Nearly half of American workers don’t earn enough to afford a one-bedroom (cont)
theguardian.com
theguardian.com
For months everyone has naysayed the idea that money printing would have a negative effect, now just Google "inflation" news articles.
but inflation (as measured by CPI) isn't anywhere close to 20%?
I just filled up a propane tank, 3lbs of fuel was almost $10 whereas a year ago it was $5-$6
The price of a California burrito most places here is almost $10, they were closer to $7/$8 before pandemic started spiking beef prices
It’s getting harder and harder to keep the bill at Costco under $100
Uber/Lyft rides that used to be $10 cost $15-$20 during non-surge hours
And so on…
When I worked in Hawthorne in 2010, there was a $4 burrito option. When I left in 2013, it was a $5.50 burrito.
In the bay area, it seems like burritos with guacamole have been $9-11 for several years now.
Restaurant breakfast burritos have seemingly gone up from $8 to about $12 in the last two years.
Grocery store deli counter breakfast burritos have gone up from about $3.50 to about $4.50.
Microwave burritos have gone up from $not-worth-it to $not-worth-it + 2 over the last couple years.
The diner down the street from me makes the best breakfast burrito for about $9, enough to feed two people. It's pretty amazing, considering it would probably cost me $6 to recreate from the grocery store. My favorite coffee shop in 2019 had a $12 burrito that was a bit overpriced but worth it; they shut down months before the pandemic ramped up, though. I suspect it was partially because of the burrito price. Their food was expensive enough that my wife and I would always share an entree regardless of how hungry we were. We live in a touristy area, and there are local restaurants we won't even consider going to because it's so overpriced.
Great. And what was it 2 years ago? 3 years ago? In fact propane is still cheaper now than it was in 2018:
* https://fred.stlouisfed.org/series/WPU05320104
So yes, perhaps propane has gone up since last year. But last year it was the cheapest it's been since 1999. So of course the YoY change is going to go up.
Further, in regards to CPI, what percentage of propane purchases make up of your expenses, either on a monthly or annual basis? In the US, "Propane, kerosene, firewood" make up .076% of the CPI:
* https://www.bls.gov/cpi/factsheets/household-fuels.htm
In general, household energy makes up 3.605%, with electricity being 2.628%. So while you may feel like it's a big deal, how much of your budget is it really impacting?
What were your expenses in all the various categories of spending last year, and what are they this year? Cherry picking one data point that you just happen to notice does not necessarily mean your expenses are much different in total.
In Canada, StatCan has a personal inflation calculator where you can enter your own expenses for a personal basket of goods:
* https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2020015...
I think if the BLS had a similar tool a lot of the "I think/feel inflation is more than x%" comments would be reduced, as people wouldn't be trying to extrapolate the average CPI to themselves.
Edit: in the spirit of worker solidarity though, if you can convince your boss to give you a 20% raise by showing them the M2 money supply, I fully support you in that.
https://www.forbes.com/sites/simonmoore/2021/08/12/cpi-data-...
And that's flawed due to https://en.wikipedia.org/wiki/Availability_heuristic
[thing] increases in price: "omg inflation!"
[thing stays the same]: "meh"
result? "omg inflation!"
Is this effect global? Who knows, it’s anecdata
If only I had continued, I could've provided great anecdata here, because we never really "go out". And herein lies the crux. Many if not most other people I know go out regularly. Rain or shine, recently got kids or not etc. So the pandemic hitting would drive up their Costco bills even if prices stayed flat.
Happy to learn that the anecdata presented in this thread is from people like me. But otherwise my "felt" Costco bill has stayed almost the same (minus "normal" inflation).
All the data captured over the years omits very fine detail for the most part; things like weights and volumes and stuff. The data is fairly messy but there should have some signal within it however. This motivates me to revisit what sort of receipt OCR stuff is out there, it's been a TODO for a long time. I'm looking for mainly partially automated stuff, fully automate the frequent vendors, manual entry the rest: https://gist.github.com/jxramos/db8195d1972b6d7f7eb0e97be51d...
I even went as far as building a small mobile app using AWS OCR. I was able to itemize and categorize using that but it still required manual "fingerprinting" of each receipt type. Basically figuring out that something was a Costco receipt and in Costco receipts this column in the OCR'd text was the name of the item etc and then also defining the mapping of item name to category.
Worked well enough but I wasn't willing to pay for this after all the free trials and such if it couldn't be monetized by releasing the app. And since the fingerprinting is pretty cumbersome and error prone (Costco doesn't even have a global standard for their receipt format, never mind different gas stations etc) and I neither have the expertise nor the necessary training data for a machine learning approach.
did I say it wasn't? The BLS freely admits that inflation is higher than usual at 5.4% YOY. What's being disputed is whether it's 5.4% as the BLS claims or 20% as GGP claims.
