Fuel[1] accounted for a substantial portion of the overall lift, we've actually come in under expected inflation which is why you're seeing markets up today.
Gasoline, unleaded regular - +48.8% (+20.1% over last month)
Gasoline, unleaded regular - +48.8% (+20.1% over last month)
What's your general impression regarding price levels in the US? How much has your grocery bill gone up? How about rent? What about restaurant bills? Services like haircuts? Whats your credit card bill look like, excluding gasoline?
Personally I have seen prices go up well above 10%. Inflation metrics are complicated and there is a huge incentive to keep the official numbers down as they affect trillions in spending in terms of social security and other numbers tied to official inflation.
To put this number in context, Congress gave themselves a 21% increase in House office budgets to account for inflation
For staffers. Not members of Congress [1]. Never officially tied to inflation.
[1] https://www.factcheck.org/2022/03/spending-bill-includes-pay...
That isn't remotely obvious and in this case is very obviously not true. This is a chronically underfunded program that Democrats have been lobbying to increase for years. AOC, for instance, has been pushing for this since she first entered Congress, well before any inflation showed up.
It's entirely disingenuous to point to a budget increase in a single extremely-small Congressional staff program and paint it as evidence of broad-based inflation.
Maybe, but it's a perfectly valid data point. Congressional staffers are struggling because, in the D.C. area, costs are rising very quickly, and the low-paid staffers are having trouble paying bills because of it.
It's not disingenuous to suggest this is a signal. Also, Democrats are always lobbying for an increase in all budgets. They got this one through because they were going to lose staff who can't make the job work because of rising living costs. I.e., inflation.
So would it disingenuous to point out Xbox prices dropped significantly recently then claim it as evidence there is no inflation?
Using such simple, single data points is disingenuous when there is ample broad based data to point to instead. Ask why he picked something with a 21% increase instead of something with a 4% increase, then you understand why it's disingenuous.
That is the problem with anecdotes versus broad and properly computed inflation.
They keep, and some people on HN, keep calling it a conspiracy when you mention actual inflation is a lot higher than reported, my question is what is this crowd's reasoning? Are they so well off that they are not able to see the rapid rise in prices because they use maids to do the grocery shopping?
Why is it a conspiracy to suggest actual inflation is far above and beyond what is reported by the Feds, who are stuck between a rock and a hard place when it comes to controlling the money markets now?
If they raise rates to match actual inflation they are going to cause the asset bubble to burst. If they don't raise rates than they are going to find hyperinflation that will certainly damage USD's "exorbitant privilege"
The conspiracy is that it’s treated as a conspiracy. Local inflation varies wildly [1]. In official statistics. And inflation is personal, dependent on your basket of goods and services. There is no market evidence that inflation is endemic, but the market is frequently wrong.
> so well off that they are not able to see the rapid rise in prices
Many on this forum have equity holdings and/or in-demand jobs. Those make one somewhat inflation tolerant.
[1] https://www.bls.gov/charts/consumer-price-index/consumer-pri...
Yeah I’m genuinely shocked that people seem so upset about inflation. Then again I couldn’t tell you if the gas price down the road begins with a 3, a 4, or a 5.
I wouldn't call it a conspiracy, but throwing out random number like "25-50%" because you noticed your one specific grocery bill is more expensive also isn't an argument I'm going to give much credence to.
The government is actually very transparent about how they calculate inflation and what goes into it, so if you're going to argue that they're bullshitting you need to argue one of:
1. The basket that they use to calculate the price index isn't a good representation of most people.
2. They're fibbing on specific prices.
3. The "smoothing" they always do can hide some of the recent acute inflation.
If you want to make any of those arguments, with data, great! Please go ahead. I've certainly seen plenty of good arguments related to points 1 and 3, not so much point 2. Otherwise, it's fine to say you notice things you buy seem a lot more expensive, but that's not an argument that the Fed is somehow fudging the numbers.
[0]: http://www.shadowstats.com/alternate_data/inflation-charts
Zillow rent index up 17%, CPI rent index up 5%
CPI calculates rent by asking people how much they are currently paying for rent or how much do they think it would cost to rent their place.
