantaneously halted is a little spun. In fact month-to-month
| CPI change for October is 0.4%, which corresponds to about 4.9%
| per year. That's higher than we've seen for most of the last
| decade, but not a number most people would consider "high" in
| the sense of "disruptive to economic activity".
| rzimmerman wrote:
| Yes the YoY number is useful for getting rid of seasonal
| variations. The monthly CPI is also noisy. But when there's a
| big spike over a few months (like we had 8-16 months ago) YoY
| won't go down meaningfully for at least a year.
|
| This is actually great (if noisy) news. 2 months of 0.4% CPI
| increase is equivalent to 5% yearly inflation. But the YoY is
| still high because it was much worse 8-12 months ago.
|
| I hadn't even considered that people will think low numbers are
| a lie because prices don't go down. But of course (sadly)
| you're right.
| fakethenews2022 wrote:
| Many words for something that can be explained by a single
| cumulative CPI graph.
| fakethenews2022 wrote:
| Of course it probably needs a second graph under it of 2%
| cumulative CPI for comparison.
| anyonecancode wrote:
| I think of it like the accelerator pedal on a car. A decline in
| inflation means the foot has eased up on the accelerator some,
| but the car is definitely still moving forward.
| la64710 wrote:
| Which businessman in their right mind will decrease the price
| of their products because of cost decrease? Not unless there is
| intense competition. Because of that for large scale monopoly
| business like commodities once the prices go up it may not come
| down again.
| Green_man wrote:
| I may be missing something, but if there is no competitive
| pressure/monopolistic market, why would these businesses need
| the excuse of inflation/cost increases to increase their
| prices? Wouldn't we expect prices to have gone up before
| inflation?
|
| Or is this a specific criticism of a regulatory blind spot
| for reigning in market power? Monopolies can get away with
| price increases now, but they wouldn't normally?
| massysett wrote:
| The argument is that they had market power before, but were
| afraid to exercise it for political reasons or because they
| feared enforcement action. Now, with inflation, the company
| has an excuse to raise prices, but now they're raising them
| only partly due to increased costs, and partly as an
| exercise of their market power.
| smileysteve wrote:
| What is "before inflation"? Deflation is bad it means you
| should keep your dollars instead of investing them.
| jliptzin wrote:
| If you sell commodities that is literally the opposite of a
| monopoly
| matwood wrote:
| And to add to your explanation, because inflation jumped so
| quickly and then slowed we'll eventually hit a YoY number that
| plummets. If milk is $4/gallon today and still $4/gallon 12
| mos. from now, that's 0% YoY inflation.
|
| This will inevitably lead to people saying the numbers are fake
| because milk used to be $2/gallon.
| KptMarchewa wrote:
| Month on month numbers are still slightly up.
| Am4TIfIsER0ppos wrote:
| If "inflation is transient" when is it going back to 2/gal?
| howenterprisey wrote:
| You're making the same mistake. If inflation is transient,
| the price _increase_ is transient, but the high prices
| remain. It would only go back to 2/gal if the high prices
| themselves were transient. Which I really hope is the case,
| but IDK.
| evancox100 wrote:
| Transient inflation means the $4 / gallon milk prices stick
| around and don't go any higher. Going back down to $2 would
| be deflation.
| elgenie wrote:
| "Inflation" means "increase in price levels". That's it.
|
| "Inflation is transient" fits prices increasing and then
| leveling out, and does not imply that every bit of price
| increase is balanced out one-for-one by immediate deflation
| afterwards.
|
| As for gas prices, it's going to depend on supply
| (including refinery capacity) and demand. The $2/gallon of
| April 2020 was an artifact of covid nuking demand.
| fleddr wrote:
| Honestly, I'm with those people.
|
| Your explanation is fully technically correct, but the
| subsequent messaging that inflation is zero is a matter of
| not reading the room.
|
| When an important item dramatically rises in price, this can
| have a massive impact on people. A dramatic drop in
| purchasing power or even businesses needing to close. It is
| _impactful_.
|
| When the price continues to be high, the impact remains. The
| pain continues, the problem is not solved. The politically
| smart messaging is to say "we feel and acknowledge your
| continued pain, this is what we're going to do about it", not
| "Good news! Inflation is 0%."
|
| Same with the opportunistic messaging of sometimes using MoM
| or YoY, whichever number looks better. When MoM inflation in
| October is 15% and 5% in November, you really shouldn't bring
| this as good news. The situation still got worse in the real
| world.
