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Comment by ilamont | Hacker News Reader

It's very strange. Some items have a glut of inventory, others are very difficult to find. Weird substitutions are taking place in some cases, like the GE light bulbs from Mexico a friend spotted at a local retailer in Boston.

Prices seem higher regardless, which ties into higher fuel and labor costs.

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Target just announced they're going to start reducing prices on a lot of their inventory and signaled their profits are going to drop for this year.

Target Corp. will cut prices, cancel orders and take other steps to cut its bloated inventory, moves that will lower its profit in the current quarter more than executives thought just three weeks ago.

Demand softened for home products, like furniture, that were popular during the height of the pandemic. In addition to presenting a financial cost, a lot of those items are bulky and take up considerable space in stores and warehouses.

"We got more of that product than we want to have, and we think dealing with that head-on by being aggressive now positions us with the right flexibility for the back half of the year," he said.

But it will come at a cost. .

While its excess inventory will be marked down, Target may see its overall price level rise this summer as it grapples with transportation and other costs that are being affected by inflation.

"Price is the last lever that we pull. … But price increases are unavoidable given the inflationary pressures that we've seen in many categories," Fiddelke said.

https://www.startribune.com/target-will-slash-prices-to-get-...

Well, silver lining is that seems like a really strong signal that we're heading towards disinflation.

No, it's a signal that we're heading for lower demand, at least partly because of inflation.

The point is this might stop inflation in its track.

I am not saying that this is the scenario but it's worth considering that the start of economic collapse from inflation tends to happen when companies have products to sell, but they can't afford to sell them for prices that people can afford to pay.

This does not end inflation, but tends to exasperate it. The company goes out of business and you now have fewer things in the economy, but the same amount of money. The result is further inflation.

But Target is likely not going out of business. Even if they have to sell stuff at a loss. And even if they did, their inventory would be auctioned off and resold, it would not just be chucked in a landfill.

I agree that they are probably not going out of business, though it may be closer than it seems. The article suggests they're now going to be running on a 2% margin after the clearance. Even if things get worse, they can probably afford to run in the red for some significant period of time (and perform various liquidations to get back into the black if necessary), but that's a quite unstable scenario.

The issue with a retailer going out of business is not the retailer itself, but the manufacturers behind it. Target failing to sell their product reflects large numbers of manufacturers being unable to sell their product.

Which is counter intuitive. If your money is going to worth less soon, you should probably spend it. This is the idea behind why “gentle inflation is good”.

I’m looking at expensive hard good rights now. Purchases that I’ve been putting off for awhile because I know those prices are going up soon.

However if your money is going to be worth less soon, you might be inclined to avoid all non-essential purchases so you have more money left for stuff you need (food, rent, gas).

I mean, it's literally lower prices which means lower CPI. You can make an academic debate over whether that's technically disinflation, but the BLS report is going to post a lower number.

No, it means lower prices on the limited number of goods which were oversupplied that nobody wants right now. It doesn't mean lower prices on the stuff everyone is still buying like food and gas.

You've got cause and effect backwards.

I'm saying that higher inflation causes lower demand. Are you saying that lower demand causes higher inflation? If so, can you explain how you think that cause-and-effect works?

Lower demand causes lower inflation, lower demand is indicative of Fed tightening. Higher inflation often goes hand in hand with higher demand. Don't reason from a price change.

I read an article in the newspaper about this which quotes analysts saying this isn't about Target trying to fix its prices, but because Target is trying to recover from a series of big mistakes.

Apparently, it handled the start of the pandemic poorly and couldn't keep anything in stock. Then just as the winter wave started to ease, it bet big that people would continue to stay locked up and bought tons of home improvement things it should have had in stock a year ago.

Personally, my Target runs have gone from every other week to almost never, because it simply doesn't seem to ever have the things I want and need anymore.

So it's not just me? I'm trying to think what my Target store would mark down! It's kind of hard to mark down aisle after aisle of sparsely-stocked shelves!

I'm not a regular Target shopper, but when I've gone in for specific purchases (basic clothes, small appliances, gifts) I've found only empty shelves where what I wanted should have been, surrounded by stuff that looks like it's been there for years. Reminds me a lot of K-Mart or Sears in the first years of their decline–nothing you want and everything you don't.

Pricing and supply can cause strange results during shortages - if bulbs from China are even a fraction of a penny cheaper in normal times they’ll be picked, but if they’re not available the closest could be mexico or even the US.

