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The economic data (https://fred.stlouisfed.org/series/CPILFESL#0 https://fred.stlouisfed.org/series/CPILFESL#0 ) is showing deflation. The quantitative easing h

The economic data (https://fred.stlouisfed.org/series/CPILFESL#0 https://fred.stlouisfed.org/series/CPILFESL#0 ) is showing deflation. The quantitative easing has so far been deflationary. The Fed can lower interest rates, but it cannot make people spend. People are unemployed and scared, they are not borrowing money, and it shows in the lending data as well (https://www.federalreserve.gov/releases/h8/current/default.htm https://www.federalreserve.gov/releases/h8/current/default.h...) where we can see falling numbers in consumer loans and credit cards. I think people have rushed into stocks because they think that that's the safe haven for their money against inflation as they think the Fed is "printing money" and causing inflation, but the data is showing deflation. If deflation continues, bonds would be the safer place to be.

landryraccoon 6y ago
I am speaking anecdotally here but.. Deflation? I can’t think of a single product that has gone down in price and numerous things are more expensive. In particular, virtually every single food item at the grocery store is more expensive than it was in March. Am I the only one who has experienced this? It seems like basic staples (milk, eggs, flour) are substantially more expensive than a few months ago.
- soared 6y ago
  Real prices lag behind deflation. Short term deflation is really only visible in market/financial metrics/prices. But your other point is probably more correct - supply/demand swings in the short term affect the prices you see more than deflation/inflation. Technically a gallon of milk should go up in price like 6-10 cents a year, which you might not notice.
- dman 6y ago
  You are correct - I moved and thought the store in the new area was a ripoff before realizing that food prices are up everywhere. I buy a fair amount of Indian groceries and the prices of many staples is up ~25-30%.
- ls612 6y ago
  Some food products have increased in price since the pandemic mostly due to production and distribution chain issues. However, the basic staples you mention are such a small proportion of the budgets of people that even a significant rise in their price won’t move the inflation needle much compared to other categories.
- guenthert 6y ago
  Oil/Gasoline went down in price early this year quite dramatically. This (as energy cost) is included with a heavy weight in the price index calculation.
  - coolspot 6y ago
    Not in Southern California. Regular costs $3.5/gal
- charwalker 6y ago
  You need to consider the whole basket that the CPI is based on including other factors like housing, utilities, and oil/gas. We probably won't see any specific store bought items drop in price but trends overall will reflect deflation. Part of that is the cash injection is not spread over just the US population but anyone that relies on the USD for transactions or backing their currency. Being the default currency has perks.
- thehappypm 6y ago
  I have experienced what you have -- food is about the same or more expensive than before. But the housing market has softened. Retail goods in stores are much cheaper. Clothing is incredibly cheap -- go to an outlet store and you'll see 50% sales everywhere.
  - pnutjam 6y ago
    How does housing costs help anyone? Nobody is moving if they can help it and costs are tied into long term contracts. I had a standard rent increase since my state allows them during the pandemic.
- luckylion 6y ago
  Plenty of products aren't lowering in price, but are getting you more quality for the same price, e.g. a faster CPU or more RAM in your smart phone. Economists consider that a price drop for the calculation of inflation. That's technically correct, though of course does not feel like it for many people. To the average consumer, a "phone that can play today's games" is the same measurement today as it is next year, and if prices don't change, they might not consider that "quality increase".
- raziel2701 6y ago
  Food and oil prices are volatile and can mask inflationary and deflationary periods, which is why I linked to the consumer price index minus food and energy as that is more accurate.

landryraccoon 6y ago

I am speaking anecdotally here but.. Deflation? I can’t think of a single product that has gone down in price and numerous things are more expensive. In particular, virtually every single food item at the grocery store is more expensive than it was in March. Am I the only one who has experienced this? It seems like basic staples (milk, eggs, flour) are substantially more expensive than a few months ago.

soared 6y ago
Real prices lag behind deflation. Short term deflation is really only visible in market/financial metrics/prices. But your other point is probably more correct - supply/demand swings in the short term affect the prices you see more than deflation/inflation. Technically a gallon of milk should go up in price like 6-10 cents a year, which you might not notice.
dman 6y ago
You are correct - I moved and thought the store in the new area was a ripoff before realizing that food prices are up everywhere. I buy a fair amount of Indian groceries and the prices of many staples is up ~25-30%.
ls612 6y ago
Some food products have increased in price since the pandemic mostly due to production and distribution chain issues. However, the basic staples you mention are such a small proportion of the budgets of people that even a significant rise in their price won’t move the inflation needle much compared to other categories.
guenthert 6y ago
Oil/Gasoline went down in price early this year quite dramatically. This (as energy cost) is included with a heavy weight in the price index calculation.
- coolspot 6y ago
  Not in Southern California. Regular costs $3.5/gal
charwalker 6y ago
You need to consider the whole basket that the CPI is based on including other factors like housing, utilities, and oil/gas. We probably won't see any specific store bought items drop in price but trends overall will reflect deflation. Part of that is the cash injection is not spread over just the US population but anyone that relies on the USD for transactions or backing their currency. Being the default currency has perks.
thehappypm 6y ago
I have experienced what you have -- food is about the same or more expensive than before. But the housing market has softened. Retail goods in stores are much cheaper. Clothing is incredibly cheap -- go to an outlet store and you'll see 50% sales everywhere.
- pnutjam 6y ago
  How does housing costs help anyone? Nobody is moving if they can help it and costs are tied into long term contracts. I had a standard rent increase since my state allows them during the pandemic.
luckylion 6y ago
Plenty of products aren't lowering in price, but are getting you more quality for the same price, e.g. a faster CPU or more RAM in your smart phone. Economists consider that a price drop for the calculation of inflation. That's technically correct, though of course does not feel like it for many people. To the average consumer, a "phone that can play today's games" is the same measurement today as it is next year, and if prices don't change, they might not consider that "quality increase".
raziel2701 6y ago
Food and oil prices are volatile and can mask inflationary and deflationary periods, which is why I linked to the consumer price index minus food and energy as that is more accurate.