| impulser_ wrote:
| Don't be surprised when politicians use this to their
| advantage next year.
| 0x445442 wrote:
| Especially when their incomes didn't double.
| olivermarks wrote:
| @matwood it is a disaster for working people regardless as
| wages are not keeping pace with the effects of inflation.
| coding123 wrote:
| It's bullshit because it's an average of everything that no
| one buys. My grocery bills have doubled since 2020, meaning
| my CPI was 100% over 3 years. I will not shut up as you and
| many others are trying to force me into accept it's 10%
| inflation.
| sn0wf1re wrote:
| The Canadian government provides a personal inflation
| calculator. You may see higher or lower personal inflation
| than CPI. https://www150.statcan.gc.ca/n1/pub/71-607-x/71-6
| 07-x2020cal...
| throw0101a wrote:
| > _If milk is $4 /gallon today and still $4/gallon 12 mos.
| from now, that's 0% YoY inflation._
|
| Conversely, if there was a one-time jump in a particular
| item, it will take a year before it gets 'removed' from the
| inflation numbers.
|
| Extremely contrived example: if gas/petrol was $1/L in
| December 2021 (and generally in all of 2021), but $1.20/L in
| January 2022, then there will be a 20% YoY jump in inflation
| for the January number comparing Jan 2021 to Jan 2022.
|
| Now if gas stays at $1.20/L in February 2022, _it will still
| register as 20% YoY_ even though the price has not changed
| month-to-month. That 20% (YoY) is "stuck" in the system
| until January 2023 when we're comparing $1.20/L to $1.20/L.
|
| A one-time jump can 'skew' the numbers if all you look at is
| YoY metrics.
| soared wrote:
| It's not really skewing anything though, since the price is
| 20% yoy?
| danielmarkbruce wrote:
| It is skewing if you are looking for an up to date
| change. It's like, is it better to get two points on a
| curved line and draw a straight line through them, or is
| it better to calculate the derivative and the the slope
| at a specific point?
| joshuahedlund wrote:
| That depends on how noisy or smooth the changes are.
| That's why it's valuable to look at both.
| cwilby wrote:
| That literally leads to the conclusion that prices rose,
| in your example.
| rflrob wrote:
| The conclusion that "prices rose" is the correct one.
| What you should not conclude, even though the inflation
| has been at 20% all year is that "prices are (still)
| rising".
| dcow wrote:
| But they have risen since last year. YoY _they are still
| rising_.
| Dylan16807 wrote:
| You can't use "rising" to strictly talk about the past.
| You need to expect it in the future too. If you don't
| expect the price to be higher a year from now, then it's
| not "rising YoY", it merely "rose YoY".
| danielmarkbruce wrote:
| It may be - but to the above poster's point - if gas went
| up 20% in Jan of this year and then stays flat... is it
| helpful to think of prices as "going up" ? It seems
| misleading.
| jerf wrote:
| "is it helpful to think of prices as "going up" ? It
| seems misleading."
|
| Here you are encountering a common human cognitive
| failing, which is the belief that there is some sort of
| objective answer to the question "are prices going up?"
| that we should all be able to totally agree on, somehow
| floating in Platonic space without reference to any
| _particular_ measure of "prices increasing".
|
| The problem is that if you drill down to the question of
| "what does it mean for prices to be 'going up'?", you
| _must_ admit to the fact that there are multiple valid
| definitions of that. It just isn 't possible or plausible
| to create one true definition.
|
| In the presence of that fact, it becomes inevitable that
| there will be senses in which the price is going up, and
| senses in which they are not, and senses in which prices
| are going up more than other senses. That is the reality,
| which is complicated.
|
| (One propaganda technique is to take one of these
| numbers, which really exists and is perfectly defensible
| on its own terms, and then use it in a context in which
| you _know_ people are generally going to interpret it as
| one of the other senses of the term. Excitingly, by
| controlling which "sense" you anchor your listeners to,
| both "sides" of a debate can push the numbers in whatever
| direction favors them at the same time.)
