> Headline CPI in March rose by 8.5% *from a year ago*
Another notable piece:
> core inflation appeared to be ebbing, rising 0.3% for the month, less than the 0.5% estimate
which matches the other commenter mentioning that the gas prices were a massive contributor to this.
Straw man. Core inflation includes housing and healthcare.
If one can’t understand why food and energy inflation aren’t cleanly a monetary phenomenon in the midst of Russia, an energy exporter, invading Ukraine, a food exporter, I’m not sure how to help.
A hypothesis perfectly corroborated by core PCE, the metric OP criticised [1].
Because we live in a representative democracy and policy responses are likely to be a significant electoral issue.
Supposedly a majority voted for this and are now complaining about what they voted for. Maybe they didn't vote for this and voter fraud really did happen...
If it’s a long-term problem and you’re living paycheck to paycheck you’re screwed for longer.
Honestly, what’s the play here for someone who doesn’t own any significant assets and barely makes enough to pay bills each month? That’s what I read as OP’s point.
If I’m living paycheck to paycheck and my current term runs up, I would go month to month if this is a short term spike since prices should recover soon. But if it’s long -term, I should go ahead and lock in now because it won’t get better.
There are tons of those examples. Even people with no assets and just living month to month can use this information. Obviously, billionaires are impacted more, but people might literally be trying to figure out if they just skip meat for a month (short term) or buy a bicycle (long term).
I also find it hard to believe that a bus / train pass costs as much as car ownership fwiw
Public transit can be very cheap and convenient for some use cases: for example, if you live close to a stop, your destination is close to a stop, there is straight transit line between the two places, it runs frequently and has few stops on the way, and you usually travel by yourself. If all of the above is satisfied, it will likely to be more cost effective and similarly convenient to use public transit. However, for many other standard use cases, public transit is by nature very inconvenient compared to cars: for example, if you visit grandma with your small kids on a regular basis, grandma lives in a small town, getting to which on public transit from your home requires 2 transfers, and is only reasonably possible twice a day at very particular times. In that scenario, which, by the way, is (in some form) extremely common for most people who aren’t single professionals living in big city, public transit is just a non starter, even in Germany.
Since the latter scenario is, as I point out, rather common, most people own a car anyway. At that point, you’re already paying the total cost of ownership just to use it on routes where public transit is extremely inconvenient. This changes your calculation on routes where public transit actually is pretty convenient: sure, public transit on that route might win with total cost ownership of the car, but once you already have a car, fixed costs are already sunk, so public transit is now competing with marginal costs, and it might very well then lose.
For this reason, even in countries with good public transit, it is largely a domain of students, young singles, and retirees, and working people with families overwhelmingly own and use cars.
Boston, MA -> Philadelphia, PA (511km):
By car: 5h15
By Amtrak (this Monday): $311 for business on Acela, 4h54
By Amtrak (next Monday): $119 for coach on NR, 5h50
Munich Hbf -> Berlin Hbf (582km):
By car: 5h23
By DB (this Monday): 195eur for 1st class on ICE, 4h34
By DB (next Monday): 68eur for 2nd class on ICE Sprinter, 3h57 OR 48eur for 2nd class on ICE, 4h34
FWIW, the travel times you post are not instructive, because you are not going to drive from Hbf to Hbf. Getting to the station, waiting for a train, and getting from the station to the final destination will increase travel length substantially. At the same time, not having to drive into city center (where Hbfs are) will decrease drive times.
Should make you wonder how much other outdated/incorrect information you unknowingly spread in the same fashion.
> Sadly, this means that if I lived in Germany, it would be much cheaper for my family to drive everywhere.
Only if you don’t factor in massive discounts for children (who ride for free until they’re 15) or even small groups of people. Eg. the Bayern-Ticket - can’t really beat a day trip to an alpine lake town for 32eur total (for a couple with young children, and no need to book in advance).
Oh, And don’t forget about that 25% Bahncard discount that pretty much pays for itself after taking two train trips in a year.
> FWIW, the travel times you post are not instructive, because you are not going to drive from Hbf to Hbf.
Ending up in the centre next to a main station is actually one of the biggest benefits over flying or driving in my experience. Maybe it’s just the way I plan my trips, but I almost always end up wanting to be in the centre of wherever I’m going to, anyway.
Inflation clearly affects cost of living because wages are stickier than prices. You don't walk into work every monday morning and get your wages increased by CPI.
> If you think prices are going up
I don't think prices are going up. I factually know prices are going up. We keep track of this data
> you need to explain how this is possible at all.
sure. Let's say I have a grocery store. I pull off the price sticker from last week and put a new one on this week. I don't even understand how this is a question.