That's OER, which is computed separately from rent.
[0]: http://www.shadowstats.com/alternate_data/inflation-charts
Official stats say grocery store items are up 10%, which is roughly line with my experience. It can vary a lot from item to item so it really depends on your diet. White bread is up 6% while wheat bread is up 9%. Meats are up 15% while fresh veggies are up 6%.
"What you see" is literally what's being measured, though. Typical prices for typical commodities grew less than expected. The outlier is one particular commodity (petroleum) which is experiencing an external shock.
Sanctions on Russia are poorly explained as "inflation", obviously.
> Personally I have seen prices go up well above 10%.
On what? Does that not match up with the data in the report? If so, document it! You'll be internet famous, if nothing else.
For what goods/services? Have you been tracking the same goods/services over the past year to make this analysis?
> Inflation metrics are complicated and there is a huge incentive to keep the official numbers down as they affect trillions in spending in terms of social security and other numbers tied to official inflation.
You haven't provided anything aside from personal anecdote (without any actual data to support it). Your understanding is built entirely on your own experience, the official numbers are built on a transparent basket of goods that is meant to represent the entire country.
For me, housing costs (most people's largest expense) hasn't changed in 3 years because I have a 30-year mortgage. Does that mean that the 5% CPU measure of housing expenses is false? Of course not.
Data, when reported by a reputable organization, is going to be substantially more predictive.
Incentives are another interesting factor to consider.
If an institution has a history of providing a certain quality of service, and is successfully used to make highly consequential decisions, it is objectively more reputable than an institution with neither of those things.
Reputability is the aggregate of individual opinion, which is the definition of subjectivity.
More likely there is a continuum, and more reputable places have more objective (and hence less subjective) output than less reputable places.
"The Bureau of Labor Statistics is a reputable institution"
"A triangle has three sides"
"Governments, politicians and their bureaucrats are trustworthy"
"Two parallel lines will never meet"
This is why I much prefer to follow guidance from institutions over individuals. There's also a "stewardship" in institutions that seems effective in countering other forms of bias (but not all).
Of course there's a whole lot of bias left over that doesn't make this a fire-and-forget strategy, but comparatively it seems closer to objectivity than to just trust one's eyes alone, which has effectively zero systemic corrections for bias.
[0] - You may know about this already, but I think of it like crowds singing, and if you'll afford me a bit of metaphorical license, here's a better explanation of how that works than what I could write: https://physics.stackexchange.com/questions/382429/in-concer...
See, I think the opposite. If your numbers differ from the US gov. official ones, you're either doing something wrong, or measuring a different thing.
The BLS in particular aims for consistency in reporting. They ask people what they bought, and for how much, then they go around collecting real world pricing information about products.
No other entity is putting that much work and effort into collecting pricing information. So anyone reporting different numbers is less accurate than the official BLS ones.
Even people who complain that they under-report "real" inflation use BLS numbers, but they change the weights on the various categories such that categories experiencing the highest inflation are also weight the highest.
Nope, a few people's unmeasured selection bias is no where near as accurate as a professional methodology done like the official numbers.
>there is a huge incentive to keep the official numbers down
Also false. If the numbers were gamed, there would be significant arbitrage employed in markets to extract value from the lie. There are ample papers analyzing this, and no one has found a way to do it, since the numbers are the best possible.
Also the numbers are done in many places, from Goldman Sachs, to the Billion Prices project at MIT, to the Bureau of labor and Statistics, and so on.
If you really think the numbers are gamed, do this experiment (I have, it's easy to do, and then you'll never claim the numbers are gamed again since you methodically checked them).
Take BLS listed inflation for a decent period of time, say 20-30 years. Make a basket of goodssplit by how most people buy: energy, housing, food, eneterainment, etc.
Pick a list of goods, say same sized apartments, houses, foods, etc.
Look at prices now. Write them down. Hide that list so you don't cheat.
Look at ads from the beginning of the period. Get prices.
Compute.
Now add say 1% to BLS annual inflation numbers, and compute.
Viola! BLS and rest are very accurate. People's unmeasured selection bias beliefs are not.
This is QAnon tier logic. “All my friends voted for Trump, therefore the vote count was fabricated!”