|
| According to our nationally-used, generally-accepted
| metric, if gas is the same price today as it was 365 days
| ago, inflation is zero. But does that mean the
| metaphorical person on the street is "lying" if they say
| prices are generally going up because gas is 20% more
| expensive than it was three hundred and sixty _six_ days
| ago? There is a fundamental arbitrariness both to our
| metrics, and how we all _feel_ about things. I 've seen
| plenty of "How can annual inflation be %8 if my eggs are
| 2.5x more expensive than this time last year?" posts
| around lately. The literal answer to that question is
| obvious, but if someone's expenses involve more eggs than
| mine, either because their food is a bigger percentage of
| their home budget or they are a business for whom eggs is
| a major input cost, they may _feel_ a higher level of
| inflation than I do, and they 're not wrong. They've just
| got their own inflation metric that disagrees with the
| national one, but their own metric may well be more
| relevant to their life than the national one is.
| danielmarkbruce wrote:
| Most people in this thread are using prices and CPI
| interchangeably, for better or worse. My read of the
| thread is that most people in the thread know they aren't
| actually the same thing.
| dcow wrote:
| If the last time you looked was last year, then yeah.
| They went up this year.
|
| What's misleading about reporting yearly percentage
| increases in prices? I'm baffled.
| ncallaway wrote:
| I don't think anyone was saying it was misleading, rather
| they were pointing at a nuance of the data.
| dcow wrote:
| > It seems misleading
|
| (from the comment I directly replied to)
| [deleted]
| danielmarkbruce wrote:
| You appear to be saying: factually reported data cannot
| be misleading.
|
| This is wrong, but so obviously so that you must be
| making another point?
| dcow wrote:
| Misleading implies the data has some agency. Data cannot
| be misleading. People can make whatever conclusions they
| want based on data at hand and it's just bad analysis if
| it's wrong. The data didn't _mislead_ them.
| Dylan16807 wrote:
| That data was picked by someone out of all the data in
| the world. That's where the agency is.
| danielmarkbruce wrote:
| Weird take. Most will agree "deliberately misleading" is
| what you are talking about.
| unethical_ban wrote:
| Sigh.
|
| The YoY is useful for businessmen and economists.
|
| People aren't checking their statements for milk prices
| from Nov 2021 right now. They just know "man it jumped
| up".
|
| The point is that the everyday person cares about jumps
| and trends, and hearing "20% YoY increase" for 12 months
| is misleading to someone not thinking about it in
| economists' terms.
|
| The fact a bunch of people here are debating what it
| means and how to interpret it proves my point.
| macksd wrote:
| And yet that's the same kind of distinction that you need
| to understand to be able to make decisions about
| household debt. If we're honestly at the point where this
| is considered too confusing for the masses, I think I've
| stopped thinking democracy is a good idea.
| mlyle wrote:
| If there's a true step change that happens once (and
| nothing else), inflation looks like:
|
| 0% 0% 0% +10% +10% +10% +10% +10% +10% +10% +10% +10%
| +10% +10% +10% 0% 0% 0%
|
| If there's a .8% price increase per month, every month,
| it looks like:
|
| +10% +10% +10% +10% +10% +10% +10% +10% +10% +10% +10%
| +10% +10% +10%
|
| The upside of reporting this way:
|
| * Seasonal effects are (mostly) removed
|
| The downside:
|
| * You have to have a lot of context about surrounding
| numbers to try and distinguish between these scenarios.
|
| * The drop from +10% to 0% is not related proximally at
| all to the real change.
|
| * Even if you are careful in interpretation, information
| and context are removed.
|
| It's not very user friendly or useful as a single number
| to get an idea about what's happening with prices now.
|
| > If we're honestly at the point where this is considered
| too confusing for the masses, I think I've stopped
| thinking democracy is a good idea.
|
| I have a lot of knowledge about economics and
| mathematics, and it's frequently confusing for me and
| difficult to tease out what's really happening with
| prices from a couple of macroeconomic aggregates. If that
| makes you give up on democracy, uh, so be it.
| danielmarkbruce wrote:
| And it's not even a theoretical issue. Look at the energy
| component of CPI. And then consider how that flows
| through to food and transportation. It is very possible
| that the vast majority of what we are seeing is the
| result of a big jump in energy prices over a few months,
| 8-10 months ago.
| mlyle wrote:
| > Look at the energy component of CPI. And then consider
| how that flows through to food and transportation. It is
| very possible that the vast majority of what we are
| seeing is the result of a big jump in energy prices over
| a few months, 8-10 months ago.
|
| Well, that makes it even worse, the "flow through" you're
| describing from prices increasing because an input price
| increased. That spreads the initial shock over a longer
| term.
