10 ms·

A key inflation measure rose to a 39-year high last month

109 points by pezzana 5y ago

melling 5y ago
Where do people find good discussions about the economy, investing, etc? Anyone taking a deeper dive into the Fed, global markets, QE, China, etc Btw, this was an interesting read: https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-supply-shock-and-its-everywhere https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-...
- Nick87633 5y ago
  There is a lot of chaff but I find it here on HN, reddit (personal finance, investing, wall street bets, quality convos in other random subs), and a limited number of posters on Twitter (probably my least favorite place, bleh).
- jonnycomputer 5y ago
  https://www.calculatedriskblog.com/ https://www.calculatedriskblog.com/ https://econbrowser.com/ https://econbrowser.com/
- nprz 5y ago
  Lyn Alden probably has some of the best commentary on the current state of the US economy. Would highly recommend checking out her blog if you're looking to learn more: https://www.lynalden.com/ https://www.lynalden.com/
bko 5y ago
From WSJ article: > Unlike in past recoveries, strong demand for goods such as autos, furniture and appliances has driven much of the inflation surge. Prices for services—such as for travel and recreation—have generally climbed much less with softer demand. The holiday season is likely exacerbating these dynamics, said Aneta Markowska, chief financial economist at Jefferies LLC. We're seeing crazy price growth without a rise in demand for services. But that'll likely change and fuel inflation further as covid restrictions are lifted. I still believe it is due to the large money printing by the Fed, a total of around 10 trillion disbursed for various programs. We saw inflation in nearly every asset class in our economy, blowing past pre-covid numbers, and now its coming to consumer prices. I just hope we have the political will to do something about it. Unemployment is very low and the Fed is still dragging their feet about maybe 1 or 2 potential raises next year and a slow unwinding of the trillions in assets its built up over the last year
- redwood 5y ago
  Aligns with https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-supply-shock-and-its-everywhere https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-...
- redwood 5y ago
  You could argue we've been engaging in a massive scale basic income for all Experiment!
- jyounker 5y ago
  > I still believe it is due to the large money printing by the Fed, a total of around 10 trillion disbursed for various programs. W If the Fed's policy was responsible, then we'd see a divergence between inflation rates in European countries and the US. We don't though. European inflation rates (across the board) closely track what's happening in the US. What we do see is a similar demand reallocation in both portions of the world. Demand has shifted from services to goods, and that increased demand drives inflation.
XIVMagnus 5y ago
I would love to understand why the fed hasn't increased interest rates to counter the rapid increase of inflation..? I remember learning some basic economics in 2019 about how the U.S. learned a valuable lesson from 2008. How they will never make the same mistakes of letting inflation go unchecked because they have tools to work against it. Yet inflation has rapidly scaled to 6.8% (reported). Also, I am keeping supply chain demand in mind but I don't think it excuses the fed's decision to not immediately start curbing high inflation rates. My guess is that people with money are profiting and want to continue profiting until it is no longer sustainable.
- anm89 5y ago
  Because half of US companies and the US government itself as long as basically every pension and retirement fund are levered up either directly or indirectly to their eyeballs in cheap debt. Our entire system would quickly be insolvent at a rate that would have seemed low 20 years ago.
- myth_drannon 5y ago
  Housing and Stock market bubbles will implode.
  - voxadam 5y ago
    If they're bubbles aren't they going to implode regardless?
    - xwdv 5y ago
      Bubbles don’t have to implode. They can just reach a point where there’s a long consolidation and things are sideways until reality fully rationalizes the bubble and it shrinks. This happens all the time with stocks. A stock could get very bubbly and reach an insane valuation to the point people think it will pop! But then it never does, instead it just stops rising and the underlying company eventually catches up to the valuation, until people think it’s a good buy again and start pumping the price even higher to the next leg up. Eventually the stock can never truly pop and go back to the pre-bubble levels because in the time that has passed the company actually did become more valuable.
pjc50 5y ago
> Consumer price inflation rose by 6.8% without seasonal adjustments over the 12 months ended November, the Bureau of Labor Statistics reported Friday. > Stripping out food and energy, the prices of which tend to be more volatile, inflation rose 4.9% over the same period — the highest level since June 1991. This is high by recent standards but not too bad by 20th century standards. And at least this time wage inflation is happening as well. > Several categories saw significant price increases. Gas prices jumped 58.1% over the year ending in November, the biggest jump since April 1980. .. ah. Yeah, this is much more significant. Oil is up too: WTI about $40 at the end of last year to $70-80. As lots of places have found out, fossil fuels are cheap until they aren't. High oil prices are quite capable of causing inflation on their own.
- woodruffw 5y ago
  The YoY metric for oil is slightly misleading, due to the chaos that was 2020's market[1]. It was at 59.22 on this day in 2019, and now it's at 69.62. That's a significant increase, but it's not the eye-popping 2x jump that the YoY number suggests. Gas prices, on the other hand, are surprisingly divergent[2]. [1]: https://fred.stlouisfed.org/series/DCOILWTICO https://fred.stlouisfed.org/series/DCOILWTICO [2]: https://fred.stlouisfed.org/series/GASREGW https://fred.stlouisfed.org/series/GASREGW
mercy_dude 5y ago