You can argue the root causes all you want but just writing the words "there is no inflation" isn't an argument.
If you don't understand the cause for it, then attempts to fix the not-cause may cause more or bigger problems in other parts of the economy.
This is in part complicated because there isn't necessarily one cause.
If it was caused simply because the supply chain shock from different spending habits of consumers from the pandemic, then that would sort itself out as the supply chain adapts to the different habits - going from just in time to just in case in many places.
If it was caused by an increase in energy prices, then increasing supply (and importantly, having the existing energy reserves be used).
(and so on)
The other side to this is the managing expectations. If you know that you can't fix it by just adding more oil to the market, then that data can be used to manage the expectations for all parts of the economy. "No, this isn't going to get better for some time" is a valid answer.
There is no monetary phenomenon. It's clear as day on the Fed's balance sheet the reason for inflation. https://www.federalreserve.gov/monetarypolicy/bst_recenttren...
If one can't understand why the value of their money goes down as the government buys trillions of dollars of their own debt with non-existent money, I'm not sure how to help.
Yet there was not this inflation during the Fed balance sheet runup in 2008-2018......
So maybe your simple claim is not what is the cause. More likely is that in 2008, the balance sheet was loans to banks (paid back), whereas in 2019+, the increase was from money being handed to people?
In fact, your total assets graph is misleading. Look at the same graph, under the selected liabilities breakdown - the monetary base has been steady, with no inflation for most of it. The big recent increase is in purchase of Treasuries, which is the money the govt gave to the people to help them through the COVID caused downturn. This is a good use of money, and of course giving people money with no gain in production will lead to inflation, but it's not the Fed at fault - it's elected officials voting for free money.
Could you think of something which happened in 2008 which might have impacted the velocity of money in the global economy, despite the aforementioned QE? QE works great following a recession. For quite a number of years later, in turns out. But not forever. At some point the economy recovers and continuing to pour gasoline on it stimulates it beyond the target inflation zone.
You and the comment you’re responding to agree on the Fed’s balance sheet being insufficient per se to explain core or non-core PCE. It's a complicated phenomenon.
Unsurprisingly, the lion's share of that money handed out for covid relief wasn't given to people. It was corporations that, once again, walked away with most of it. Going back even further, the 2016 tax bill also provisioned way more money to corporations compared to the time-limited-bone they threw at people.
While its fair to say handing out money can cause inflation, lets not kid ourselves about who is really getting that money.
https://theintercept.com/2020/12/04/covid-irs-corporation-ta...
https://www.washingtonpost.com/graphics/2020/business/corona...
https://www.forbes.com/sites/christianweller/2019/05/30/the-...
https://www.nytimes.com/2018/01/16/us/politics/banks-are-big...
Wrong [1]. 1.8T directly to people, 1.7T to businesses. I'd not call that a lion's share.
>It was corporations that, once again, walked away with most of it.
And a significant part of that was to pay, you guessed it, people :)
Of the 1.7T to businesses, 835B went to paycheck protection program (i.e., people wages) , 85B to a delay (not handout) of employer payroll tax (so this will be paid back by the businesses), and a significant number of loans, not handouts, that have to be paid back.
And keeping companies alive, i.e., jobs available, has vastly better long term economic value than simply giving it to people, since at some point those people will really like having a job for a continued income.
Tell me again of the 1.8T given to people, how much was loans that have to be paid back? And what is that ratio for the business side?
[1] https://www.nytimes.com/interactive/2022/03/11/us/how-covid-...
Asset prices are prices, they're just not part of the CPI.
The early part of the inflation fed almost entirely into financial assets. Take a look at the absolutely INSANE multiple expansion of the S&P 500 for this time period, as well as the INSANE monotonically decreasing yield curve in literally every kind of debt security.
Fed added 3.5T in balance sheet over this time. S&P 500 market cap went from $12T to $23T (and this is not counting all the other market caps from other stocks and exchanges not in S&P 500). It's not unreasonable that investment market caps have increased tens of trillions over this time.
So it's pretty hard to claim the Fed injected this money into the stock market. It's much more likely that as the world is changing some companies are viewed as increasing in value due to the products and services being more valuable than before.
Energy commodities are up 48% this year, but 37% of that increase was over the last month.
Didn't we all go through that period early in the pandemic where spot oil prices briefly went negative?
Weren't "bullwhip effect" articles regularly making the rounds on HN or did I dream that all?
Interesting, not in Europe. The UK produces a separate CPIH index. CPIH is CPI, additionally factoring in Owner Occupiers’ Housing Costs.
> Instead, the BLS uses an owner’s equivalent rent (OER). The BLS estimates the OER by asking homeowners how much they could charge to rent their home.