I’ve noticed the local “free range fancy chicken eggs” have remained $4 since two years ago but the cheap eggs have gone from a Buck (sometimes 50 cents on sale) to almost the same $4.

Single data point: a rural egg seller on the washington peninsula just raised their prices from $4->$5 per dozen because their feed costs recently doubled.

Yep, lots of price changes will happen and apparently random intervals as contracts and prices expire. Some farms will be almost entirely isolated from much of it (if they grow their own feed corn for the chickens it could be a year or two) others will be affected immediately.

>I’ve noticed the local “free range fancy chicken eggs” have remained $4 since two years ago but the cheap eggs have gone from a Buck (sometimes 50 cents on sale) to almost the same $4.

I noticed this too and stared buying the free range eggs again (used to get these all the time for my ramen eggs). There's definitely a difference but I don't go through enough eggs or cook them in a way that I typically care (no time to prep ramen and therefor nitamgo anymore).

Check again. Our rich person eggs are 9.99, spent years around 4.99.

We'll know it's really bad when grocery stores start selling "singles" - individual eggs.

At that price, I would seldom buy eggs.

The only difference I've ever noticed is that the more organic or free-range an egg claims to be, the more likely it is to have defects like blood inclusions. If I don't know where the egg came from, the actual taste isn't distinguishable. Yolk color is easily manipulated and means nothing.

The only difference I notice is in the white which seems to have more protein from the cage free eggs. It's usually not too noticeable to me except with hard and soft boiled eggs where the egg white just seems more dense/thicker. I use these for my soft boiled marinated eggs so there's more white to absorb my marinate goodness.

The GE light bulbs I find in big box stores are GE as a licensed brand name. They are made all over by someone licensing the name.

Weird substitutions are taking place in some cases, like the GE light bulbs from Mexico a friend spotted at a local retailer in Boston.

People in border states have seen this since the start of the pandemic. I remember the first time that the only toilet paper available in Kroger was all Mexican brands.

I suspect that Mexican companies can make more money shipping goods to the U.S. than selling them locally. I also wonder if the demand from the north had made shortages in Mexico worse.

Mexico makes sense, there's NAFTA, just pay transport, tariffs/customs are waived. Not really weird, take a look at cars and manufacturing and it's been that way for the over the past two decades.

I thought Trump got rid of NAFTA?

There were some slight changes in a few areas but it’s essentially the same. https://en.wikipedia.org/wiki/United_States–Mexico–Canada_Ag...

What Trump sank was the US joining the Trans Pacific Partnership.

No, he 're-negotiated' NAFTA as the United States-Mexico-Canada Agreement, or USMCA.

There weren't that many changes, but he did implement the TPP's intellectual property rules.

Or the oligopolies that are allowed to operate unfettered in the USA.

I doubt the lightbulb cartel is still a thing. While oligopolies and monopolies exist, it's not the answer to every inflating article.

>> Or the oligopolies that are allowed to operate unfettered in the USA.

> I doubt the lightbulb cartel is still a thing. While oligopolies and monopolies exist, it's not the answer to every inflating article.

An oligopoly doesn't have to also be a cartel, it just has to have few competitors.

I think the GP is complaining about how the US as pretty much allowed any market consolidation short of outright monopoly for a long time, which means a lot of companies have too little competition and therefore too much market power.

Is an oligopoly that isn't a cartel problematic? If the lightbulb manufacturers jack up their prices, how long can that last until new incumbents come around and compete margins away?

You know what people hate more than oligopolies? High prices. Consolidation is not de facto problematic. Unless said consolidation leads to cartel-like behavior or entrenching regulations (which even Adam Smith recognized as a problem and a propensity of elites, I'm not arguing in favor of laissez-faire capitalism), margins will be cyclical in a free market and colluding oligopolies will eventually face new incumbents, because high margins attracts competition and investments.

There are exceptions like markets where cost is prohibitive for new participants, say telecom (hello Rogers-Bell-Telus), but I don't see how that applies to lightbulbs in the 21st century.

Well that shouldn't come at a surprise since U.S. antitrust law is aimed at protecting consumer interests, not protecting competition.

> Well that shouldn't come at a surprise since U.S. antitrust law is aimed at protecting consumer interests, not protecting competition.

And a lot of people are now questioning the wisdom and effectiveness of that approach.

Also a, "that shouldn't come [as] a surprise" response doesn't really address anything in this subthread. I don't think anyone is surprised that was the approach that was taken or its result, they just disagree with it.

> I don't think anyone is surprised that was the approach that was taken or its result, they just disagree with it.

