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Some 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 pr

Some 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 ago
Yeah 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 ago
  Lumber 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 ago
    The 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 ago
    why is Lumber expensive? the only rationale I could think of is that housing construction has spiked due to low interest rates.
  - scruple 5y ago
    Some anecdata from a neighbor who works for Lennar... The Lennar Corporation is still buying up property with plans to develop "in the future" but they are not going to be moving forward with most of their development plans for this year and next. She is actually worried about losing her job in the next 6 months because of the way things are moving in that world.
- monksy 5y ago
  About those prices: https://www.youtube.com/watch?v=Ei14ks5ggGo https://www.youtube.com/watch?v=Ei14ks5ggGo That explains what's going on.
blsapologist42 5y ago
Cars are included in the CPI. Don't spread FUD. https://www.bls.gov/cpi/factsheets/new-vehicles.htm https://www.bls.gov/cpi/factsheets/new-vehicles.htm
- zaptheimpaler 5y ago
  https://www.epsilontheory.com/im-trying-to-understand-hedonic-adjustments/#.YJntUKIek98.twitter https://www.epsilontheory.com/im-trying-to-understand-hedoni... "A Honda Accord cost $12,000 in 1990 and it costs $25,000 now. A Mustang was $9,000 and now it’s $27,000. The BLS has new car prices close to unchanged over the past 30 years." Whatever you think of the validity of "hedonic adjustments", this is certainly not what I would expect when BLS reports car prices as unchanged during that period.
  - namdnay 5y ago
    I’d be wary of comparing models across such a long time period, car makers have a habit of gradually drifting up each model (because it’s hard to release a smaller/simpler model than the preceding one) To take a European example, a 1990s VW golf is smaller and slower than a 2020 polo.
  - ensignavenger 5y ago
    The Honda Accord of 1990 is a different class of vehicle than the Honda Accord of 2021. In 2021, there are other entry level vehicles that can be purchased for much less than an Accord.
    - MontyCarloHall 5y ago
      Indeed. A 2021 Accord is far superior to a 1990 Rolls Royce or other ultraluxury car in terms of amenities, engine power, quietness, build quality, etc. That’s not even mentioning the leaps and bounds in efficiency and safety. I’d argue cars have gotten effectively cheaper over the years, as they’ve dramatically improved in every respect. If you could still buy a 1990 Accord manufactured today, it would probably sell for a couple thousand dollars. Edit: as for the Mustang example in the grandparent post, that $27,000 Mustang of today outperforms entry-level Ferraris of 1990. A fully-spec’d $80,000 Mustang of today would outperform every Ferrari from 1990, including the F40, which sold for $400,000 in 1990 dollars (~$800k in today’s dollars). So if anything, the CPI doesn’t implement hedonic adjustments enough for cars.
snarf21 5y ago
The government has perverse incentives to keep it low and close to the same. The way the CPI is calculated has changed dozes of times in the last 30 years. Like you said, if you at food, healthcare, education, etc., they are up way more than 3% year over year.
- u320 5y ago
  > Like you said, if you at food, healthcare, education, etc., they are up way more than 3% year over year. That's how averages work
  - katmannthree 5y ago
    The greater point is that the cost of essentials has skyrocketed but the effect is hidden in official inflation metrics because they include a large number of nonessential items such as utility-adjusted television prices.
    - bcrosby95 5y ago
      Yeah, I can buy cheap 55 inch tvs for days. But my family's health insurance is still $36k/year (and regularly going up). I guess that can buy me about 75 55 inch tvs though, maybe I should spend it on that instead.
    - gruez 5y ago
      A large number perhaps, but the weight assigned to them is low. Food, housing, and transportation makes up 72.77% of the CPI, whereas televisions only make up 0.091% of the CPI.
  - deleted 5y ago
    [deleted]
prichino 5y ago
The inflation has been tampered with quite a bit over the years. It's how you explain how the avg American is much poorer than his parents. I.e. in real terms, as in being able to buy: quality food, quality car, quality house (what? renting? no, not the same) I like this website as it uses the older methodology which has been twice updated it seems: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts
- sbelskie 5y ago
  If those numbers were right coffee would be $25 a cup. I can understand thinking CPI understates things, but the math for average inflation of 6-10% for decades just doesn’t add up.
  - gruez 5y ago
    Not to mention that 6-10% inflation combined with 2-3% GDP growth would mean the economy is contracting by 3-5%.
- gruez 5y ago
  >quality car Ironic considering that the reason cars have gotten more expensive was because their quality increased. >quality house They've gotten bigger over the decades, better equipped, and the monthly payments have actually gone down https://awealthofcommonsense.com/2021/03/what-if-housing-prices-arent-as-high-as-they-appear/ https://awealthofcommonsense.com/2021/03/what-if-housing-pri...
  - deadbolt 5y ago
    I won't disagree with you that cars have increased in quality, but I don't believe homes have. Bigger isn't better. Better equipped? Sure, maybe. When I look at the new homes under construction today (or over the past few decades), they're shit. They have more floor space, and that's about all.
    - gruez 5y ago

deleted 5y ago

[deleted]

rwcarlsen 5y ago

Yeah 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 ago
Lumber 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 ago
  The 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 ago
  why is Lumber expensive? the only rationale I could think of is that housing construction has spiked due to low interest rates.
- scruple 5y ago
  Some anecdata from a neighbor who works for Lennar... The Lennar Corporation is still buying up property with plans to develop "in the future" but they are not going to be moving forward with most of their development plans for this year and next. She is actually worried about losing her job in the next 6 months because of the way things are moving in that world.
monksy 5y ago
About those prices: https://www.youtube.com/watch?v=Ei14ks5ggGo https://www.youtube.com/watch?v=Ei14ks5ggGo That explains what's going on.

