25 ms·

Inflation rises to 6.8% year over year

361 points by rsj_hn 5y ago

nathancahill 5y ago
Remember, if you're not getting a 5% raise, you're getting a pay cut. Applies to every year, but this year in particular.
- emerged 5y ago
  My response to not getting a raise has been to reduce my hours proportionally. Working backwards to maintain the same effective hourly rate. I make enough money already, so it ends up just giving me more free time.
game_the0ry 5y ago
Anecdote time. I live in NYC and went to CVS recently. Picked up the following: * 12 pack of Bounty paper towels * a box of Q-tips * contact lens solution * 6 pack of Smart Water Cost me over $50 bucks. This sucks.
- MerelyMortal 5y ago
  Two things: "cornerstore" prices, and overpriced water. (CVS isn't as expensive as convenience stores, but they aren't as cheap as grocery stores either.)
davidw 5y ago
Isn't a 'quick fix', but legalizing the production of various shapes and sizes of housing would help a lot of people, especially long term.
- dominotw 5y ago
  how will that quickly fix inflation ?
  - scoopertrooper 5y ago
    Inflation (especially asset inflation) is as much expectations about future price rises as it is anything else. If investors expect to a vast expansion of housing stock in 3 years, they'll start exiting the market today, to get ahead of it.
    - coding123 5y ago
      We should start taxing vacation, abnb, secondary empty homes at 100x the property tax rate. That would provide housing VERY quickly. Rental housing can be taxed at 10x UNLESS it is offered 10% below market rate.
    - hogFeast 5y ago
      The evidence for the expectations model has changed significantly over the past two years or so. Obviously, central banks are going to move slower given that expectations has been the consensus for two decades. But I think academics are realising (about seven years after markets realised) that central banks have a huge role in signalling and the consumers form their expectations about inflation based on the past (note: the last point is compatible with evidence for expectations when inflation is falling...in other words, if inflation was falling over your sample you would be unable to distinguish between an expectations-based theory and a moving average-based theory of inflation). Also, investors won't start exiting the market if they expect expansion in housing stock. Financial markets trend, they absorb information imperfectly, they overreact, and there is massive volatility as all this occurs. Indeed, there are some investors who base their investment strategy on the inability of markets to react to capital cycles (Marathon Asset Management have written books about this). Investors have different time scales, if the housing stock was going to expand then you would see capital pile into the sectors because people will chase that growth expecting to flip at a higher price at the top.
  - deleted 5y ago
    [deleted]
  - tenuousemphasis 5y ago
    They said it is NOT a quick fix.
- dragontamer 5y ago
  Shelter is .5% growth. Gasoline is like 5% per month. This is almost entirely an energy problem Gasoline up over 50% over the year, increasing delivery costs and the price of damn near everything else.
  - throwawaygh 5y ago
    This. The short term temporary solution is pressure on OPEC+ and jump-starting Shale (no small task). The long term permanent solution is EVs and massive investment in renewable base load power generation.
    - WanderPanda 5y ago
      Your long term part is quite inflationary as well. If it wouldn’t be more expensive everybody would already driving evs
      - toomuchtodo 5y ago
        EVs cost half the cost per mile as an internal combustion vehicle [1], even less as renewables generation increases driving down the price of power. EVs do have a higher upfront cost, but lower total cost of ownership. Issue green bonds to subsidize the capital cost for borrowers, and increase the tax on internal combustion vehicles sales. EV supply is currently manufacturing constrained; provide incentives to rapidly scale EV and battery manufacturing. [1] https://www.energy.gov/eere/vehicles/articles/fotw-1190-june-14-2021-battery-electric-vehicles-have-lower-scheduled https://www.energy.gov/eere/vehicles/articles/fotw-1190-june...
        throwawaygh 5y ago
        > EVs do have a higher upfront cost For now. Because they are new. But there's every reason to believe this is temporary. Electric cars are way simpler to manufacture. Far fewer moving parts. Literally.
        5y ago
- colechristensen 5y ago
  People that advocate this are advocating for lowering the quality of life. Long term it raises the price per square foot and makes it harder to have the space you want and need.
  - epistasis 5y ago
    Sorry, but that doesn't make any sense. More housing means less sqft per person? The chain of reasoning to get to that conclusion must be long, because it is certainly not obvious.