My grocery bill isn't in a vacuum. Does anyone buy the same basket of groceries constantly? My career has been on a steady rise and my lifestyle has inflated.
> How about rent?
It's up a TON in many LCOL places - but in many of the most expensive places, it's gone up less in the last 3 years than normal (and in some places down). Either way - 67% of people are homeowners, and their payments went DOWN a lot because the Fed allowed everyone to refinance at historically low levels.
> What about restaurant bills? Services like haircuts?
My anecdata is that I'm shocked so far none of this has gone up. I do expect it HAS to go up probably 10-20-50% eventually / soon. But I haven't seen it happen yet.
> Whats your credit card bill look like, excluding gasoline?
Again - who's credit card bill is in a vacuum?
What's interesting is although fast food prices have went up, it doesn't seem like casual dining chains have gone up. So even though steak prices have doubled at the grocery store, they've stayed the same at the chain steakhouses.
I’m sorry but I disagree. Do you have an explanation for why the increased price of gasoline won’t just infect prices for all the goods and services which depend on it?
Any business which needs to move people or goods over the road, or runs equipment/vehicles on gas is going to be affected. Not to mention the fact that consumers will have less disposable income to spend on things. And businesses may have to pay their workers more to account for that loss of disposable income.
Edit: see “wage price spiral”
It will, but the price of oil has already dropped substantially from the recent peak, and probably will continue to do so.
The price of gas is known to be volatile, it has gone up in the past without bringing the entire economy along with it, and also has gone down many times without making everything cheaper. The prices of retail goods don’t adjust instantaneously, and gas may well be below what it is now by this time next year. The price of gas might be a small minority fraction of the cost of producing most retail goods as well, so there’s no reason to assume that consumers will tolerate compensatory price hikes that blame gas while the price is falling.
This is the reason that the US Department of Labor excludes the price of gas as one of the core indicators of inflation, because the price of gas does not always reflect inflation, and frequently changes for other reasons independent of inflation.
That doesn't sound like rampant inflation, it does sound like a market correction.
Now in reality gas prices globally is high because of Ukraine and Russia, which hides the massive gas deflation over the last decade, but if 2011 businesses could afford gas at $3.50, I'm not sure why 2022 businesses can't afford it at $4. Wages are up about 30% in the same time period (well by 2020) [2]
[0] https://gasprices.aaa.com/
[1] https://business.time.com/2011/12/20/2011-is-priciest-year-e...
I think a lot of people have this doom fantasy of runaway inflation in the US, but it's likely to slow down quicker than people realize. Monetary supply is tightening (mortgage rates touching 5% now), and the supply chain is slowly getting back to normal. Heck, even gas prices have reversed where I am.
Europe is having to restructure it's economy to deal with reduced energy and materials inputs from aggressor nations.
We still face a massive shortage of workers, particularly in logistics.
I suspect we will see inflation remain steady or even increase later this year, barring a recession.
It’s a weirdly predictable phenomenon around American inflation discussions. Has it always been this way? Is it renewed interest in gold bugging or people sour about crypto losses?
Just like QE is good as a short term solution to economic problems releasing strategic oil reserves to push down inflation (as it relates to oil) is a short-term fix that will likely exacerbated the problem in the medium to long term.
[1] https://www.reuters.com/business/energy/us-strategic-oil-sal...
So it's more of a signal that the US is about to start swinging a bigger stick to get oil production up, than it is an illusion.
i called the bottom on oil during the worst of the pandemic but did nothing about it :(
EDIT: i also sold apple at $10/share, i am not good at trading hah
Also a US President who is antithetical to the oil/lng industry will drive up the price of oil through the futures market. Demand is still high, Biden has constrained supply, forcing futures prices to go up. Trump was bullish on oil/lng, with the same demand and increased supply, prices went down.
America no longer supports the House of Saud. It tolerates it. But were it to face a serious threat, apart from a Wahhabi fundamentalist, the U.S. would be unlikely to intervene. Riyadh knows this, which is why those calls aren’t very useful.
That said, the President does have dials. They are drilling permits and import restrictions.
