7 ms·

“The Labor Department’s data showed a 10% surge in the cost of used vehicles that accounted for more than a third of the increase in the overall CPI.”

m3kw9 5y ago
I hope people won’t attribute 100% of that as inflation. It rather due to supply issues.
- omalleyt 5y ago
  What factory makes used cars? It’s pretty hard to say there’s a “supply chain” for used vehicles
  - redm 5y ago
    The lack of new cars is driving up demand for used cars. Supply chain issues in new products increases used product value if demand is there.
  - ericabiz 5y ago
    New cars aren’t available due to chip shortages, which enhances demand for used cars. That being said, if you happen to have an extra car, now is probably the best time to sell it in recent history.
  - mywittyname 5y ago
    The USA needs to sell roughly 15 million new cars a year to maintain an adequate supply of used cars. Falling below that target will cause used car prices to rise in the following years.
    - mc32 5y ago
      Not necessarily. Cars that go out of circulation can be made road worthy, if demand for them is there. Having a supply of new cars means old second hand cars get retired even if they could be made just as road worthy as any other second hand cars.
  - oflannabhra 5y ago
    What happened 12 years ago? 2008 happened, and resulted in a decade of incredibly low new-vehicle output. Add in the Cash for Clunkers program, and used inventory levels are about as low as they’ve ever been. This is the same as the housing market, the result of a decade of underbuilding. Couple that with stimulus money making down payments easy, and low interest rates keeping monthly payments low, and you have a recipe for prices to take off like a rocket, from both ends of the supply-demand curve.
    - omalleyt 5y ago
      Right, that doesn't sound like a supply chain issue, that sounds like a decade of structural issues leading to a perfect setup for structural inflation
- mc32 5y ago
  Money supply issues? Pumping this much free money into the economy is going to cause prices to go up. We’re seeing labor prices go up. Whether minimum wage should be 12 or 15 is tangential. We’re seeing where people will not take a job unless it pays significantly more than the can draw from COVID benefits. Those pay premiums mean your groceries, coffee, fast food, then rent, then real estate, etc., etc., is going to cost more.
  - greedo 5y ago
    Did you see the article/comment from Chipotle's CEO about the impact of increasing wages? Going up to $15/hour would increase menu prices between 2-3%. Labor prices have been low forever. Businesses have been taking advantage of low labor costs for service jobs literally for decades, pocketing the profits while expecting the government to fill the gaps with welfare/SNAP/EITC etc. And a good portion of this labor segment has decided (after experiencing the COVID lockdowns) that they don't need to put up with crap wages for a crap job. I worked in the restaurant biz for over two decades, and it disgusts me how much it (and other service jobs) take advantage of employees. I was repeatedly told that every time the minimum wage went up, we'd have to lay off employees, or cut benefits etc. And every time, net income went up for every place I worked. It's just BS. https://www.restaurantdive.com/news/chipotle-cfo-15-minimum-wage-would-be-very-manageable-with-menu-price-h/598904/ https://www.restaurantdive.com/news/chipotle-cfo-15-minimum-...
- throwaway4good 5y ago
  It is. And we are in the middle of a global transition to electric vehicles which ultimately will be cheaper than gasoline powered ones.
- frankbreetz 5y ago
  Inflation is still inflation if it is caused by supply issues.
  - matthewdgreen 5y ago
    Yes but the treatment is potentially very different. Having the Fed use its blunt monetary tools to control a price increase might not make sense if that increase is caused by a specific supply-chain issue. “Inflation is still inflation” is like a doctor saying “a headache is still a headache” and ignoring the fact that one patient’s headache is caused by an operable brain tumor, while the other drank too much the night before.
- jerf 5y ago
  Inflation is a summary statistic, or, if you like, an effect rather than a cause. Though of course as it flows downstream it becomes a cause of the next round of effects. But still, fundamentally, it's an effect rather than a cause. All of the inflation has "reasons" behind it. That doesn't make it "not inflation".
- dv_dt 5y ago
  Unfortunately "Inflation from too much money chasing too few goods" is often in people's mind with only a focus on too much money, and rarely any thought to too few goods - especially when we know right now it's almost certainly to a huge degree temporary supply dips in goods - with waves of covid still rising in international supply, as well as the logistics of companies dropping production during pandemic (e.g. w/ automotive chips). It's also a metrics problem - you can see inflation increases which are easy to equate to units of money, but I don't think there's as universal an index of supply. Likely some industrial output index over time would better quantify how much inflation is pandemic disruption of supply, vs money supply. I predict it's mostly supply disruption.
neogodless 5y ago
I was considering selling my car 6 months ago, so I checked the KBB used car private party price/value, and it was around $12,500. That same report today says it is $15,500. (6 year old hatchback with top trim, very low mileage.)