You mean you disagree with it, despite there being many markets where less competition doesn't hurt or even benefits the consumer.

Also, addressing the tone or being grammar nazi doesn't add much to discussion.

I'll put this as simply as possible: you didn't understand what I wrote, but chose to respond anyway.

A 'you didn't understand what I wrote' response doesn't really address anything in this subthread.

Of course it’s still a thing.

Why wouldn’t it be?

Because manufacturing lightbulbs today is a well established process and basically any manufacturer can produce them if they so chose, as opposed to 1925's situation. It also quite empirically is no longer a thing as LED bulbs can last up to 100k hours [1] and are often rated for 50k [2], as opposed to the cartel's 1k [3].

1: https://www.inlineelectric.com/lifespan

2: https://www.bulbs.com/learning/ledfaq.aspx

2: https://en.wikipedia.org/wiki/Phoebus_cartel

You don't seem to understand how modern markets work. See for example Coca-cola. Anyone can create a drink that looks like Coca-cola. However, we know it has a near monopoly on that segment of the market. Just because a product can be manufactured, doesn't mean that companies have the capacity to create and produce it at the scale needed to become profitable.

That's a separate subject to anti-competitive oligopolies. Let me doubt people are loyal to lightbulb manufacturers and that the situation is remotely comparable to one of the most powerful and well established consumer brands in history.

But since you brought up this subject, why should I care consumer brands are exercising their pricing power for as long as I have access to the low-margin alternatives? People paying $5 for takeout coffee at Starbucks doesn't affect me in any way. It would affect me if Coke and Starbucks prohibited the existence of competitors or extinguished them, but that isn't the case (for these examples at least, such anti-competitive behaviors do exist) as you have yourself implicitly noted in your comment.

> It would affect me if Coke and Starbucks prohibited the existence of competitors

In a sense they do, every Starbucks in existence is a store where a traditional coffee shop cannot be stablished. How many more Starbucks it takes to completely shut other competitors out of the market?

I don't think it's useful to debate fictitious scenarios. You know of a place where there are only Starbucks selling coffees? I can't think of one, as someone that never steps in a Starbucks, yet often buys takeout coffee in other fastfoods.

On the contrary, Starbucks is frequently -- maybe even usually -- the only place in a given area that serves fresh coffee of fair to moderate quality. You can get coffee in McDonalds or Burger King, but it's not very good, and the employees know even less about coffee than someone working for Starbucks. The absence of competition in that midrange market means that Starbucks faces relatively little pressure to maintain lower prices and higher quality.

I can only think of a single other dedicated coffee shop near my suburb of Cincinnati, and it's a cat cafe that serves dogshit coffee (or catshit, I suppose, and I'm not referring to the civet). At least they have cute adoptable cats to play with!

I didn't say it was. But the four meat producers raking in 40% higher profits while whining about a labor shortage should be top of the docket for any politician claiming to want to "do something" about inflation.

Isn't the baby-formula fiasco yet another wake-up call?

While we're at it, let's stop burning our food. Growing (and subsidizing) corn for fuel is asinine.

socialists in 2019: "evil oligoplies are driving down prices unfairly meaning local businesses cant compete and are forced to close"

socialists in 2022: "evil oligopolies are raising prices unfairly causing inflation"

havent found one that could explain why they didnt "collude" to raise prices in 2008-2019.

whereas its quite clear what caused the high prices was rather insane govt spending caused by socialist policies.

1. Between 2008-2019 they just didn't realize they could. I have found the years you quote to be high priced. Competition just went done in every sector I depend on. Banks, cell phone companies, cable, energy prices went up without inflation, etc.

2. The minute we started talking about inflation, every company in my life took advantage of it--overnight.

3. I'm with you on the government spending. I understood the money thrown at Covid, but that's done, and the working poor will never see those checks ever again. And I'm no fan of the Infrastructure Bill.

4. If you don't wonder why gasoline prices fluctuate by a dollar hourly at some stations, while making record profits; I don't know what to say.

5. Every large company made record profits during Covid, and we don't know why? They didn't lower prices.

Again the $300 extra per week for unemployed people affected by Covid was a one time thing. Companies might get free money as usual, but not the little guys.

It was conservatives (Trumpy) that passed first 2 trillion stimulious package.

America has just a few badly run "socialist" programs.

I think we all have seen our homeless population get bigger each month.

Oh yea, federal government programs. Basically (Cal-fresh, and medi-cal)have gone back to make qualifying very hard.

