Edit: for the doubters, the stock market is clearly pricing in inflation dropping, your current analysis doesnt take into account any data that hedge funds and investors are trading on
[1] https://fred.stlouisfed.org/series/UNDCON5MUSA [2] https://fred.stlouisfed.org/series/RRVRUSQ156N
lots of tech companies just have too many employees
it takes fewer people to maintain something than to build it...and arguably Netflix has saturated its markets
No, it means that the rate of price increases has slowed.
Some useful links from the Fed:
- Inflation calculator: https://data.bls.gov/cgi-bin/cpicalc.pl?cost1=1&year1=200001...
- Recent CPI Summary: https://www.bls.gov/news.release/cpi.nr0.htm
Yes, historically this is how it works. High inflation leads to higher prices which then settle, an higher salaries etc. lag but roughly catch up.
It's more useful to think of inflation as a rate of reduction of the value of money than as an increase in prices. Tools like the CPI baskets are attempts to find a measure of the "real" loss of value, but this is inherently flawed. Tools to affect it (e.g. federal rates, QE, etc.) are inherently ham-fisted and only indirectly coupled to the economic drivers of inflation, so also flawed. Companies take advantage of the variability to be more aggressive with price experiments, etc., etc. - so it's complicated.
And so it goes.
So if your COGS are shifting you have to respond to that, but in most cases price variability is going to cause you problems (e.g. you aren't a financial market, you are selling goods) and your competitors movements are also, so you are trying to strike a balance. And maybe you are bit greedy and see an opportunity in the variability to end user, but maybe you are more worried about collapsing margin.
> And maybe you are bit greedy and see an opportunity in the variability to end user, but maybe you are more worried about collapsing margin.
"And maybe you are bit greedy" -- https://www.cbsnews.com/news/retail-price-gouging-lowes-amaz....
And this "profit" is a number derived from an price that is set to attain some difference that is "allowed by the market". Greed is baked in always, else a business cannot continue; but the smoke-screen of inflation is what is discomforting.
I guess I'm objecting to "arbitrary" rather than "how markets work".
I think we are both agreeing that there are parts of e.g. consumer grocery store prices that are inherently inflation driven (and unlikely to go down) and parts that may be opportunistic or defensive (and might) but the key think is literally nobody actually knows how to separate that cleanly. There is some hope that competition will drive out some of the additional price increase over time relative to actual value, but usually the way this happens is by letting inflation eat it, not actually re-pricing lower. We will see, but until then we'll see reports like you've linked, and others claiming otherwise, and not really know until the dust settles.
Consumers must have reduced purchases but companies don't want to backtrack on the price, thus they're always on sale without actually bringing down the base price.
I wonder if that affects inflation measurements as I don't know if the inflation basket is calculated based on individually marked prices or actual consumer spending.