For all the people in the “transitory camp” here are a few things I would like you to reconsider: - “underlying supply chain will go back normal” well the way I see it the container owners and everyone downstream have no incentives for doing so. [1] - China is facing water crisis among many other issues from energy crisis as well. If the main supplier of US faces crisis it will likely affect US as well. [2] - and many actually don’t understand this, Fed actually has incentives to get inflation. For many years they spent time to get inflation and recently even accepted they will let it run beyond the benchmark 2%. Part of the argument is Fed currently has no leverage or tools left in an economic downturn given the amount of debt in the balance sheet. A mere 5% raise in interest rate would require interest payment equivalent of another US army. So rate hikes of any substantial measure is out of question without bankrupting US. The easiest way is to inflate the 40 trillion debt away like they did post war in the 40s. [3] [1] https://medium.com/@ryan79z28/im-a-twenty-year-truck-driver-i-will-tell-you-why-america-s-shipping-crisis-will-not-end-bbe0ebac6a91 https://medium.com/@ryan79z28/im-a-twenty-year-truck-driver-... [2] https://thehill.com/opinion/energy-environment/584266-american-supply-chains-face-a-dire-threat-from-chinas-water https://thehill.com/opinion/energy-environment/584266-americ... [3] https://www.lynalden.com/inflation/ https://www.lynalden.com/inflation/
- SubiculumCode 5y ago
  Post war was a pretty good time for Americans. Bring it on.
  - mercy_dude 5y ago
    Except US has also hollowed out manufacturing becoming increasingly dependent on rival China (even for defence equipments), has been increasingly losing its sphere of influence (both soft and hard - ask anyone in Africa who wields its soft power there China or US; or look at the Afghanistan fallout), and there is very little bipartisanship left while everyone is busy fighting cultural war. One can hope at least de globalization is a partial outcome of this post covid realignment if ever one.
    - 5y ago
laurensr 5y ago
I'm not an economic expert, but the rate at which new money was created in 2020 & 2021 is frightening: https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL
- kbaker 5y ago
  That M1 discontinuity at least has an explanation: https://fredblog.stlouisfed.org/2021/05/savings-are-now-more-liquid-and-part-of-m1-money/ https://fredblog.stlouisfed.org/2021/05/savings-are-now-more... Still a lot of money being printed, but not 10s of Trillions.
- merpnderp 5y ago
  Maybe 1/4th of that is regulation changes on m1 versus m2 holdings, so just banks moving money around. But yes, they printed a crap ton of money.
csours 5y ago
Inflation has been lower and more consistent over the last 39 years (and especially over the last 20 years) than any time in history. If you live in the United States and you're my age or younger, you haven't had to worry about inflation for your whole adult working life. This doesn't make today's inflation acceptable, it just lets you know how much importance has been put on handling inflation up until now.
- SubiculumCode 5y ago
  Well, I'd argue that inflation has been kept too low, placing burdens on debt-holders and lowering growth, which in my view contributed to the decimation of the middle class.
  - csours 5y ago
    I'm not qualified to assess that, but I do think that it's hard to balance the needs of wealthy people and wall street with the needs of main street; it's even harder if you don't try to do that balance
- nathias 5y ago
  that's isn't saying much as the current monetary system only exists for 50 years
- dnautics 5y ago
  you haven't been poor, have you? I have been, and I definitely worried about inflation. In the early aughts ratcheting prices really fucked me over on a 26k salary.
  - csours 5y ago
    I haven't been poor as an adult. I was definitely poor as a child. Inflation is different things to different people, just like unemployment numbers are different things to different people and communities. Unemployment may be low, but if you don't have a job, that doesn't matter. Yes, the top line inflation number can be very misleading for individual experiences.
bryanlarsen 5y ago
The Fed had to choose between inflation and recession. They chose inflation, and made the right choice.
- ephbit 5y ago
  In times when many (if not most) human deeds are far from being carbon neutral and humanity is in dire need to reduce its footprint, maybe a recession (or more positively coined "degrowth") wouldn't be such a bad thing.
- kickout 5y ago
  Care to explain why a recession is a better choice to inflation?
  - kahrl 5y ago
    He literally said the opposite.
- TedShiller 5y ago
  They made a decision but it’s not the right decision
  - bryanlarsen 5y ago
    You'd rather have a recession than inflation? Are you a pensioner? That's the only group that I think would benefit in that scenario.
    - deburo 5y ago
      A recession caused by the government stopping corporate activities. As soon as the restrictions would have been relaxed for good (and I think we can say that we're finally in the clear, even tough Omicron worries (I personally think it will be similar to Delta)), the economy would've restarted just as well.
bitshiftfaced 5y ago
Check out the median CPI growth compared to long term trends: https://fred.stlouisfed.org/series/MEDCPIM158SFRBCLE https://fred.stlouisfed.org/series/MEDCPIM158SFRBCLE
mcs5280 5y ago
The fed has chosen to bleed the poor and middle class to keep the government spending, housing and stock market bubbles going.
- SubiculumCode 5y ago
  This is the opposite of what is happening. There has been a massive transfer of wealth and income to the middle and lower classes at a rate that exceeds inflation, and that I hope will lead to sustained growth of the middle class.
  - Supermancho 5y ago
    > This is the opposite of what is happening. This is exactly what is happening. The motivations may be partly^ different, but the result is one of the wealth inequality gap growing. ^I'm not sure how it could be incidental, given the obvious consequences.
acd 5y ago
Central banks has caused the inflation by lowering interest rate and creating record amounts of new debt.
bhelkey 5y ago
> a key measure of inflation climbed to a level not seen since June 1982. Am I missing something in the article? Which key measure? The only other time 1982 is measured in this article is the following: > Food prices in restaurants jumped 5.8%, the biggest rise since January 1982.