|
| But the effect I'm describing shows up even if it's just
| a single good that steps once. What's measured in the YoY
| inflation number is a convolution/FIR filter of 12 months
| of changes.
| danielmarkbruce wrote:
| yup, you are right.
| MobiusHorizons wrote:
| The misleading bit would be reporting yoy price increases
| every month. Still not necessarily misleading to someone
| trained in reading this data, but the average lay person
| would probably interpret yoy statistics reported monthly
| incorrectly when comparing adjacent months
| dcow wrote:
| Who's doing that?
| Dylan16807 wrote:
| Everyone. Just about every report is talking about how
| the yoy numbers are changing each month.
| JumpCrisscross wrote:
| Which is partly what we're seeing. CPI rose 0.4% MoM in
| October, or 4.8% seasonally adjusted. That's above target,
| but better than YoY.
| fizx wrote:
| Really wish we reported the 4.8% number. Seems more
| reasonable for a monthly report to focus on the changes
| of the month.
| Bootvis wrote:
| I agree it's confusing. I think they do it to remove
| seasonality and the experts on the topic probably don't
| understand anymore why the rest of us think their way of
| reporting is confusing to lay people.
| treis wrote:
| Seasonally adjusted != multiply by 12. Prices naturally
| fluctuate throughout the year due to weather, consumer
| patterns, and business cycles. Seasonal adjustment is an
| attempt to account for those changes.
| reedjosh wrote:
| Beyond seasonal price fluctuations, wouldn't it be
| 1.04^12 = ~6% annually?
| Izkata wrote:
| 0.4% is 0.004, so 1.004^12 = 1.049... or 4.9%
| reedjosh wrote:
| Derp, yeah. Thanks.
| orra wrote:
| I agree the annualizing the monthly figure would be
| handy, as an additional figure. Looking at annualized
| monthly figures, it was also apparent (say) six months
| ago, that the monthly annual figures would almost
| certainly continue to get worse.
| thunky wrote:
| Also note the four most recent (seasonally adjusted)
| monthly CPI numbers: Jul 2022: 0.0%
| Aug 2022: 0.1% Sep 2022: 0.4% Oct 2022: 0.4%
| bitshiftfaced wrote:
| Even in the early 80s after huge interest rate hikes, YoY CPI
| inflation stayed above 2% (until the mid 80s).
|
| Rather than modeling it as "the price increases happened in a
| short period of time and then went back to normal," I think
| it's more likely that it happened more spread out and
| persistently, and perhaps still is going on. It's not going
| to jump to zero after some given month
| Spooky23 wrote:
| People who lack foundational skills in math are always
| vulnerable to being worried about witchcraft and conspiracy.
|
| It's a major reason why society spends so much on education.
| Stupid people make poor citizens.
| mattferderer wrote:
| How to set inflation expectations - "Inflation shoots up like
| a rocket & floats down like a feather."
| citilife wrote:
| The number is largely manipulated anyway. It's more complex
| than even this because you have to account for price
| elasticity. They are giving oil a very wide fluctuation, for
| instance.
|
| I've been tracking my expenses since 2015 and they're up around
| ~50% since then, for effectively the same food (eggs, bread,
| meat, etc). I eat ~2800-3000 calories per day (which I also
| track) and that's been consistent.
|
| According to BLS it should be up only 27%, but everyone knows
| that's just not true. Remember ~1 year ago when the
| administration was calling prices "transitory", that means
| they're claiming a larger elasticity in prices so inflation
| doesn't look bad because they believe they'll come back down
| (soon).
| sonthonax wrote:
| As a general consumer, the slowdown in the erosion of my
| earning power is welcome news. My gamma hedging hedging costs
| have never been lower.
| thomastjeffery wrote:
| They effectively said, "The increase went down."
|
| It would have been much clearer for them to say, "The increase
| has slowed."
| onion2k wrote:
| Or clearer still "The increase is smaller than expected."
| hanoz wrote:
| That this month's rate is smaller than expected is a
| completely different thing to it being smaller than last
| month's rate.
| mgkimsal wrote:
| It seems both are true in this case, but yeah, those two
| statements don't really mean the same thing.
| laweijfmvo wrote:
| This is like the 3rd derivative, right? e.g. we now have a
| slightly lower rate of acceleration towards the cliff than
| before?
