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Consumer prices increase 2.6 percent
- markus_zhang 5y agoWell, they finally got what they wanted. Inflation, more inflation!
- vkou 5y agoI think what they wanted is for the economy to not implode, with millions of people either dead to the virus, or newly homeless because they are broke.
- CameronNemo 5y agoThen they should have built a better safety net. Monetary policy just leads to consumer or asset price inflation, and the legislature did a very poor job with fiscal stimulus when it was most necessary (early in the pandemic). They just wrote blank checks to businesses and people. They could have done so much more (expanded SNAP benefits or more incentives for first time homebuyers, for example). Instead wealth inequality is higher than it was before the stimulus.
- danhak 5y agoCould you please expand on how keeping interest rates artificially depressed, causing the prices of homes to skyrocket, advances the goal of preventing homelessness?
- AnimalMuppet 5y agoThe price of homes skyrockets. The interest on loans craters. The monthly payments stay the same. This is because the demand curve on buying houses is sensitive to the monthly payment, not the total price. So it all evens out... ... until you need the down payment. Then the higher prices/lower interest rates combo locks people out. It especially locks out first-time buyers.
- vkou 5y agoYou don't become homeless when you can't afford to buy a house. You become homeless when you can't afford rent (or your regular fixed-rate mortgage payment). Rent is largely divorced [1] from house prices, and is largely driven by the amount of money people have after they get their paycheck, and subtract bills, gas and groceries from it. In a tight market, your landlord will take everything that's left from you. In a loose market, your landlord will only be able to charge you maintenance + his mortgage interest payments. The best way to create a lot of homeless people really quickly is to have renters stop going to work, causing them to miss rent payments. The various stimulus and unemployment benefits cause some amount of main street inflation (increases in the cost of a basket of goods), but have also kept people in their apartments. [1] Home prices in many metro areas are skyrocketing at the moment, but rents are falling.
- minhazm 5y ago2.6% is not particularly high. In Jan 2020 it was 2.5%, and in May 2018 to August 2018 it was a range of 2.7% to 2.9%.
- throw0101a 5y agoAnd in the 1990s the US was regularly hitting 3%: * https://fred.stlouisfed.org/series/FPCPITOTLZGUSA https://fred.stlouisfed.org/series/FPCPITOTLZGUSA
- notyourday 5y agoAnyone who has been to a supermarket in the last 12 months knows that the 2.6 percent increase in consumer prices is observably not true. I buy the same basket of the generic products ( chicken quarters, produce, beef, eggs, bacon, dairy products ) . Compared to this time in 2020 I'm spending at least 20% more. People who buy processed food(s) are spending at least 30% more.
- jrsj 5y agoSomehow everyone seems has this experience, rents have continued to climb at a high rate for the last decade, and they manage to downplay this in statistics.
- asquabventured 5y agoThe "basket of goods" they use to measure inflation is purposefully gamed to under represent purchases everyone makes weekly that are "volatile". But good news is that DVD players are cheaper than ever so inflation must be low!
- AnotherGoodName 5y agoFuel, which isn't purchased as often since the pandemic started has maintained its CPI weighting and has gone down dramatically however. Inflation is one of those things where if it's clearly stated as being extremely high can risk a lot of followon effects as everyone divests themselves of any direct monetary assets.
- drewcon 5y agoCare to cite evidence of this conspiracy?
- chrischen 5y agoOr maybe everyone who has been having this experience is posting about it, because otherwise there's nothing to post about.
- nostromo 5y agoSome non-CPI items like cars (new and used) and basic commodities like lumber have grown a lot more than 2.6%. Correction: CPI does include new and used car prices, after a lot of adjustments, at 3.7% and 2.5%, respectively. It's important to note though that the median cost of cars sold has grown much faster than the CPI car numbers. This is because the BLS tries to account for car quality, so even though you're paying much more for a car, they can say car prices "per value" are flat.
- deleted 5y ago[deleted]
- rwcarlsen 5y agoYeah 2x4's are literally 4x what they were just over a year ago. And I couldn't find an architect to help me with my house this spring at any price.
- nostromo 5y agoLumber is so expensive now, I fear it's going to worsen the housing shortage and increase the cost of existing homes. I know a small developer trying to build townhouses and he's unable to source the lumber needed at any price.
- aeternum 5y agoThe issue is just a bottleneck at the sawmills, likely due to labor shortage or covid restrictions. There's still an oversupply of trees, and (unfortunately) tree farmers have not seen any increase in price for the raw lumber. Similar things happened with the meat processing plants and food/vegetable packaging.