    - ryandrake 5y ago
      Almost all "moar housing" discussions, at least on HN, call for building medium-and-dense urban apartments, which tend to be smaller than average sizes of housing. You never hear YIMBY advocates calling for building more 3500 sq.ft. single family suburban or rural homes.
      - davidw 5y ago
        It's entirely possible to build large and dense. I knew a pretty wealthy guy in Padova whose family had an enormous home that all happened to be on the 2nd floor of a 4 story building.
      - spamizbad 5y ago
        I don't understand how my quality of life will improve if I go from my current 1500 sqft home to a 3500 sqft home. Living near shops, walking around town with my family and being able to ride my bike brings me more joy than a larger home office. I suppose if I had a larger family I would want more bedrooms. But we are done growing our family at this point - and mine is roughly the size of the median, so I don't see why we need to flood the market with homes that are too big.
        _Wintermute 5y ago
        Perhaps slightly off-topic, but as someone who has spent most of my time living in European cities these house sizes are just mind-blowing to me. 1500 sqft is 140 m^2, my first apartment was 30m^2. I can't imagine what you would put in a 3500 sqft (325 m^2) house, never mind something like answering the door if you were at the other side of your house.
- kiba 5y ago
  It would help a lot of people, but it also hurts a lot of people with mortgage. Liberalizing zoning and implementing LVT would help, but it would means massive structural change in our society. It's a true fix, but that true fix requires that we have important and difficult conversations about said structural changes.
  - davidw 5y ago
    It's not going to hurt owners that much, really, not those in it for the long haul. It's unlikely that in a liberalized market, all else being equal, prices would truly crater, as builders would pull back. You'd probably get something more like Germany has been, where prices are fairly stable and boring, rather than an exciting market to speculate in.
  - epistasis 5y ago
    People with mortgages have been making out like bandits for decades, and have recently locked in historically low interest rates that leverage their economic gains even further. This is a huge drain on the economic productivity of the younger generations, and anybody who was not able to afford to buy in to the scheme before the recent climbs. It's time to make housing behave at most like a savings account, rather than an investment account.
    - davidw 5y ago
      Exactly. > This is a huge drain on the economic productivity of the younger generations Economists have attempted to quantify the effects of this, and the numbers are huge: https://www.aeaweb.org/articles?id=10.1257/mac.20170388 https://www.aeaweb.org/articles?id=10.1257/mac.20170388
    - Marsymars 5y ago
      > People with mortgages have been making out like bandits for decades, and have recently locked in historically low interest rates that leverage their economic gains even further. Depends on jurisdiction. Canada's housing market has most of the same problems as the US's, but you can't really lock in low interest rates for longer than five years - so if you raise interest rates, you leave people five years from now underwater and having to renew for the next two decades at high rates.
- anm89 5y ago
  This isn't by a long shot a housing policy issue.
nikkinana 5y ago
Let's go brandon! I'll tell you what, Trump gave us big returns in our 401(k)'s, Biden is taking it all back. Remember that next time you get your 3% raise, it's not 3%, it's actually -4%
JavaBatman 5y ago
A lot of this is due to fuel prices. The price of fuel affects the price of everything else. It's a benchmark since everything requires fuel. Manufacturing, transportation, agriculture, etc. It all requires fuel. It doesn't help that OPEC refuses to increase production in order to make up for their budget shortfalls last year. Also doesn't help that the US government is sending signals that it is no longer on board with fossil fuels. The shutting down of pipelines, ending of fossil fuel leasing, etc. sends a market signal to producers and traders that the US is hostile towards the industry, leading the producers to cut production and maintain their profits. Best option would be to have a diverse portfolio of energy production: oil, natural gas, solar, wind, hydroelectric, and nuclear. Don't go all in on one, that's how you arrive at the situation we are currently in.
- brianwawok 5y ago
  > sends a market signal to producers and traders that the US is hostile towards the industry, leading the producers to cut production and maintain their profits. Great! Puts us one step closer to slowing global warming and giving us a chance to turn this boat around. Rising oil prices makes the market naturally move away, which is really really good in the long run.