| roflyear wrote:
| No, acceleration is going down. Not a lower rate of
| acceleration. The second implies acceleration is still
| increasing, but at a slower rate. What is actually
| happening is we're decelerating (so we're still going fast,
| meaning inflation is high, but inflation is going down...)
|
| Without trying to be mean, I would also argue your framing
| is also poor as some inflation is not bad.
|
| To put it in context, if current trends hold we'll expect
| 3-5% inflation yoy. That is not awful. Higher than last
| decade or so but we have had super low inflation for a long
| time. Averaging out, inflation over the last decades, even
| including the recent high inflation, will still be pretty
| low, around 3%.
| kdmccormick wrote:
| Second derivative: p = price t = time
| dp = change in price dp/dt = change in price over
| time = inflation d^2p/dt^2 = change in change in
| price over time over time = change in inflation over time =
| what we are talking about
| bilsbie wrote:
| What would the fourth derivative of inflation be? I can't
| get my brain to work for that.
| kdmccormick wrote:
| Since inflation is a 1st derivative of price, 4th
| derivative of inflation would actually be a 5th
| derivative of price. It'd be like: "The increase of the
| acceleration of the rate of price increase is slowing."
|
| Definitely not a statement that I would be able to
| visualize :)
| formerkrogemp wrote:
| Second derivative I think. Inflation is change in prices.
| Change in inflation is a second order derivative? I wish
| more Americans knew at least a little conceptually about
| derivatives. Personally, I need to review them.
| Anecdotally, the number of accountants that I've met that
| haven't progressed beyond middle school level math is
| depressing as well.
| ac2u wrote:
| I think it's second derivative.
|
| 3rd derivative would be Nixon's:
|
| >When campaigning for a second term in office, U.S.
| President Richard Nixon announced that the rate of increase
| of inflation was decreasing, which has been noted as "the
| first time a sitting president used the third derivative to
| advance his case for reelection."[2] Since inflation is
| itself a derivative--the rate at which the purchasing power
| of money decreases--then the rate of increase of inflation
| is the derivative of inflation, opposite in sign to the
| second time derivative of the purchasing power of money.
| Stating that a function is decreasing is equivalent to
| stating that its derivative is negative, so Nixon's
| statement is that the second derivative of inflation is
| negative, and so the third derivative of purchasing power
| is positive.
|
| https://en.wikipedia.org/wiki/Third_derivative#Economic_exa
| m...
| Dylan16807 wrote:
| The velocity has slowed.
|
| Also there isn't a cliff, there's only speed bumps for
| going too fast. At least if movement=inflation.
|
| On the other hand if the "cliff" is supposed to be a
| specific level of inflation, then we didn't just slow down,
| we're walking away from it.
| danuker wrote:
| Finally the mania is slowing down. It seems the rate hikes and
| layoffs are working.
| InTheArena wrote:
| Probably too strong of a statement. I don't view this as a huge
| miss (.2%), and ask anyone you know on a fixed income what this
| is doing to their retirement. Ulitmately, it's the glut of cash
| out there (IMHO) that is going to need to resolve itself before
| inflation gets back to a normal level.
| PopAlongKid wrote:
| >anyone you know on a fixed income what this is doing to
| their retirement
|
| I don't know any retireees on a fixed income. They all get
| Social Security, which is not fixed. And if they have any
| signifcant savings, those interest rates are also not fixed,
| and have been rising a lot recently (recently advertised CD
| rates at 3-4% are common where I live).
| happyopossum wrote:
| > They all get Social Security, which is not fixed
|
| It's been fixed since the last cost of living adjustment
| almost a year ago. Trailing adjustments really hurt when
| inflation rises this fast.
| InTheArena wrote:
| Fixed is too wide of a term, but there are still people
| like my grandmother, who is in her 90s, as well as my
| parents, who have seen huge drops in the ability for their
| savings to pay for their retirement.
| FollowingTheDao wrote:
| I agree. And buy the 10 Year Bond today, its at a great
| discount!
| guiriduro wrote:
| But it does argue to permit the current tighter fiscal and
| monetary position to work as it appears to be doing, perhaps
| too well/quickly, rather than tightening more out of a
| dangerous over-abundance of caution.
| nine_zeros wrote:
| Likewise, it gives the FED a chance to say that they'll
| only raise rates by 50% next time and maybe only 25% in
| January. Then they can keep high interest rates for a long
| time while layoffs continue to cause demand destruction.
