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Sensationalized headlines during an extrodinary time in economic history. We've literally just come off the biggest DEFLATIONARY shock of our lifetimes (the pa
by arberx 5y ago
Sensationalized headlines during an extrodinary time in economic history.
We've literally just come off the biggest DEFLATIONARY shock of our lifetimes (the pandemic), of course you're going to see tailwinds the year after unprecidented stimulus and consumer demand.
I recommend people focus on the long term trends rather than looking at outliers to predict the future. You could very well argue wage inflation couteracts these effects, on top of supply chain shortages.
- malchow 5y agoDeflationary means prices going down, not demand going down. This inflation is real, and isn't just a COVID rebound. It's bad policies leasing to lack of business confidence leading to fear of the future. If you are posting here, odds are you work in software. Seek out some friends who work in hardware and ask them what they are seeing.
- xxpor 5y agoPrices did go down! Oil was negative last year.
- malchow 5y agoYes, you're right. I was only calling out that the parent poster incorrectly referred to the COVID related demand slump of 2020 as a deflationary period. It wasn't.
- arberx 5y agoIt wasn't deflationary because of the unprecedented stimulus. It would have been.
- colinmhayes 5y agoThe poster didn't refer to the demand slump as a deflationary period. They referred to the time period where prices decreased as a deflationary period.
- arberx 5y agoDemand went down during covid, prices absouletly went down as well. For hardware: Demand goes up, supply goes down, prices go up. Inflation, but not related to monetary policy.
- rattlesnakedave 5y ago>Demand goes up Do you think that free / easy money had anything to do with this?
- dragontamer 5y agoFor GPUs yes, but the free money was called Bitcoin and completely unrelated to fed policy.
- wyre 5y agoI think it has more to do with individuals not having their traditional outlets for spending money (dining, bars, travel, etc) and chose to invest in covid-safe hobbies causing huge demand.
- zionic 5y ago>prices absouletly went down as well. Where? On what? Prices everywhere stayed flat or increased.
- alphabettsy 5y agoAt the beginning of the pandemic lots of prices went down especially rents in major cities and travel.
- luciusdomitius 5y agoIs the very temporary covid deflation a bigger deflationary shock than The Great Contraction of the 1930s?
- angelzen 5y agoWe also literally printed trillions of dollars. What are the longterm trends in your opinion?
- luciusdomitius 5y agoThis is a very very good point. If the short-term effects are supply-side (including labour) crisis and massive resource misallocation, how is it going to get any better once demoralisation, loss of trust kick, etc in?
- lmilcin 5y ago> I recommend people focus on the long term trends rather than looking at outliers to predict the future. Both short and long term trends are important. Short term trends help us understand current situation that is different from what was happening maybe a year ago. If you only look at long terms you are blind to a lot of important processes.
- arberx 5y agoOutlier
- lmilcin 5y agoWell, you could say that current political situation in US is an outlier. Nothing to worry about, US has had a stable democracy for centuries, the recent data is just abnormal and can be ignored.
- arberx 5y agoIt's an outlier until it isn't. If the trend continues then you can argue for normality.
- lmilcin 5y agoSo I understand you say that general price increase is just a statistical fluke. A lot of business owners decided to increase their prices for no underlying, common reason? The fact is understanding the common underlying reason for the price increase is very valuable and that is why we measure short term inflation. Would you prefer the government wait now and ignored the situation until later when it is going to be more difficult to deal with it? I thought most people usually argue the other way and claim governments are too slow to react.
- xeromal 5y agoI figured it was related to COVID, but thanks for giving a few words to what it might be.
- mchusma 5y agoI have lots of data on home services, and can say with confidence they average a 20-40% increase since 2019 (they were pretty stable the prior 10 years). Housing is 20-50% more expensive since the same period. Labor costs have increased a ton. It's very hard to price as a business owner right now. I agree it's an odd year, but it's fairly clear that the Jan 2020 to Jan 2023 inflation will be materially higher in the US than any other 3 year period since the 70s. I think most likely it will land about 40% increase over that period.
- arberx 5y ago40% over a period of 3 years would be a annualized rate of ~13%. That would indeed be unprecedented, and highly highly unlikely. Remember housing isn't the only factor in CPI calculations. We're currently seeing ~6% annualized this year. Target goal of ~2-3%.
- lotsofpulp 5y ago> they were pretty stable the prior 10 years Prices in popular or economically booming areas were increasing for many years before the pandemic, at a greater rate than whatever national government statistics were claiming.
- zionic 5y ago>We've literally just come off the biggest DEFLATIONARY shock of our lifetimes Nothing about the pandemic was deflationary, money did not become more valuable at any time delta during the pandemic.
- howeyc 5y agoSure it did. You got more gas per dollar in your car last year than the year before/after.