m3kw9 5y ago

I hope people won’t attribute 100% of that as inflation. It rather due to supply issues.

omalleyt 5y ago
What factory makes used cars? It’s pretty hard to say there’s a “supply chain” for used vehicles
- redm 5y ago
  The lack of new cars is driving up demand for used cars. Supply chain issues in new products increases used product value if demand is there.
- ericabiz 5y ago
  New cars aren’t available due to chip shortages, which enhances demand for used cars. That being said, if you happen to have an extra car, now is probably the best time to sell it in recent history.
- mywittyname 5y ago
  The USA needs to sell roughly 15 million new cars a year to maintain an adequate supply of used cars. Falling below that target will cause used car prices to rise in the following years.
  - mc32 5y ago
    Not necessarily. Cars that go out of circulation can be made road worthy, if demand for them is there. Having a supply of new cars means old second hand cars get retired even if they could be made just as road worthy as any other second hand cars.
- oflannabhra 5y ago
  What happened 12 years ago? 2008 happened, and resulted in a decade of incredibly low new-vehicle output. Add in the Cash for Clunkers program, and used inventory levels are about as low as they’ve ever been. This is the same as the housing market, the result of a decade of underbuilding. Couple that with stimulus money making down payments easy, and low interest rates keeping monthly payments low, and you have a recipe for prices to take off like a rocket, from both ends of the supply-demand curve.
  - omalleyt 5y ago
    Right, that doesn't sound like a supply chain issue, that sounds like a decade of structural issues leading to a perfect setup for structural inflation
mc32 5y ago
Money supply issues? Pumping this much free money into the economy is going to cause prices to go up. We’re seeing labor prices go up. Whether minimum wage should be 12 or 15 is tangential. We’re seeing where people will not take a job unless it pays significantly more than the can draw from COVID benefits. Those pay premiums mean your groceries, coffee, fast food, then rent, then real estate, etc., etc., is going to cost more.
- greedo 5y ago
  Did you see the article/comment from Chipotle's CEO about the impact of increasing wages? Going up to $15/hour would increase menu prices between 2-3%. Labor prices have been low forever. Businesses have been taking advantage of low labor costs for service jobs literally for decades, pocketing the profits while expecting the government to fill the gaps with welfare/SNAP/EITC etc. And a good portion of this labor segment has decided (after experiencing the COVID lockdowns) that they don't need to put up with crap wages for a crap job. I worked in the restaurant biz for over two decades, and it disgusts me how much it (and other service jobs) take advantage of employees. I was repeatedly told that every time the minimum wage went up, we'd have to lay off employees, or cut benefits etc. And every time, net income went up for every place I worked. It's just BS. https://www.restaurantdive.com/news/chipotle-cfo-15-minimum-wage-would-be-very-manageable-with-menu-price-h/598904/ https://www.restaurantdive.com/news/chipotle-cfo-15-minimum-...
throwaway4good 5y ago
It is. And we are in the middle of a global transition to electric vehicles which ultimately will be cheaper than gasoline powered ones.
frankbreetz 5y ago
Inflation is still inflation if it is caused by supply issues.
- matthewdgreen 5y ago
  Yes but the treatment is potentially very different. Having the Fed use its blunt monetary tools to control a price increase might not make sense if that increase is caused by a specific supply-chain issue. “Inflation is still inflation” is like a doctor saying “a headache is still a headache” and ignoring the fact that one patient’s headache is caused by an operable brain tumor, while the other drank too much the night before.
jerf 5y ago
Inflation is a summary statistic, or, if you like, an effect rather than a cause. Though of course as it flows downstream it becomes a cause of the next round of effects. But still, fundamentally, it's an effect rather than a cause. All of the inflation has "reasons" behind it. That doesn't make it "not inflation".
dv_dt 5y ago
Unfortunately "Inflation from too much money chasing too few goods" is often in people's mind with only a focus on too much money, and rarely any thought to too few goods - especially when we know right now it's almost certainly to a huge degree temporary supply dips in goods - with waves of covid still rising in international supply, as well as the logistics of companies dropping production during pandemic (e.g. w/ automotive chips). It's also a metrics problem - you can see inflation increases which are easy to equate to units of money, but I don't think there's as universal an index of supply. Likely some industrial output index over time would better quantify how much inflation is pandemic disruption of supply, vs money supply. I predict it's mostly supply disruption.

neogodless 5y ago

I was considering selling my car 6 months ago, so I checked the KBB used car private party price/value, and it was around $12,500. That same report today says it is $15,500. (6 year old hatchback with top trim, very low mileage.)