Target recently announced that they are now overstocked. Automakers are saying the chip drought is almost over. Lumber prices are going down. Seems like we are returning to normal?
Target is in the position of needing to offer discounts- perhaps painful ones- to clear out inventory that isn't selling, while they have to pay more to bring in what is.
Time will tell, but I'm not optimistic on this account.
I guess I don't quite understand what is happening in this conversation :)
From my perspective, OP explained why the outlook is negative for target and you asked "why wouldn't i [whimsicalism] be optimistic about [lower inflation]?". To which the answer is, "well, you aren't target... you can be optimistic about that, that's prefectly ok, but it's also sort of immaterial to OP's post which was about Target's current situation."
OP wasn't analyzing whimsicalism's financial situation; they were analyze Target's financial situation. It's possible that you should be optimistic and target should be pessimistic.
I'm either wildly misinterpreting the flow of ideas here or your responses just don't make any sense at all. I'm not sure which.
But companies lowering prices because they are not having as much trouble acquiring goods would seem to be a return to normal to me.
That isn't what is happening. Target is offering discounts because people aren't buying what they have in stock, not because their supply costs are going down. If anything, it'll force prices to stay high on other goods as they need to make up the losses elsewhere.
To whit [1]:
"Target set off alarms three weeks ago — its shares tumbled more than 25 percent — after reporting a 52 percent drop in first-quarter net profit. The Minneapolis-based company cited supply-chain pressures and rising expenses, factors that also hurt Walmart and helped spark a broader market sell-off that erased more than 1,100 points from the Dow Jones industrial average.
Target now expects to sell fewer products in its home categories. It continues to see strong sales in high-frequency goods like groceries, household essentials and beauty products, largely reflecting consumer trends away from the U.S. shopping boom at the height of the pandemic. It also revised its second-quarter profit expectations from 5.3 percent to 2 percent, according to a Tuesday news release."
[1]: https://www.washingtonpost.com/business/2022/06/07/target-pr...
Other articles elsewhere have also pointed out the discounts are an effort to purge stale inventory, which lines up with them also cancelling orders from their suppliers.
If they were cutting costs because supply issues were smoothing out, that would be great. Like I said in a sibling comment, it's going to take some time yet before things stabilize to a "new normal".
Inflation is measured across a wide range of goods- a one-time discount on select items isn't going to budge the needle, or a sign of improvement.
8% inflation may not sound great to you if you got a 1% raise last year, but it's pretty fantastic if you got a 15% raise.
Presumably, this was asb opposed to shortages; Target being overstocked is not normal, and is in fact a sign that things are not normal- rather, a sign that supply lines still aren't lining up with demand, but with different causes now than last year.
Odds are we won't see 2020 prices again on many goods, so inflation slowing is the best we can hope for (and better than rising inflation, of course). It is going to take awhile for a new normal to stabilize, though.
What in god's green earth are you talking about?
There were three economic impact payments that went out to almost everyone:
https://home.treasury.gov/policy-issues/coronavirus/assistan...
For people under the income caps, the total disbursed to each adult was 3200, plus additional to parents / guardians for each child.
So, 2 years on to announce that "Free COVID money is over" is extraordinarily disingenuous.
All of COVID seems like a case of impatience.
The fact that the pandemic would last years was kind of obvious by late spring 2020 -- when in the history of humanity have humans ever experienced a pandemic that didn't last for years/decades? (I'm not here to debate masks or whatever public health measures; that's entirely tangential to the point that pandemics don't just go away after a few months.) Pandemics do end. Just not in a few financial quarters.
The same thing is happening with "Transitory Inflation" now. The supply shock IS transitory and things WILL normalize, but only in the same sense that pandemics do eventually end. Shit takes years, not quarters.
I think by 2024-2025 we'll be in this weird state where supply is back to normal but where there have been years of policy aimed at crushing demand.
I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate?
Vaccines weren't available until summer 2021, which was unexpectedly early, and still aren't widely available in some parts of the world. No reasonable "definition" puts the end of a pandemic at summer 2020, but "short and temporary" was certainly the messaging in March 2020.
What I'm saying is that in March 2020 (or perhaps April) it was was obvious that the world would not be out of the pandemic for years in the best case scenario, but many people believed things would be back to normal in weeks or perhaps months. Which... just doesn't have any historical precedent and was clearly wishful thinking. I remember expressing this on the phone to family and friends -- that covid would last years -- and no one believed me.
> I'm curious your thoughts on the intentional efforts are to crush demand, can you elaborate?
Central banks change interest rates in order to shift aggregate demand curves. "Curbing inflation" sounds less negative than "destroying demand", but the central tenant of central bank interest rate policy is that the two are causally related to one another.
I'd argue the opposite. We print absolutely insane amounts of money, which is an indirect tax via inflation (and a regressive one at that, since the rich own more inflation-resistant asset classes than the poor, who don't really own any assets). Higher taxes and less money printing would make that hidden tax less hidden, which is good, but the core problem is spending/printing too much, not taxing insufficiently.
> And so what we need to do is we need to get demand down, give supply a chance to recover and get those to align. So how might we do that? Right now, in the labor market, there are two job openings for every unemployed person. It’s historically high-level. So in principle, and I’m not saying this will be easy to do, in principle, you could moderate demand, reduce demand to the point where job openings move down substantially, and the labor market gets much closer to being in balance. And that would affect … wages would still be moving up at healthy levels. They wouldn’t have to go down, but ultimately they would be at levels that would be consistent with 2% inflation.
Basically manufacturing is at an all time low, and rebooting post-pandemic will be harder with higher wages given how strong the U.S. dollar is. Of course, wage stagnation is finally being corrected so there may be little to control that.
https://en.wikipedia.org/wiki/Bullwhip_effect
What I really wonder is what should be done about it. Seems like too many efforts to mitigate things could cause a separate whip?
"Inbound container volumes to the US are reverting to pre-pandemic levels"
The direct answer to your question is, yes.