- lumost 5y agowhy is Lumber expensive? the only rationale I could think of is that housing construction has spiked due to low interest rates.
- scruple 5y ago
- throwawaysea 5y agoNote that Warren Buffet recently noted that his companies are seeing consistent increases in prices throughout the supply chain and will in turn need to raise prices: https://www.cnbc.com/2021/05/03/warren-buffett-says-berkshire-hathaway-is-seeing-very-substantial-inflation-and-raising-prices.html https://www.cnbc.com/2021/05/03/warren-buffett-says-berkshir... Others are taking the risks of inflation much further. Stanley Druckenmiller noted that the current spending policy and fiscal policy of the US is threatening the Dollar's status as the world's reserve currency: https://www.cnbc.com/2021/05/11/stanley-druckenmiller-says-the-fed-is-endangering-the-dollars-global-reserve-status.html https://www.cnbc.com/2021/05/11/stanley-druckenmiller-says-t...
- throw0101a 5y ago> Note that Warren Buffet recently noted that his companies are seeing consistent increases in prices throughout the supply chain and will in turn need to raise prices: This is a known phenomenon: > Imagine an economy in which everyone expects inflation to be high for the foreseeable future (Americans of a certain age don’t have to imagine this; for a while, we lived in that economy). In such an economy, a company setting its prices for the next year will do so taking into account the likelihood that everyone else’s prices — the prices charged by competitors, the costs of raw materials, the wages offered by rival employers — will be going up over time. > Reflecting this expectation, companies will mark prices up relative to what they would have been if they didn’t expect future inflation — and by so doing, will feed the very inflation they fear. In other words, once expectations of sustained inflation are embedded in the economy, inflation becomes self-perpetuating — and bringing it down can be extremely difficult. That’s what makes stagflation — inflation despite high unemployment — possible. > The point, however, is that short-term fluctuations in volatile prices tell us little about whether stagflation is becoming a risk. That’s why Fed policy generally ignores the headline inflation rate and instead focuses on a measure that excludes food and energy prices. > So what’s going to happen in the months ahead? We’ll probably see a number of transitory price increases, not just because the economy is booming, but also because the lingering effects of the pandemic have produced some unusual disruptions — for example, a global shortage of shipping containers. * https://www.nytimes.com/2021/03/22/opinion/us-inflation-stimulus.html https://www.nytimes.com/2021/03/22/opinion/us-inflation-stim... * https://archive.is/Vxj5h https://archive.is/Vxj5h It can become dangerous (see 1970s), but economists have a decent understanding of it nowadays, and so can be factored into decision making.
- frankbreetz 5y agoThis seems inline with what the fed wanted/expected. They are considering this transitionairy inflation, which is temporary, so don't expect this to affect borrowing rates or bond buying. At least not yet.
- a-posteriori 5y agoIs the inflation rate transitory or is the price level fluctuation transitory? Makes a big difference...
- DylanBohlender 5y agoThe inflation rate is transitory. Price levels won't come back down unless we get transitory deflation of equal (or greater) magnitude.
- enos_feedler 5y agoWhich will happen because people will stop wanting things
- sonium 5y agoLooking at the chart 2.6 percent seem quite average, so what’s the big news?
- JohnJamesRambo 5y agoWell the prices I see around me are up a lot more than 2.6%. My latest sticker shock was at Lowe's.- https://imgur.com/a/9UoXNdk https://imgur.com/a/9UoXNdk
- nkozyra 5y agoThe Anecdotal Price Index is historically less accurate than CPI.
- JohnJamesRambo 5y agoOr has the CPI been fudging the numbers for a very long time? https://www.forbes.com/sites/perianneboring/2014/02/03/if-you-want-to-know-the-real-rate-of-inflation-dont-bother- https://www.forbes.com/sites/perianneboring/2014/02/03/if-yo... with-the-cpi/ And this article is 7 years old, I can't imagine Perianne's reaction to the current M2 money supply of 20 trillion, almost double the 10 trillion when she wrote it in 2014. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL Seems like yet another example of Goodhart's Law. "When a measure becomes a target, it ceases to be a good measure." I own many homes, I see their value go up much more than 2.6%. Yes anecdotal but it is very obvious to anyone that has tried to buy anything recently.