I'll focus just on the first half: Less than 10% of oil drilling happens on Federal land, and there are thousands of unused permits available.
Which isn't to say that these thousands of permits could be drilled on tomorrow - they are subject to environmental impact studies, lawsuits from locals for dozens of reasons, supply chain issues around equipment, etc.
Which is a long way of saying: This particular dial is very indirect, at best.
Additionally, there's the push to expand LNG exports to Europe.
Both of these are major factors in the price rise. I personally don't really care about this as I don't own a car, and this will push new buyers towards EVs, but the media silence on this is kind of instructive - corporate media is owned by the same investors profiting off the high energy prices, so there's no incentive for honest reporting, not if you want to keep your media job anyway.
Seems to me if they wanted to increase production a lot they would decrease the stock buy backs and instead increase future revenue by increasing current and near future production.
Our passenger rail is depressingly subpar.
More like last 50-100mi.
Where's your "local" intermodal yard?
its really shocking just how far detached most HNers are from logistics that is hidden. literally the comfort we enjoy is run by people who don't work from home, who are most impacted by prices.
For rent. Oh I’m feeling that myself. Finally got the point of, let’s move prices are insane. Nothing in a safe area that’s affordable for 50 miles. Minimal in high crime areas.
It honestly doesn't make much sense to me.
USD value is going to be hit extremely hard as it loses reserve currency status. The days of the petrodollar have come to an end. It will be a typical “closing the barn doors after the horses have bolted” response which will only make things worse.
This is actively happening now, the big holders are just trying to do it quietly to get out as much as possible before the US tries to shut it down and USD fully tanks.
As this happens the market valuations will appear to rise in nominal values. If you value the market in gallons of unleaded or dozens of eggs however you will see a different story. There’s only so many years the politicians can claim it’s a “supply shock”.
The dollar is approaching a 3-year high [1]. It is up close to 9% over the past year.
The U.S. dollar index, “an index (or measure) of the value of the United States dollar relative to a basket of foreign currencies” [1].
> How do you square it with a chart of USD value versus an asset which has held consistent value for millennia?
Gold has appreciated relative to the dollar since its 2016 low.
Granted, it took until 2020 for gold to regain its ca. 2013 price. That doesn’t translate into any information about inflation in that interval. Nor about U.S. export/import balances or the dollar’s strength. Unless you’re in the gold business, gold prices are a facile measure of anything economically useful.
If foreign currency has 20% inflation, and US has 10%, the dollar index will go up. But the USD still lost value in absolute terms
Agreed. Which is why we have different words for each.
Saying “USD is down” unambiguously means the former. Inflation unambiguously means the latter. Saying inflation is up in response to an article about inflation being up is tautological. So, in the spirit of Hacker News, I assumed they weren’t being flippant but were instead factually wrong.
"USD is down" is only implied to be about foreign currencies in a trading/finance context
"Dollar loses value" and "USD is down" are different words. The former is ambiguous. The latter is unambiguous. Particularly in response to an article about inflation. Again, "USD is down" is, given the context, either inane or wrong. I'd prefer to be wrong than stupid.
The terms “real” and “nominal” make it abundantly clear that I’m not talking about USD versus other currencies. Why are other currencies even part of the discussion? I can only guess because it was an easy retort to “disprove” my statement and derail the discussion.
The meaning should be clear enough from the context of my full comment. I’d rather hear feedback and discussion on that, than debating something I wasn’t even trying to claim (e.g. whether other currencies are rising or falling faster than the USD).
Countries are beginning to do real volumes of energy trade outside of the USD. Countries are also questioning the level of USD reserves they want to be holding with the Fed. This structural decrease in the demand for US dollars will have a very lasting impact that will become clear over the next decade. This is a tidal change which was a long time coming, but I think the weaponization of the USD and SWIFT thru never-before-seen sanctions have pushed it over the edge.
It doesn’t help to be reaching this point with debt levels at 140% GDP and deficit to GDP over 10%…
Because demand for dollars has been so consistently high in modern history, we usually think of inflation in terms of the US economy being too “hot” or because we’ve printed too many dollars. It can be bizarre to think about changing “demand” for a currency, because, who doesn’t want more money? The light bulb is understanding there are many options for storing value, and demand for one option versus another shifts through a combination of present utility and future expectations.