109 points by pezzana 5y ago

Where do people find good discussions about the economy, investing, etc? Anyone taking a deeper dive into the Fed, global markets, QE, China, etc Btw, this was an interesting read: https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-supply-shock-and-its-everywhere https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-...

Nick87633 5y ago
There is a lot of chaff but I find it here on HN, reddit (personal finance, investing, wall street bets, quality convos in other random subs), and a limited number of posters on Twitter (probably my least favorite place, bleh).
jonnycomputer 5y ago
https://www.calculatedriskblog.com/ https://www.calculatedriskblog.com/ https://econbrowser.com/ https://econbrowser.com/
nprz 5y ago
Lyn Alden probably has some of the best commentary on the current state of the US economy. Would highly recommend checking out her blog if you're looking to learn more: https://www.lynalden.com/ https://www.lynalden.com/

bko 5y ago

From WSJ article: > Unlike in past recoveries, strong demand for goods such as autos, furniture and appliances has driven much of the inflation surge. Prices for services—such as for travel and recreation—have generally climbed much less with softer demand. The holiday season is likely exacerbating these dynamics, said Aneta Markowska, chief financial economist at Jefferies LLC. We're seeing crazy price growth without a rise in demand for services. But that'll likely change and fuel inflation further as covid restrictions are lifted. I still believe it is due to the large money printing by the Fed, a total of around 10 trillion disbursed for various programs. We saw inflation in nearly every asset class in our economy, blowing past pre-covid numbers, and now its coming to consumer prices. I just hope we have the political will to do something about it. Unemployment is very low and the Fed is still dragging their feet about maybe 1 or 2 potential raises next year and a slow unwinding of the trillions in assets its built up over the last year

redwood 5y ago
Aligns with https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-supply-shock-and-its-everywhere https://www.bridgewater.com/its-mostly-a-demand-shock-not-a-...
redwood 5y ago
You could argue we've been engaging in a massive scale basic income for all Experiment!
jyounker 5y ago
> I still believe it is due to the large money printing by the Fed, a total of around 10 trillion disbursed for various programs. W If the Fed's policy was responsible, then we'd see a divergence between inflation rates in European countries and the US. We don't though. European inflation rates (across the board) closely track what's happening in the US. What we do see is a similar demand reallocation in both portions of the world. Demand has shifted from services to goods, and that increased demand drives inflation.