- prichino 5y agoOh lookie, someone has been calculating the numbers using the old methodology. We are much poorer than we thought. http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts
- throw0101a 5y ago
- novalis78 5y agoIt does make for a somber website visit, when one frequents the Chapwood Index and starts contemplating about all of it including the consequences for the poorest of the poor, who are trapped: https://www.reddit.com/r/PersonalFinanceCanada/comments/kr1kwb/chapwood_index_shows_129_inflation_for_last_5/ https://www.reddit.com/r/PersonalFinanceCanada/comments/kr1k... (the original site seems to be down at the moment)
- ajmurmann 5y agoDoesn't inflation affect wealthy people more, since any cash they have would go down in value? If it's true inflation income should go up with it.
- AnimalMuppet 5y agoIncome goes up after it. Inflation hits, and then later your income goes up. That hurts. The closer you are to the edge, the more it hurts.
- ffdhghggg 5y agoWealthy people do not own much cash. Wealthy people own assets. The poor also do not have much cash, they consume goods to live. Inflation increases the value of assets relative to consumption. Inflation increases the gap between the wealthy and the poor. Deflation reduces the value of assets and makes consumption more affordable. Deflation reduces the gap between the wealthy and the poor.
- throw0101a 5y ago> Chapwood Index This is complete and utter non-sense and engaging some simple math skills shows why: > But if we take away the outlier 2020 data points, the average real annual GDP growth from 2010-2019 was 2.3%. The inflation rate in that time averaged roughly 1.8% per year. > If you’re one of the conspiracy people who believe inflation has actually been running at 5-6% per year, that would assume the economy has been contracting by 1-3% per year over the past 10 years. > And if you’re a full tinfoil hat person who assumes inflation is actually 10-12% per year[fn2], that’s like saying we’ve been in a full-blown depression and the economy has lost 80% of its value. > This is absurd and patently false but that’s the claim you’re making if you really think inflation is this high. * https://awealthofcommonsense.com/2021/01/inflation-truthers/ https://awealthofcommonsense.com/2021/01/inflation-truthers/ [fn2] is a link to the Chapwood Index. If inflation is >10% as Chapwood claims, but growth was only 2-3%, then that would mean there was >7% deflation in real terms. If we had really deflation that big the economy would be collapsing à la the Great Depression. To repeat the key line: > And if you’re a full tinfoil hat person who assumes inflation is actually 10-12% per year, that’s like saying we’ve been in a full-blown depression and the economy has lost 80% of its value.
- mythrwy 5y agoThere are alternative (non governmental) calculations that put the increase much higher (if the 1990 calculation method was still used). http://www.shadowstats.com/alternate_data http://www.shadowstats.com/alternate_data
- 542458 5y agoThen why does GDP-deflator calculated inflation give essentially the same numbers as CPI inflation (and therefore different numbers than these folks)?
- whatever1 5y agoIs it really inflation or higher prices due to higher than normal demand? When the demand goes up the market clearing prices naturally increase (until more efficient suppliers join the game)
- ajmurmann 5y agoHigher prices due to demand outpacing supply is one of the three types of inflation. The other two being based on cost of production increasing and build-in (everyone expects it, so it becomes true).
- PEJOE 5y agoYes, if prices relax, then we will see the deflation reflected in the numbers. A shift of both demand and supply, resulting in increased prices, is one way inflation can happen. What is important in CPI inflation are the prices consumers pay. How that fits into bigger picture money supply * money velocity is a different conversation
- SubiculumCode 5y agoLooks like inflation is pretty average for historical March, a success considering what our economy could have looked like.
- u320 5y agoThis is the numbers for March. What's the point of posting a month old news? Especially as new numbers are posted tomorrow.
- sbelskie 5y agoYea this is confusing. I thought it was maybe published accidentally a day early but this is just last months stuff.
- KETpXDDzR 5y agoPerfectly related: The guide to inflation https://news.ycombinator.com/item?id=27099536 https://news.ycombinator.com/item?id=27099536 We don't see any big CPI increase caused by quantitative easing. Wealthy people don't increase their food quality/need. I assume there's some effect of stimulus checks since most of them went to the 90% poorest Americans. Without, we'd might even see deflation. What I took from that article is that inflation, as so many things in economics, is however you define it. I wonder what the outcome of the growing split between poor and rich will be.
- thepasswordis 5y agoIn other news, the chocolate ration has been increased to 25 grams! Great success! /s Anybody living in the world can tell you that consumer prices are up a lot, lot more than 2.6%. Look even at this very thread. Food prices are way up, lumber prices are way up, restaurant prices are way up, clothing costs are up. Lots of goods literally just seem unbuyable at this point. Even in my city (nowhere near the southeast) people are now lining up to buy gas, which is also at the highest price it has been in almost 8 years. Bullshit CPI is up 2.6%. Don't give me that propaganda number. God damnit stuff like that is so insulting. People, real actual human being are suffering right now. It's practically evil to put out obviously gaslighting bullshit statistics like this as if they're crazy to notice that literally everything in their life has gotten more expensive. "When a measure becomes a target, it ceases to be a good measure." Indeed.