| richiebful1 wrote:
| FYI, 50 basis points is a 0.5 percentage point increase,
| not 50%
| danuker wrote:
| Whether it's through consumer price inflation or bond
| devaluation, retirees are affected by the economy.
|
| There is no instrument or policy isolating them from it. The
| best you can do is diversify.
| BuyMyBitcoins wrote:
| I feel like a .2 percentage point drop is near imperceptible
| and something easily subject to reversal. I don't think we're
| anywhere near an actual slowdown to inflation yet.
| roflyear wrote:
| That's not what this is at all. It's .2% under expectations.
| Not a .2% drop. But inflation is steadying which is good.
| bushbaba wrote:
| (1-.4/.6) represents the actual percentage change. Actual CPI
| came in 33% lower than expected. Huge miss by the "experts".
| slaymaker1907 wrote:
| MoM inflation is still unfortunately 0.4% which is about 5%
| annualized. I think it's unfortunate that reporting focuses
| around yearly inflation which isn't really useful for talking
| about inflation in the moment.
| roflyear wrote:
| 5% is not that much higher than historic averages. 1990 had
| 5.4% inflation, and 2008 close to 4%.
| ethagknight wrote:
| Worse than 2008, got it.
| smileysteve wrote:
| Well, yes, and no, the crash of 2008 caused deflationary
| pressure, and below [Federal Reserve] (annualized average)
| target inflation until 2020.
| roflyear wrote:
| I am not sure that we can predict how bad a recession will
| be based on inflation.
| qclibre22 wrote:
| Some claim you can: "The historical evidence indicates
| that when inflation is as high as it is today, and the
| unemployment rate is as low as it is today, the
| probability of a recession over the next one and two
| years is extraordinarily high" source: https://www.hks.ha
| rvard.edu/sites/default/files/centers/mrcb...
| roflyear wrote:
| Probability of recession, but severity?
| rufus_foreman wrote:
| 5.4% in 1990 was the highest rate in an almost 40 year
| stretch. In 1991 it went down to 4.2% and then wasn't above
| 4% until last year.
| sparrc wrote:
| Interesting, that does seem like a more useful metric. Where do
| you find that data?
| tenpies wrote:
| It's part of the whole BLS report, here:
|
| https://www.bls.gov/news.release/cpi.nr0.htm
|
| You may also be interested in what is referred to as "sticky
| CPI" which is reported by the Atlanta Fed: https://www.atlant
| afed.org/research/inflationproject/stickyp...
|
| The name is fairly descriptive of what it is: the slowest re-
| acting elements of the CPI calculation. This is contrasted
| with the "flexible" CPI, which are the elements that react
| the fastest. In the last report, Sticky CPI was constant (no
| change), whereas all the decrease in CPI came in the flexible
| side of things.
| queuebert wrote:
| Lies, damned lies, and statistics.
| francisofascii wrote:
| Anyone know of a publicly available data of grocery prices for
| staple products month over month? I really wish I would have
| saved my grocery receipts over the past five years. Rather than
| rely on my perceptions.
| nonameiguess wrote:
| If you buy from Whole Foods and have Amazon Prime, your
| receipts are in your order history forever. It's actually been
| informative, because amidst all of the breathlessness from the
| past two years, every time I have bothered to check, most of
| the prices I'm paying haven't gone up at all or have gone up a
| tiny bit. I buy almost all raw ingredients and cook from
| scratch, which maybe just works differently than processed
| goods sold by Coca Cola and what not, or Whole Foods was just
| so overpriced to begin with that they didn't bother raising.
|
| My grocery bills overall have definitely gone up, but that's
| because I stopped eating out and buy a lot more groceries.
| shrimp_emoji wrote:
| > _My grocery bills overall have definitely gone up, but that
| 's because I stopped eating out and buy a lot more
| groceries._
|
| Wouldn't this make your bills go down?
| nobody9999 wrote:
| >>My grocery bills overall have definitely gone up, but
| that's because I stopped eating out and buy a lot more
| groceries.
|
| >Wouldn't this make your bills go down?
|
| I'd imagine that when GP "eats out," they don't do so at
| the grocery store/supermarket. I know I don't. Usually I'll
| go to a restaurant.
|
| Which may make my overall _food_ bills go up, but it
| certainly doesn 't increase my _grocery_ bills.