You are spot-on about your criticism of oligopolies as an explanation. But for your theory, you have to explain the absence of inflation from 2008-2019. It's not like government spending was sane during those years...

Take a look at the stock market, housing, education and medical from 2008 to 2019 and tell me there wasn't inflation.

https://datalab.usaspending.gov/americas-finance-guide/defic...

^^ that chart.

also, giving people money directly with stuff like unemployment and stimulus checks is extremely stimulative compared to say building a bridge.

massive supply shocks didnt help either. but they govt knew there was supply shocks and increased demand anyway. despite warnings by democratic economists. (we just found out yellen herself had misgivings about the 1.9T price tag)

The core aspect of socialism is the means of production and the fruits of labor [and exchange of all this] in the hands of the people. Only the distribution part are what any safety net programs are about. I assume socialist policies means govt programs.

The people you’re referring to would not be saying companies are taking advantage of the zeitgeist and raking in bigger profits knowing inflation talks will take all the blame or straw manning like your 2022 line. Gas prices rising so much providing incredible profits is an obvious example of this.

No one in the White House or Senate are socialists. Bernie is like the Nordic model: capitalism + large safety nets + govt programs. The senate has been in republican control or with the useless Dem leaning current situation with too many conservative Dems. Trump’s regime did some of the biggest “socialist policies” spending. It is wild to assert the right pass socialist policies.

isn't the whole "walmart cycle" of "aggressively undercut local businesses until a monopoly has been established, then increase prices once you have control of the market" pretty well-established at this point? you're phrasing the two halves of that cycle as if it's supposed to be some sort of a contradiction.

Applies to Amazon too nowadays.

no actually walmart has been keepign their prices low. thats paritally why they took a massive stock hit in may. (same with target).

guess its just a coincidence that they chose now to do it. and not 2017

I don’t think we’re going to a regime of low prices and suppressed wages. That phase of the world’s economic cycle is on its last legs. Demographics are collapsing across the world and the most prosperous, numerically largest baby boomer generation are entering their non-productive, fiscally conservative retirement years.

This just might be the “new normal”. The lack of readily available products might be a problem, but there’s also a good chance we see much higher wages across the board

Well, all of that is true. There’s also the printing of many trillions of dollars to raise all prices on all things.

Not if the fed has anything to say about it. The plan now is to let it crash since hourly workers have gotten uppity and are refusing to work terrible jobs for even worse pay. All the talk of "wage price spiral" and all that shows their hand.

Its incredible to me how more people don't revolt just watching Powell talk. He flat out does not acknowledge the possibility that wages should rise due to increased productivity. Any wage increase is just a sign of inflation.

The whole goal of the Fed is to keep salaries down. The reason is that inflation is measured only on household items that can be bought by low income families. You don't see the Fed worrying about inflation in housing, in stocks, and investments in general. That inflation they consider to be good.

Actually there are more millenials than baby boomers. If we see significant wage increases and Real Estate decreases, the millenial generation might start to procreate to a reasonable extent.

> Actually there are more millenials than baby boomers. If we see significant wage increases and Real Estate decreases, the millenial generation might start to procreate to a reasonable extent.

And cheat on Capital?

Big ifs attached to a short fuse

> If we see significant wage increases and Real Estate decreases, the millenial generation might start to procreate to a reasonable extent.

The leading edge of millennials are already way out of their best reproduction years. Middle's very much iffy. The youngest are OK but will be starting to enter that "your risk of complications and birth defects are increasing a ton year over year" territory soon.

I think we're already "procreating to a reasonable extent," where "reasonable" is defined in a context where many of us aren't in a stable enough financial situation to responsibly have kids. An alternative phrasing would be "might be able to buy houses and start families."

Eh, not really. I mean, yes, but no. Based on terminology, I'm going to stick with the US demographic. In that setting, the peak 5 year bracket of millennials is currently 7.2% of US population and 23.8M people against a world background of 7.8B people. The boomer peak at the same age was was 8.4% and 22.7M people against a global population of 5.9B. So, yes, there are quantitatively more millennials now, and the number of millennials is larger at the same cohort timepoint, but as a fraction of population, they're smaller and will have a smaller effect on global affairs.

Globally, it's a bit different, the bulge of millennials is in fact larger by all measures, but that bulge isn't really driven by the US or Europe, it's the Middle East, and to a lesser extent, East Asia.

https://www.populationpyramid.net/united-states-of-america/2...

https://www.populationpyramid.net/world/2021/

https://www.populationpyramid.net/united-states-of-america/1...

https://www.populationpyramid.net/world/1997/

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