XIVMagnus 5y ago

I would love to understand why the fed hasn't increased interest rates to counter the rapid increase of inflation..? I remember learning some basic economics in 2019 about how the U.S. learned a valuable lesson from 2008. How they will never make the same mistakes of letting inflation go unchecked because they have tools to work against it. Yet inflation has rapidly scaled to 6.8% (reported). Also, I am keeping supply chain demand in mind but I don't think it excuses the fed's decision to not immediately start curbing high inflation rates. My guess is that people with money are profiting and want to continue profiting until it is no longer sustainable.

anm89 5y ago
Because half of US companies and the US government itself as long as basically every pension and retirement fund are levered up either directly or indirectly to their eyeballs in cheap debt. Our entire system would quickly be insolvent at a rate that would have seemed low 20 years ago.
myth_drannon 5y ago
Housing and Stock market bubbles will implode.
- voxadam 5y ago
  If they're bubbles aren't they going to implode regardless?
  - xwdv 5y ago
    Bubbles don’t have to implode. They can just reach a point where there’s a long consolidation and things are sideways until reality fully rationalizes the bubble and it shrinks. This happens all the time with stocks. A stock could get very bubbly and reach an insane valuation to the point people think it will pop! But then it never does, instead it just stops rising and the underlying company eventually catches up to the valuation, until people think it’s a good buy again and start pumping the price even higher to the next leg up. Eventually the stock can never truly pop and go back to the pre-bubble levels because in the time that has passed the company actually did become more valuable.

pjc50 5y ago

> Consumer price inflation rose by 6.8% without seasonal adjustments over the 12 months ended November, the Bureau of Labor Statistics reported Friday. > Stripping out food and energy, the prices of which tend to be more volatile, inflation rose 4.9% over the same period — the highest level since June 1991. This is high by recent standards but not too bad by 20th century standards. And at least this time wage inflation is happening as well. > Several categories saw significant price increases. Gas prices jumped 58.1% over the year ending in November, the biggest jump since April 1980. .. ah. Yeah, this is much more significant. Oil is up too: WTI about $40 at the end of last year to $70-80. As lots of places have found out, fossil fuels are cheap until they aren't. High oil prices are quite capable of causing inflation on their own.

woodruffw 5y ago
The YoY metric for oil is slightly misleading, due to the chaos that was 2020's market[1]. It was at 59.22 on this day in 2019, and now it's at 69.62. That's a significant increase, but it's not the eye-popping 2x jump that the YoY number suggests. Gas prices, on the other hand, are surprisingly divergent[2]. [1]: https://fred.stlouisfed.org/series/DCOILWTICO https://fred.stlouisfed.org/series/DCOILWTICO [2]: https://fred.stlouisfed.org/series/GASREGW https://fred.stlouisfed.org/series/GASREGW

mercy_dude 5y ago

For all the people in the “transitory camp” here are a few things I would like you to reconsider: - “underlying supply chain will go back normal” well the way I see it the container owners and everyone downstream have no incentives for doing so. [1] - China is facing water crisis among many other issues from energy crisis as well. If the main supplier of US faces crisis it will likely affect US as well. [2] - and many actually don’t understand this, Fed actually has incentives to get inflation. For many years they spent time to get inflation and recently even accepted they will let it run beyond the benchmark 2%. Part of the argument is Fed currently has no leverage or tools left in an economic downturn given the amount of debt in the balance sheet. A mere 5% raise in interest rate would require interest payment equivalent of another US army. So rate hikes of any substantial measure is out of question without bankrupting US. The easiest way is to inflate the 40 trillion debt away like they did post war in the 40s. [3] [1] https://medium.com/@ryan79z28/im-a-twenty-year-truck-driver-i-will-tell-you-why-america-s-shipping-crisis-will-not-end-bbe0ebac6a91 https://medium.com/@ryan79z28/im-a-twenty-year-truck-driver-... [2] https://thehill.com/opinion/energy-environment/584266-american-supply-chains-face-a-dire-threat-from-chinas-water https://thehill.com/opinion/energy-environment/584266-americ... [3] https://www.lynalden.com/inflation/ https://www.lynalden.com/inflation/