I believe that the structural reasons driving inflation this year and for the next decade have shifted entirely into something the US has never seen before, and it’s very interesting to consider where it will lead. The war and COVID are confounding variables which I believe some people use to try to ignore the new reality.
A weak USD relative to other currencies isn’t an entirely terrible thing. It leads to massive re-domestication of production for one thing, as imports become too expensive. But that depends as much on how quickly other countries devalue their currency.
In the near term the biggest hit from debasement of the local currency is to anyone with liquid savings, or anyone who has stagnant wages (e.g. once yearly wage increases become insufficient to not lose significant purchasing power).
This is false [1].
> Why are other currencies even part of the discussion?
Referring to dollars by their ISO currency code is an FX convention. Given the article you're commenting on is about inflation being up, which is a more direct way of saying dollars have lost value vis-à-vis real assets, most people assumed you were (a) using the convention correctly and (b) not re-stating the headline.
Maybe try this one:
http://pricedingold.com/charts/SP500-2006.pdf
It’s ok though, I give up on productive discussion today. You can “win”.
Centuries and decades (your graph) are similarly useless in evaluating intraday reactions. These data are widely available [1]. American equities are up, in real terms, for almost any reasonable time interval.
Pricing the S&P 500 in gold is a convoluted way of looking at it, but for purposes of discussion, even that chart shows a 2022 decline followed by a recent rally. All up from the last few years. At par with 2006, which sounds dismal, until one consider the chart shows the S&P 500's price, not total return. The S&P 500 currently spits out a 1.45% dividend yield [2].
Someone who bought the S&P 500 in 2006, a terrible year, is unambiguously better off than someone who bought gold. In nominal terms. In real terms. In gold-priced terms.
[1] https://data.nasdaq.com/data/MULTPL/SP500_INFLADJ_YEAR-sp-50...
Which is why it's compared to a basket of currencies instead of a single one.
The USD, Yuan, Yen, Euro, GBP, and Rupee cover like 70% of the world's GDP. Maybe throw in the CHF because it's stable.
The dollar index can strengthen while cost of bread doubles in USD terms.
If every government agreed to print 2x the money supply overnight, dollar index remains the same but cost of everything will double (at equilibrium)
A good suit always costs 1 ounce of gold, since there were suits and gold.
This is clever. One can vary the value of "good" to fit any asset. Taken in good faith, I'm curious about the suit discounts I missed between 2013 and 2016, when gold lost value (relative to the dollar).
> value of gold is invariant
Axiomatic arguments work for anything. Bagel is invariant. All price relative to bagel. One breakfast sandwich always costs one bagel.
Also note that while the value of the dollar in real terms can vary minute to minute and swing percentage points day-to-day and many percentage points year to year, retail pricing will take time to catch up due to the length of the supply chain and the cost of repricing. Retail pricing is “sticky”.
Keep in mind that over the last 100 years the US dollar has lost ~95% of its real value. It will most certainly do so again, and my opinion is that it won’t take nearly as long the next time around.
Gold is terrible for stability, which is why booms and busts were more common and longer before every single country learned that and dropped gold standards.
In 500 B.C. in Babylonia apparently an ounce of gold would buy you 350 loaves of bread. It’s roughly the same today.
Augustus paid his centurions about 40 ounces of gold a year in 0 B.C. Today the median wage is about the same.
I don’t disagree about the booms and busts, I’m not saying that a gold standard is a solution.
The fact that pricing in gold is stable over millennia even within an order of magnitude is pretty cool. Certainly no fiat currency could say the same even on a 100 year scale.
No one holds fiat for 100 years, so it's a silly thing to worry about. No one hold currency even 25 years, so again, irrelevant. Fiat is designed to make pricing predictable and smooth out the booms and busts that gold causes. It's designed to be slightly inflationary to avoid deflationary spirals. Fiat has been the most stable economic basis in history. There never was a goal that a loaf of bread is $1 usd for eternity. There is a goal that inflation targets around 2%, and the resulting stability under this system allows loans to have lower interest, for businesses to make longer term financial plans, and for solid expansion of economies.
