Inflation Appears to Be Over
politicalwire.com
politicalwire.com
Yeah those are all up too. Thankfully, those don't count either. TV's are cheap though!
I did not interpret it that way. I interpreted that as trying to imply a breadth of cost increase that was not true, so I was trying to call that out.
If we interpret it that way, then I might not have replied, this comment does a better job: https://news.ycombinator.com/item?id=38281712 But I might have pointed out that "groceries" is a pretty narrow view on inflation.
But not on average.
The government has always been incentivized to make inflation numbers lower than they are. There have been numerous changes to CPI methodology, many in just the last few years. Hedonistic adjustments are questionable at best.
Moreover: inflation is a gradient, not a singular vector. You will experience inflation differently depending on where you are in that gradient. Reporting a single number for inflation is about as useful as reporting a single number for the temperature of the planet.
30% is a lot! But it is what the CPI numbers imply for food, and it's more accurate than "feels like." or "these few things went up 100% so everything went up 100%."
Feelings are important, but they are not the reality, and they don't imply a government conspiracy.
I think it’s obvious why Americans are upset about that change — and the government lying to them about the problem.
That's like saying "the government is lying when they say the fire is out, because I saw that the building is still burned and hasn't been repaired."
Where did the government say that?
Inflation has returned to normal levels, but I don't think most economists expect prices to broadly decrease. Decreasing prices can be a (very) bad thing.
Debt has skyrocketed if anyone's had their head under a rock.
That's a feature of the system, not a bug.
Does it not mean prices? Anyway, prices are up. A lot of people are frustrated. I believed inflation was a measure of that, but if inflation is actually something else, it wouldn't make people any less frustrated.
Money has to move around the economy for it to be a good one. Every single dollar you earn, someone else spent. Every dollar you spend, someone else earns. Deflation gets people to stop spending, which means people stop earning, which means people stop spending (since they have to tighten budgets or don't have money), which means people stop earning, and soon enough the economy goes in the shitter.
We've had extended periods of deflation exactly two times since we've had the means to start tracking it. The first time was called The Great Depression. The second time was called The Great Recession.
Where do you think your income comes from?
At least half the run-up in inflation was on the supply-side of things:
* https://www.frbsf.org/economic-research/publications/economi...
Or have people forgotten oil and food/wheat prices spiking (thanks Russia!)? (Clogged ports for goods didn't help earlier in the pandemic either.)
It's hard to explain to people as you've said that prices aren't going to decrease in 95% of instances. Prices are sticky and outside of some goods with high volatility, the prices of 2019 are never coming back. That's a tough position politically too, and one reason I feel despite the economy having done pretty well that Biden is underwater on the economy as a whole. Especially coupled with interest rates rising.
When inflation is low, prices grow slowly over time. When it is high, they grow quickly over time. High inflation over a sustained period of time leads to a meteoric increase in prices.
For prices to decrease, the inflation rate would have to be negative. For them to decrease to pre-pandemic levels, inflation would have to be negative for a sustained period of time.
When inflation is negative, it's deflation, and prices drop exponentially.
Well the article does start with "Wholesale prices in October posted their biggest decline in 3½ years, providing another indication that the worst of the inflation surge may have passed".
I don't think anyone expects prices to go down, just to stop going up so fast.
Most gut aversion to deflation comes from great depression PTSD.
- Panic of 1785
- Copper Panic of 1789
- Panic of 1792
- Panic of 1796–1797
- 1802–1804 recession
- Depression of 1807
- 1812 recession
- 1815–1821 depression
- 1822–1823 recession
- 1825–1826 recession
- 1828–1829 recession
- 1833–1834 recession
- 1836–1838 recession
- 1839–1843 recession
- 1847–1848 recession
- 1853–1854 recession
- Panic of 1857
- 1860–1861 recession
- 1865–1867 recession
- Panic of 1873 (which lasted until 1879)
- Depression of 1882–1885
- 1887–1888 recession
- 1890–1891 recession
- Panic of 1893
- Panic of 1896
- 1899–1900 recession
- 1902–1904 recession
- Panic of 1907
- Panic of 1910–1911
- Recession of 1913–1914
But besides that we did fine.
2. Nearly all of them were relatively minor and recovered on their own
3. Now make a list of all the economic disasters that have happened under fiat money / central bank / pro-inflation policies.
Ideally the economy oscillates between periods of low inflation and low deflation. This would reflect natural business cycles.
- 1981-1982 recession, caused by the oil crisis a few years before, had 10.8% peak unemployment
- The Great Recession (again, there was deflation here) with 10% peak unemployment.
- COVID, which had a 14.7% peak unemployment for a few months before the US made a smooth landing.
That's it.
Is it that the American ascent to becoming the richest economy on earth wasn’t perfectly smooth and therefore not “fine”?
This process is self-perpetuating and can get out of hand very quickly.
I've heard it said that the British pound was worth the same in 1914 as in 1614.
The BLS changed how it measures things so of course inflation went down
https://www.bls.gov/cpi/additional-resources/improvements-cp...
Since the fed moved to an average inflation target, shouldn't the fed be targeting sub-2%?
It is true that there are other factors which can drive inflation and rising consumer prices. However, if the recent bout of inflation was caused by supply chain issues, or by food + energy costs rising, then a decline in producer prices would probably slow consumer price inflation.
PPI and CPI historically are loosely correlated, but show no clear lead-follow relationship. PPI seems to swing harder, but not first.
https://www.fisherinvestments.com/en-us/insights/market-comm...
If owner equivalent rent is moving lower (which it was in October), and if prior inflation was caused by supply chain tightness or higher input costs, than a lower PPI could indicate that supply chain tightness has eased, and goods inflation will head lower or stabilize.
It's also worth noting that CPI moves slower than PPI because rents make a pretty big percentage of CPI, and rents move slower than PPI due to how the BLS measures them. It is _a_ leading indicator, but not the _sole_ leading indicator.
However, the PPI can still be a leading indicator of the direction that consumer prices are moving. Here's a recent article from the Federal Reserve on this question:
> However, we also see a considerable positive correlation between lagged values of monthly PPI inflation and the current month's inflation. In particular, the correlations between current monthly PCE inflation and previous months' PPI inflation up to seven months back are all greater than 0.3. This is our first clue that PPI inflation contains information for future changes in the PCE price index.
https://www.richmondfed.org/publications/research/economic_b...
i'm not sure if it's just this city (i've moved recently) or if it's something broader
The average person is hit hard. at happy hour in the city, tons of white collar workers are bitching about two things inflation and layoffs
Inflation is only over if you manipulate the stats, the average person is absolutely reeling. Tiktok is full of videos of people asking how they are coping. Mommy net is the exact same, with people asking for diaper donations at a pace I've never seen before. I've been blessed to work in tech, so I've been donating a couple hundred bucks of diapers!
Trying to guess economic sentiment from TikTok is not a good idea.
You are extremely out of touch. The real world has confounding variables beyond the ones captured in your wrong model.