blsapologist42 5y ago

Cars are included in the CPI. Don't spread FUD. https://www.bls.gov/cpi/factsheets/new-vehicles.htm https://www.bls.gov/cpi/factsheets/new-vehicles.htm

zaptheimpaler 5y ago
https://www.epsilontheory.com/im-trying-to-understand-hedonic-adjustments/#.YJntUKIek98.twitter https://www.epsilontheory.com/im-trying-to-understand-hedoni... "A Honda Accord cost $12,000 in 1990 and it costs $25,000 now. A Mustang was $9,000 and now it’s $27,000. The BLS has new car prices close to unchanged over the past 30 years." Whatever you think of the validity of "hedonic adjustments", this is certainly not what I would expect when BLS reports car prices as unchanged during that period.
- namdnay 5y ago
  I’d be wary of comparing models across such a long time period, car makers have a habit of gradually drifting up each model (because it’s hard to release a smaller/simpler model than the preceding one) To take a European example, a 1990s VW golf is smaller and slower than a 2020 polo.
- ensignavenger 5y ago
  The Honda Accord of 1990 is a different class of vehicle than the Honda Accord of 2021. In 2021, there are other entry level vehicles that can be purchased for much less than an Accord.
  - MontyCarloHall 5y ago
    Indeed. A 2021 Accord is far superior to a 1990 Rolls Royce or other ultraluxury car in terms of amenities, engine power, quietness, build quality, etc. That’s not even mentioning the leaps and bounds in efficiency and safety. I’d argue cars have gotten effectively cheaper over the years, as they’ve dramatically improved in every respect. If you could still buy a 1990 Accord manufactured today, it would probably sell for a couple thousand dollars. Edit: as for the Mustang example in the grandparent post, that $27,000 Mustang of today outperforms entry-level Ferraris of 1990. A fully-spec’d $80,000 Mustang of today would outperform every Ferrari from 1990, including the F40, which sold for $400,000 in 1990 dollars (~$800k in today’s dollars). So if anything, the CPI doesn’t implement hedonic adjustments enough for cars.

snarf21 5y ago

The government has perverse incentives to keep it low and close to the same. The way the CPI is calculated has changed dozes of times in the last 30 years. Like you said, if you at food, healthcare, education, etc., they are up way more than 3% year over year.

u320 5y ago
> Like you said, if you at food, healthcare, education, etc., they are up way more than 3% year over year. That's how averages work
- katmannthree 5y ago
  The greater point is that the cost of essentials has skyrocketed but the effect is hidden in official inflation metrics because they include a large number of nonessential items such as utility-adjusted television prices.
  - bcrosby95 5y ago
    Yeah, I can buy cheap 55 inch tvs for days. But my family's health insurance is still $36k/year (and regularly going up). I guess that can buy me about 75 55 inch tvs though, maybe I should spend it on that instead.
  - gruez 5y ago
    A large number perhaps, but the weight assigned to them is low. Food, housing, and transportation makes up 72.77% of the CPI, whereas televisions only make up 0.091% of the CPI.
- deleted 5y ago
  [deleted]

prichino 5y ago

The inflation has been tampered with quite a bit over the years. It's how you explain how the avg American is much poorer than his parents. I.e. in real terms, as in being able to buy: quality food, quality car, quality house (what? renting? no, not the same) I like this website as it uses the older methodology which has been twice updated it seems: http://www.shadowstats.com/alternate_data/inflation-charts http://www.shadowstats.com/alternate_data/inflation-charts

sbelskie 5y ago
If those numbers were right coffee would be $25 a cup. I can understand thinking CPI understates things, but the math for average inflation of 6-10% for decades just doesn’t add up.
- gruez 5y ago
  Not to mention that 6-10% inflation combined with 2-3% GDP growth would mean the economy is contracting by 3-5%.
gruez 5y ago
>quality car Ironic considering that the reason cars have gotten more expensive was because their quality increased. >quality house They've gotten bigger over the decades, better equipped, and the monthly payments have actually gone down https://awealthofcommonsense.com/2021/03/what-if-housing-prices-arent-as-high-as-they-appear/ https://awealthofcommonsense.com/2021/03/what-if-housing-pri...
- deadbolt 5y ago
  I won't disagree with you that cars have increased in quality, but I don't believe homes have. Bigger isn't better. Better equipped? Sure, maybe. When I look at the new homes under construction today (or over the past few decades), they're shit. They have more floor space, and that's about all.
  - gruez 5y ago