SubiculumCode 5y ago
Post war was a pretty good time for Americans. Bring it on.
- mercy_dude 5y ago
  Except US has also hollowed out manufacturing becoming increasingly dependent on rival China (even for defence equipments), has been increasingly losing its sphere of influence (both soft and hard - ask anyone in Africa who wields its soft power there China or US; or look at the Afghanistan fallout), and there is very little bipartisanship left while everyone is busy fighting cultural war. One can hope at least de globalization is a partial outcome of this post covid realignment if ever one.
  - 5y ago

laurensr 5y ago

I'm not an economic expert, but the rate at which new money was created in 2020 & 2021 is frightening: https://fred.stlouisfed.org/series/M1SL https://fred.stlouisfed.org/series/M1SL

kbaker 5y ago
That M1 discontinuity at least has an explanation: https://fredblog.stlouisfed.org/2021/05/savings-are-now-more-liquid-and-part-of-m1-money/ https://fredblog.stlouisfed.org/2021/05/savings-are-now-more... Still a lot of money being printed, but not 10s of Trillions.
merpnderp 5y ago
Maybe 1/4th of that is regulation changes on m1 versus m2 holdings, so just banks moving money around. But yes, they printed a crap ton of money.

csours 5y ago

Inflation has been lower and more consistent over the last 39 years (and especially over the last 20 years) than any time in history. If you live in the United States and you're my age or younger, you haven't had to worry about inflation for your whole adult working life. This doesn't make today's inflation acceptable, it just lets you know how much importance has been put on handling inflation up until now.

SubiculumCode 5y ago
Well, I'd argue that inflation has been kept too low, placing burdens on debt-holders and lowering growth, which in my view contributed to the decimation of the middle class.
- csours 5y ago
  I'm not qualified to assess that, but I do think that it's hard to balance the needs of wealthy people and wall street with the needs of main street; it's even harder if you don't try to do that balance
nathias 5y ago
that's isn't saying much as the current monetary system only exists for 50 years
dnautics 5y ago
you haven't been poor, have you? I have been, and I definitely worried about inflation. In the early aughts ratcheting prices really fucked me over on a 26k salary.
- csours 5y ago
  I haven't been poor as an adult. I was definitely poor as a child. Inflation is different things to different people, just like unemployment numbers are different things to different people and communities. Unemployment may be low, but if you don't have a job, that doesn't matter. Yes, the top line inflation number can be very misleading for individual experiences.

bryanlarsen 5y ago

The Fed had to choose between inflation and recession. They chose inflation, and made the right choice.

ephbit 5y ago
In times when many (if not most) human deeds are far from being carbon neutral and humanity is in dire need to reduce its footprint, maybe a recession (or more positively coined "degrowth") wouldn't be such a bad thing.
kickout 5y ago
Care to explain why a recession is a better choice to inflation?
- kahrl 5y ago
  He literally said the opposite.
TedShiller 5y ago
They made a decision but it’s not the right decision
- bryanlarsen 5y ago
  You'd rather have a recession than inflation? Are you a pensioner? That's the only group that I think would benefit in that scenario.
  - deburo 5y ago
    A recession caused by the government stopping corporate activities. As soon as the restrictions would have been relaxed for good (and I think we can say that we're finally in the clear, even tough Omicron worries (I personally think it will be similar to Delta)), the economy would've restarted just as well.

bitshiftfaced 5y ago

Check out the median CPI growth compared to long term trends: https://fred.stlouisfed.org/series/MEDCPIM158SFRBCLE https://fred.stlouisfed.org/series/MEDCPIM158SFRBCLE

mcs5280 5y ago

The fed has chosen to bleed the poor and middle class to keep the government spending, housing and stock market bubbles going.

SubiculumCode 5y ago
This is the opposite of what is happening. There has been a massive transfer of wealth and income to the middle and lower classes at a rate that exceeds inflation, and that I hope will lead to sustained growth of the middle class.
- Supermancho 5y ago
  > This is the opposite of what is happening. This is exactly what is happening. The motivations may be partly^ different, but the result is one of the wealth inequality gap growing. ^I'm not sure how it could be incidental, given the obvious consequences.

acd 5y ago

Central banks has caused the inflation by lowering interest rate and creating record amounts of new debt.

bhelkey 5y ago

> a key measure of inflation climbed to a level not seen since June 1982. Am I missing something in the article? Which key measure? The only other time 1982 is measured in this article is the following: > Food prices in restaurants jumped 5.8%, the biggest rise since January 1982.