That’s headline inflation. It’s politically relevant. If you're running for Congress or the President of the United States, this is the one that gets you in and out of office.
Core inflation is monetarily and thus more financially relevant. It singles out what central banks can strategically respond to. (You don’t want to raise rates because an energy exporter invaded a food exporter; rates aren’t the problem.)
Anyone in leveraged debt is going to do well in inflation.
I would say it is due to loose monetary and fiscal policies (duh).
Maybe we are in for a 70es rerun; and the 70es inflation spiral didn't really end until Paul Volker, Thatcher, and Reagan changed the economic policies.
Also stopping the inflation spiral helped bankrupt the Soviets who were a great benifitter of the rising commodity prices ... just a hint.
If you don't think this has any affect on inflation Ive got a bridge to sell you.
Can you explain what you mean by that? I think many of us would argue that we’re more efficient now in WfH situations.
My workplace is post-remote now. We're back to fulltime in the office. I'm super happy for all the random interaction, problem solving together and coffee breaks. The social interaction enables us to work better in the team.
The best policy was not the topic of the comment but it's probably to let those who want and like remote work to do it.
Ah yes, the pervasive disruptive social din of an office. Unstructured, random and disruptive interactions. How anyone achieves optimal focus and gets into the zone when in an office is beyond me.
So my -efficiency- is higher. Total work productivity, sure, taken a hit.
Team velocity? What do people who say this do all day? Are you in sales?
Most of these things really are harder to do remote. I could honestly see how you'd be more productive and have stats to prove it if the vast majority of your responsibilities were just code.
Think of your work output as a vector. It has a magnitude - how much work you can get done in say a quarter. It also has a direction - what is the project you're working on, and does that line up in an economically productive way?
The reason we have corporations and management is to get all those vectors to line up in a certain direction. They're like magnets, aligning the productivity vectors of each IC so they don't compete with each other and instead contribute to a common goal. Almost every IC is less productive in terms of magnitude when working in a big corporation, but because there are thousands of them, the overall product becomes very hard to compete with.
WFH effectively reduces the magnetic force on each employee. Their productivity magnitude increases - they get more individual work done per unit time. But their alignment suffers. It's harder to identify when two IC's work is not going to line up perfectly, and harder to catch problems and complications early, and harder to set a direction in the first place.
And that's where WFH is going to suffer. As long as people can basically continue on the same direction they were going pre-pandemic, it's an improvement. But as soon as a direction shift becomes needed, corporations that have gone all-WFH are going to quickly find that the reason they're a corporation has gone away. They won't be able to adapt and chart a new course, and their employees will all quit and join new startups that are already pointed in the right direction.
If you recall "ping-gate" entire underground lines were shutdown in the UK due to people working jobs that can't be done remotely.
My passport took forever to get renewed during the very first lockdown due to disruption to a fairly manual process that required handling of physical things (eg a passport)
Although they saved money on studio rental and travel, they ended up teaching far fewer students - despite starting out with an established group of regular students, and charging much less than an in-person class would cost.
Where are these statements coming from?
Here's a summary of revenue/share for the S&P 500 (from Standard & Poor's data): https://www.multpl.com/s-p-500-sales/table/by-year
This time around, who wants to be Carter? Somehow I suspect we will be short of volunteers. Neoliberal propaganda shot itself in the foot. Oops.
Just like Obama, really.
Biden actually did it, and paid the political price. There was never going to be any way to withdraw without horrific consequences. Which is why neither Obama or Trump actually did it.
Volker was brought in by Carter.
And Reagan got all the credit - supposedly he tricked the Russians into thinking the Star Wars program actually worked and that was why they went bankrupt.
Things have obviously changed - but the basics are still there: inflation comes from monetary and fiscal expansion - once the spiral picks up - commodities lead the way - and that’s the Russians.
I think everyone agrees they can't raise rates to 20% without causing catastrophic side effects.
I think everyone also agrees they don't need to raise rates that high.
Highly subjective.
search for "Volker" http://bilbo.economicoutlook.net/blog/?p=7591
It’s an amazing turnaround from the unisonic voice of “it’s transitory”, ‘printer go brrrrrrt’ is a conspiracy, don’t you worry…
The standard way to formulate YoY changes is what GP said, or "Consumer prices rose 8.5% in the year ending in March".
The MoM change for March is a hefty 1.2% in its own right.
This... seems like a good news story?
Obviously the Russian invasion of Ukraine has royally messed up fuel and food prices, but that's a specific shock that's independent of larger macroeconomic issues.
How do you figure? YoY is the best way to measure these things since there's seasonal changes that happen month to month.