- gruez 5y ago>Anybody living in the world can tell you that consumer prices are up a lot, lot more than 2.6%. Look even at this very thread. Food prices are way up, lumber prices are way up, restaurant prices are way up, clothing costs are up. who knew that if you cherrypick from a list of items rather than using a broad basket, you can get arbitrarily higher/lower averages?
- deleted 5y ago[deleted]
- chiefalchemist 5y agoYes and no. If these (e.g., food) are the things most people consume most of the time that's not cherry picking. Furthermore, consumer perception does matter. It does have impact - even if it's misperception. Gas is up. That's naturally going to increase cost of nearly everything that depends on that mode of transportation. Certainly, that's directly or indirectly just about everything.
- gruez 5y agoAll of that sounds like the availability heuristic in play. You buy groceries and fill up your car every week, but those two only make up 15.157% and 2.875% of the CPI respectively. If those went up 100% and everything stayed the same, you might conclude that inflation is 80-100%, even though the CPI would only be up 18%.
- hourislate 5y agoThey are doing everything they can to inflate. They have basically spent over 20 trillion in the last 2 decades fighting deflation and have little to show for it. The reckoning is coming and there is nothing they can do to stop it. Over half of employable Americans will be without work, corporations will require less and less people. Every industry and every corner of the economy will feel it. We are probably no more than a decade or two away from chaos if the Government doesn't take steps now to address the issue that Technology is eating the world.
- randomopining 5y agoYeah realistically most people will be worthless lol. Even myself as a mid-level Java engineer. They needed and need to invest heavily in education. Incentivize in-demand careers. Silly majors like gender studies, you pay your own way.
- throwaway9870 5y agoI have never seen anything like this in manufacturing. Steel prices are double if you can find it at all. Plastic molders are operating under force majeure due to TX weather a few months back. Electronic assembly parts are in short supply and some, such as STM32 processors are almost impossible to find (such as variant for brushless controllers). One wire forming vendor we have worked with for over 20yrs cancelled our POs and said they can't even discuss when they might be able to work with us again because they don't have labour or raw materials. The damage being done in manufacturing right now dwarfs anything from last year.
- simonblack 5y agoThe problem with printing money by governments is that every dollar printed means the value of that money is spread thinner and thinner. That means you need more of those thinner dollars to make up the value. It's like watering down the beer. You'll need to drink more glasses of that weaker beer to get the same effect. Every government gets away with printing money for a very short time, then the Zimbabwe Effect takes over. It will happen in the US just like it happened in the Confederacy. IIRC, in 1865 one silver dollar cost sixty paper dollars in exchange. In Germany in 1923, one wheelbarrow-load of Weimar Deutchmarks could buy you a loaf of bread.
- sbelskie 5y agoWhen will it happen?
- simonblack 5y agoLike the crack in the bridge over the Mississippi, the actual time can't be predicted. But that crack (amongst the thousands of other bridge problems) was certainly expected, and no surprise when it finally happened. A country is no different from a house. If you don't keep up the maintenance, things will definitely break sooner or later. The US's infrastructure has been lacking maintenance for decades. Many talk about the financial problems like the acrobat spinning lots of plates on sticks. He's having problems keeping them going, and those plates are getting wobblier and wobblier. If I have to make a prediction, I'd say in the next 5 years or so. So don't take on too much debt for you to handle, and start prepping for very difficult times.
- ameetgaitonde 5y agoThe key similarity in all those situations was a loss of productive capacity. The Confederate currency wasn't backed by any assets, so it lost value as their defeat became more likely. Apparently, it lost 20% of it's value after the battle of Gettysburg. Zimbabwe's government seized the land of white farmers and gave them to people who lacked farming knowledge and experience. Predictably, their output cratered, sparking the hyperinflationary spiral. Germany lost a huge amount of it's productive capabilities due to the Treaty of Versailles. Keynes wrote a fantastic book (The Economic Consequences of Peace) that lays the economic case for why the Treaty would be a disaster. Germany basically had much of its land, equipment, and other assets seized while also being saddled with significant war debts. They were effectively forced into hyperinflation by the structure of the treaty.