Another way to think of it over those timespans, is gold is simply a terrible thing to hold also. If you're claiming holding gold for 10,000 years breaks even, it's a terrible thing to hold. You might as well hold water or dirt. If gold is worth the same now as 100 years ago, you should have sold it immediately and invested into productive assets, such as Dow Jones index (which over the past 100 years returned 132 times the initial investment).
Since no one holds currency for long term investments, and for likely centuries decent investments have returned vastly more than gold, there is nearly zero use for gold. The love of gold is simply voodoo.
Currency is more stable for buying and selling and pricing over any range people hold currency. If you want an investment that has return, pick nearly anything except gold.
The purchasing power of an ounce of gold in terms of real goods that can be obtained is remarkably consistent over human history, taking into account productivity increases which make everything actually easier to produce (rather than making gold or fiat currencies more “valuable”).
This is a characteristic of gold in particular (above all other commodities), due to a number of factors related to its density/portability, longevity, malleability, and the consistent rate over history at which it’s been extractable from the earth. It’s a rather peculiar if not spectacular equilibrium.
It’s a nice benefit that it’s also rather pretty, and interesting to consider to what degree that matters.
The way I know this was because of the giant laugh that my historian wife gave when I showed her your comment.
Do the exercise in terms of housing/lodging, loaves of bread, nice attire, annual median wages, etc…
The reason why market prices look so high is because it’s priced in US dollars, and US dollars aren’t worth what they used to be.
The reason why markets go up when the Fed seems completely unconcerned or helpless to stop the worst inflation in decades, is because people are betting that this trend will continue.
If you re-price the market in another unit of measure, like “ounces of gold”, you will get an entirely different picture.
If you price the dollar in terms of ounces of gold, then you would think that the dollar is worth more than it was in September of 2011, and you would think that the dollar is worth more now than it was in August of 2020. While gold is stable over the long term e.g. centuries, its price can be quite erratic over the short term.
You can price it in barrels of oil, silver, copper, a collection of other currencies, bitcoin, median house price and get a different answer each time.
> The reason why markets go up when the Fed seems completely unconcerned or helpless to stop the worst inflation in decades, is because people are betting that this trend will continue.
It's a global phenomenon. We've got less production of goods and commodities because of covid and just as much if not more demand. So supply down, demand even or even up. What do you expect to happen?
While the USD has problems, other currencies seem even worse at the moment.
There is not some other fiat currency at the moment that is better than the USD. Things that people think are hedges BTC(Ponzi scheme), Gold(volatile) don't always work well.
e.g. here is real(inflation adjusted) gold prices. https://blogger.googleusercontent.com/img/a/AVvXsEiyWSImAdvN...
it doesn't look all that cheap at the moment.
> If you re-price the market in another unit of measure, like “ounces of gold”, you will get an entirely different picture.
Like this? https://schrts.co/pAKzMCFc
Yes, your graph at the end showing SPY in gold falling below the 200 day MA is exactly what I was talking about.
I absolutely agree gold is volatile in the short term and not some magical replacement for fiat currency nor an absolute indicator of the level of inflation in an economy.
Sometimes however it’s important to figure out if the “platform” you’re taking your measurement from isn’t actually what’s moving, rather than the thing you’re trying to measure. If you’re going to step outside of the fiat viewpoint, gold is where I’d usually start.
Maybe a VIX-adjusted price of gold or something like that could be useful to smooth it out.
I agree it's interesting. I'm invested in Gold, so I'm basically betting that it's going to go up. Instinctively, I'm looking for the best disconfirming evidence.
Here's where I got the chart. http://scottgrannis.blogspot.com/2022/03/inflation-net-worth...
> If you’re going to step outside of the fiat viewpoint, gold is where I’d usually start. > Maybe a VIX-adjusted price of gold or something like that could be useful to smooth it out.
yeah, I'm not really sure what the best way to look at it is. I believe Adam Smith used minimum price of labor, but that's distorted as a signal by minimum wage laws. I find the big mac index to be useful-ish. idk, perhaps something like median cost of an hour of labor per big mac, is a measure of prosperity.