>Is this effect global? Who knows, it’s anecdata
The problem is that listing a bunch of things that's gone up by 20% doesn't mean the overall CPI went up 20%. CPI is a weighted measure, so the things you listed only contribute 1% to it, then it can go up 2000% and the CPI wouldn't be anywhere close to the claimed 20%.
the "very real price increases" you're seeing is clouded by the https://en.wikipedia.org/wiki/Availability_heuristic. The CPI uses a fixed basket to weigh the different price increases. Meanwhile in your head, your brain weighs price increases based on the shock factor. That lyft ride that got 2x more expensive? That's going to have much more mental weight than your rent that stayed about the same, even though the rent makes up 40% of your monthly spend and your lyft rides makes up 5%.
Ubers have also increased in price.
Groceries.. have not.
You say this like no one measures inflation, but in fact we do measure inflation quite carefully, and it's nowhere near 20%.
> Pricing information is then sent to our national office, where specialists who have detailed knowledge about the particular goods or services review the data. These specialists check the data for accuracy and consistency, and make any necessary corrections or adjustments. Adjustments can range from an adjustment for a change in the size or quantity of a packaged item, to more complex adjustments based upon statistical analysis of the value of an item's features or quality. Thus, commodity specialists strive to prevent changes in the quality of items from affecting the CPI's measurement of price change.
> Hedonic quality adjustment is one of the techniques the CPI uses to account for changing product quality within some CPI item samples. Hedonic quality adjustment refers to a method of adjusting prices whenever the characteristics of the products included in the CPI change due to innovation or the introduction of completely new products.
https://www.bls.gov/cpi/questions-and-answers.htm#Question_1...
https://www.bls.gov/cpi/quality-adjustment/questions-and-ans...
But what proportion do [thing] and [thing stays the same] make up of your budget? That's why the CPI uses a basket of goods, each in proportion to what the average person uses in their lives to find the average inflation.
And some [thing]s may be more noticeable than others: yes, gas may have gone up, but your care insurance perhaps hasn't, and so perhaps hasn't parts and maintenance. But you fill up more often so you notice those prices more and suffer recency bias.
In Canada, StatCan actually has a "Consumer Price Index Personal Inflation Calculator" so that you can find the quantitate number to your personal experience of inflation give your personal basket of goods, versus the average one:
* https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2020015...
If supply chain problems or availability cause prices to go up, that's still inflation. They might call it transitory inflation or whatever, but they won't say "well that's just supply chain problems so we won't count it for this month".
Most places have gone up about $3 since start of the pandemic.
As for the LA cali burrito heads: don't step dudes. Y'all got plenty of great food that kicks our asses. But we have the best calimex, hands down. "Don't ever argue with a San Diegan about Mexican food"
I'd almost shed a tear.
If I normally spend $2k a month, but then lose my job and get $2k from the government, that's not going to cause inflation.
From what I understand, much of the stimulus money was saved. https://fred.stlouisfed.org/series/PSAVERT
That $2k a month that you used to earn is still out there somewhere unaccounted for.
In short this is the equivalent of not printing money.
The very reason why you print money is to spend it. If you didn't want to spend money. Why print it?
"M2 Money Supply vs. CPI and GDP"
220x increase in the money supply vs 18x increase in CPI
The only real anomaly in that chart is 2011, which is concealed by the fact that CPI is a terrible inflation metric when wealth inequality is changing (see the increase in equities and real estate during that period).
For reference: CPI is based on a survey to see what median Americans are buying, the prices of those things, and how much of them they are buying. Naturally, people change their spending habits when prices rise to buy cheaper items, and this cancels out the how much of them they buy to end up with an effective metric of "how much are median Americans spending" (hint: basically all of their money). So CPI measures the median American's income, which is why there can never be any changes in "real wages" [0].
[0] https://www.pewresearch.org/fact-tank/2018/08/07/for-most-us...
I get it, M2 really seems like it should correspond with inflation but at minimum you need to adjust for economic growth. As we produce and consume more we need more money handle those transactions.
The reason CPI is a terrible metric is because measuring inflation is very difficult and somewhat arbitrary (see for example: hedonic adjustments). M2 is a significant, consistent, and logical factor. Even from 1980-1986, rapid changes in M2 consistently correspond to a change in inflation. But there are other factors, like real economic growth, population growth, changes in size of the labor force and velocity of money.
That’s some serious weasel wording right there. Either a model fits real world data or it doesn’t, ignoring all those times a model failed isn’t an eye for data it’s a delusion.
> And all the people predicting decade-high inflation and asset inflation since last year have been right so far.
That’s little different from walking into a room full of broken clocks picking those that are currently accurate and suggesting they must be working fine. If you select for people who accurately predicted the last year you then need to look at their predictions of every prior year.
> What I feel...
versus:
> facts...
CPI adjusts for package sizes.
“According to Zillow, the typical value of U.S. homes is $269,039 as of January 2021, a 9.1% increase from January 2020. Between 1999 and 2021, the median price has more than doubled from $111,000 to $269,039.”
Shouldn't the median sale account for this? If there's a buyer presumably somebody wants to live there, and if there are 1000 sales in CA but 10 in SD that would be accounted for as well.
Inflation numbers that just came out measure year-over-year inflation at 5.4%. And last July we had artificially depressed demand during the pandemic.
Well, if it were that simple they would simply report another manipulated inflation number and sleep well at night.