| vel0city wrote:
| The few times I've eaten out at a grocery store has been
| at a Whole Foods. Their hot food bar and fresh pizza area
| is nice and they often have a small bar with seating
| available.
| mrguyorama wrote:
| Not if you budgeted takeout in a separate category.
| willhinsa wrote:
| lol
| dotnet00 wrote:
| Reminds me of Nixon's "the rate of increase of inflation is going
| down" comment and the associated quip that it was "the first time
| a sitting president used the third derivative to advance his case
| for reelection."
| pakyr wrote:
| This isn't that. The rate of inflation is going down, not the
| rate of increase of inflation. 8.2% in September, 7.7% now. The
| second derivative of prices, not the third.
| dotnet00 wrote:
| I'm aware of that, it just reminded me of that incident and I
| thought others would find it funny too is all.
| qclibre22 wrote:
| Which is interesting because Nixon pressured official to make
| "cheap money" :
| https://www.investopedia.com/articles/economics/09/1970s-gre...
| SantalBlush wrote:
| For those who were wondering if we would officially be in a
| recession after November 8 elections, the answer is still "no".
| InTheArena wrote:
| It will take a quarter, but given the massive layoffs occurring
| now, the projections of early next year are looking spot on.
|
| Inflation is a different problem.
| SantalBlush wrote:
| The argument being repeated here on HN wasn't that recession
| might happen in the future (which would be a true statement);
| the argument was that we've been in a recession since summer,
| but due to government propaganda and a media conspiracy, it
| was swept under the rug (which was false).
| juve1996 wrote:
| Yea just like "COVID" would go away when Biden became
| president.
|
| You just have to roll your eyes at these people. They're
| too far gone now.
| mi_lk wrote:
| > the projections of early next year
|
| where do you see that projection?
| InTheArena wrote:
| https://www.reuters.com/markets/us/goldman-ceo-says-
| reasonab... https://www.worldbank.org/en/news/press-
| release/2022/09/15/r... https://abc11.com/recession-
| prediction-2023-imf-world-econom...
| https://www.cnbc.com/2022/11/03/bank-of-england-uk-faces-
| lon...
| iav wrote:
| GDP grew +2% in Q3, after declining in Q1 and Q2. Gross
| Domestic Income (similar to GDP but measured differently) grew
| consistently the entire year. And unemployment rate has
| declined consistently every single month and stands at 3.57%. I
| think it would be hard to thread a needle to call any part of
| YTD 2022 as a recession with this kind of fact pattern. Only if
| unemployment rate starts to increase in a dramatic way can we
| really go back and say we were in a recession this year.
| eloff wrote:
| I agree with that, but mind you there are two kinds of job
| numbers. The household survey numbers and the official ones
| which mysteriously diverge from the survey before elections,
| but otherwise track nicely. There's some two million jobs
| that only exist on paper to benefit the incumbent government.
| This anomaly appears regardless of which party is in power.
| isusmelj wrote:
| The way I read it the price of things like eggs increased by 43%
| (on table 6 which is seasonally adjusted it's still 10%)? Does
| anyone know why?
| jeffbee wrote:
| Lack of low-wage immigrant labor to fill farm jobs.
| https://www.economist.com/united-states/2022/07/28/a-shortfa...
| giantg2 wrote:
| I'd imagine it's more likely due to energy prices associated
| with the chicken houses, and the virus (bird flu I think)
| they've been dealing with.
| docandrew wrote:
| Energy prices in the form of diesel to get the eggs
| delivered, too.
| mrguyorama wrote:
| Our local egg prices in Maine doubled, supposedly because we
| got hit bad with bird flu and had to cull a lot.
| meragrin_ wrote:
| So how much of this is due to lower than normal heating costs
| last month?
|
| Utility (piped) gas service -4.6%
|
| I used the A/C more than heat last month since temps have been
| quite a bit higher than normal. Just using A/C in October is
| pretty abnormal for me.
| chiefalchemist wrote:
| Inflation in and of itself isn't the problem per se. It's
| income(s) being able to keep pace, or more often than not keep
| pace.
|
| Working citizens - as well as those on public assistance? - have
| been losing ground to inflation for decades.
|
| The bottom line: In the eyes of bread winners this is old news,
| and does nothing (again) to mitigate their discomfort and pain.
| From a sociopolitical POV this is not sustainable.
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