Let's assume we accept that there is actually double digit inflation of some sort then what meaning would it have to the economy or monetary policy? Honestly, I'd say it would have zero relevance. Ok, houses went up and now we have to make money scarce and make people unemployed because of that? Building a house creates jobs, selling a house doesn't.
The bailout that caused all the current asset inflation happened reflexively after a single day drop in the stock market at the start of Covid. Executives had looted companies by loading them up with debt that relied on optimistic cashflow, gave themselves bonuses for that "optimization", and then got bailed out when the cashflow slowed. These companies should have been restructured in bankruptcy, with the executives going to jail for violation of fiduciary duty. Instead, they were rewarded.
The direct price inflation we're seeing lately is actually a good thing in that it will force the Fed to use the brakes. When they only give money to the financial industry, it takes a while for price inflation to occur. But by giving the new money directly to consumers instead, price inflation occurs much quicker and thus precludes asset inflation.
By "optimistic cashflow", do you mean the assumption that the government wouldn't suddenly ban most companies from doing anything that would earn them any money for months on end? Because until they did, that seemed like a totally reasonable assumption.
You're right about consumer stimulus. The worst thing about inflation is that it is unpredictable. Pumping the markets with trillions without meaningfully impacting inflation just causes more unpredictability. Just do "QE for the people", hit your inflation goal and then never talk about low inflation again.
I did, they all say inflation is transitory largely due to supply chain issues, and that it looks like it's starting to come down.
This explains what occurred in a very neat and tidy package and also confirms my own suspicions.
[0]https://abcnews.go.com/US/wireStory/us-consumer-prices-rose-...
Point is that HN was so gung-ho about covid stimulus package, that any comment that pointed out inflation issues that we're going to have in the future were ridiculed. And, now here we are.
And we're right back to the secret inflation theory that your parent referenced. The main point of contention regarding the current numbers is that it's too early to know where we are, that is, to know whether the inflation we've seen this year is transient.
There was a steady stream of inflation scaremongering throughout the Obama years which never made economic sense, and of course never came to fruition. I heard the same arguments about it then: "inflation is here, it's just complex and the government is hiding it".
Of course you could be right this time, but it also shouldn't surprise you that an attempt to support this prediction by rehashing the old secret inflation theory attracts a few eye-rolls.
That is the bottom line, I'll let other readers draw their conclusions about what is reasonable.
If anyone is more knowledgeable than me wrt economics and supply and demand feel free to correct my intuition here:
As long as there's a distinction between "luxury", "average", and "barebones" apartments, it seems unlikely that we'll ever reach a point where everyone (or even, say, 90% of people) can afford a better-than-median apartment. If the number of people who can afford a nicer than average one becomes significantly greater than the supply of above average apartments, some luxury apartments will just increase prices until they hit a more profitable equilibrium.
So, hundreds of years later, what have they created? Something better? Something similar? Something same same but different?
https://www.thebalancecareers.com/top-worst-paid-jobs-206169...
No not really. As far as I understand it was religious freedom which brought the pilgrims, and then the American revolution was about tyrannical government.
Breckenridge, Frisco, Dillon, Silverthorne, Keystone, and to some extent Copper Mountain are radiating an insatiable demand for affordable housing. Building is slow due to the mountainous terrain and lots of NIMBYs.
Park county, in contrast, is still a working man's county. The Placer Valley, which lies over Hoosier Pass to the South of Breckenridge, is full of active mines from top to bottom, and South of that lies the vast mountain meadow called South Park. The valley and park can hold Summit's bedroom communities, and they inevitably will. It's just going to take a while to build them up.
Basically, unless I am reading the chart wrong (https://nlihc.org/sites/default/files/oor/2021/Out-of-Reach_...) the price of a 1 bedroom home is in fact affordable to 50%+ of the population.
its kind of like duh, the average house is affordable to the average person, and people below that average (nearly half) would have to spend more than 30% of their income to pay for the average 1br by the very fact they are in the lower tier.
they also try to make it sound like 'unaffordable' means they can't ever pay those prices, they could, it would just take more of their take home.
The issue of cost relativism is key.
In low cost flyover country, mortgages can be cheaper than rent. This is why CAP [1] rates in Middle America are so attractive.
20 an hour would be fine for a one bedroom in many places in lower cost areas.
I don't think 20 an hour will cut it in LA, SF, Seattle, Chicago, Boston, DC, or NYC, but you can always double up.
[1] https://corporatefinanceinstitute.com/resources/knowledge/va...
The minimum wage in my state is just the federal $7.25, but even fast food and big box retail hire people at a minimum of $16/hr, if they can even get them to show up for that anymore.
Nowhere, and I literally mean nowhere, in my area is hiring anyone for "minimum" wage.
Maybe it's a geographical problem. We live near a mid-sized city (300k people), rents don't seem so bad here. Perhaps it's the bigger cities that have the outrageous rents?
That's the proof that the west actually works, and at the time was the only way to fend off the communist hordes.
I wonder what happened to that strategy?
This should at least be controlled with legal temporary migration and removal of birth citizenship (which very few Western countries have), instead of a free-for-all with a large criminal element.