  - seibelj 5y ago
    Great for rich people on HN. Bad for middle class and poors who need to drive right now, not 20 years in an imagined future.
    - lp0_on_fire 5y ago
      Those middle class and poor people need to just suck it up and cut expenses so they can buy the $35,000 electric cars. /s
  - annexrichmond 5y ago
    That will disproportionately affect lower income households who can't as easily withstand these rising costs, which further drives income inequality. > Rising oil prices makes the market naturally move away This is trivialization of the transition as the worlds depends oil in many ways: development of cars (electric or otherwise), airplanes, solar panels, vaccines, acetaminophen, etc. -- these are all petroleum-derived products. I recommend this article on the difficulty of the transition https://www.theatlantic.com/international/archive/2021/11/energy-shock-transition/620813/ https://www.theatlantic.com/international/archive/2021/11/en... Given this dependence, axing our production just means we have to rely more on other countries and given that climate change is a global problem -- what's the difference? If we do it here, perhaps we innovate on making its extraction more eco friendly (which has been the case for the last 20 years)
jrs235 5y ago
Dupe: https://news.ycombinator.com/item?id=29509944 https://news.ycombinator.com/item?id=29509944
boringg 5y ago
Spot check, if I'm not mistaken the benchmark year was a pretty crazy low price year for certain assets classes (gas was absurdly low). Not saying this isn't an issue but just putting some cold water on the media hype storm.
- jeffbee 5y ago
  https://fred.stlouisfed.org/graph/?g=JJ3V https://fred.stlouisfed.org/graph/?g=JJ3V
- OmicronCeti 5y ago
  Also, nearly every developed country is experiencing high inflation. Supply << Demand and OPEC wants it that way.
  - marcusverus 5y ago
    I'm curious as to why this is being downvoted. The data seem to indicate that the EU is also experiencing significant inflation, with energy costs being the worst offender. What am I missing? https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Inflation_in_the_euro_area https://ec.europa.eu/eurostat/statistics-explained/index.php...
- jjk166 5y ago
  This is an annualization of the change over the course of November. So the baseline is October 2021.
JohnWhigham 5y ago
We need interest rates raised yesterday
- throwaway6734 5y ago
  They should've been raised back in 2018 when we had a booming economy
  - AlgorithmicTime 5y ago
    The best time to plant a tree is 50 years ago. The second best time is today.
- dragontamer 5y ago
  Interest rates don't really affect gasoline prices. And raising interest rates won't solve the chip shortage hurting the new / used car industry.
  - mupuff1234 5y ago
    But it would probably hit demand for cars as people will be less quick to take out loans.
    - jjk166 5y ago
      No one is buying a car for funsies in this market. Cars break down, people get into accidents, people have kids and need larger vehicles, demand for transportation is inflexible, and people will take out loans to get it regardless of the rate.
      - deleted 5y ago
        [deleted]
      - milkytron 5y ago
        > ...people have kids and need larger vehicles, demand for transportation is inflexible, and people will take out loans to get it regardless of the rate. I think this is true but only to a certain extent. People can make sacrifices to reduce transportation demand. Making a single trip, getting a smaller vehicle, or carpooling are options. The issue is that we've lived in a luxury transportation world for a long time, and people may be unwilling to make those sacrifices.
shmageggy 5y ago
I’d like to see some localized or regional stats. Feels more like 50% for certain things in certain locations.
mikaeluman 5y ago
Crude prices have been a lot higher in the past, 2007-2008. The production is fairly in line with the demand. US actually needs higher crude prices to make sure the incentives exist for shale production to get back to pre covid levels. The supply chain sluggishness (worldwide) combined with excessive, irresponsible spending (although I hear it "costs nothing"...) explain these figures. Euro area has higher inflation than pre covid but nowhere near these levels. It's not transitory, and it's not good.
- eloff 5y ago
  It's becoming increasingly clear that the "it's transitory" narrative is dead wrong. But now all the policy makers are committed to the lie. I fear this will make any reaction much slower and weaker than it otherwise might be. Are we going back to the stagflation of the 70's? How should one prepare financially for that possibility?
  - MrPowers 5y ago
    I think the Fed clarified that they won't be using the word "transitory" anymore last week: https://fortune.com/2021/12/03/inflation-no-longer-transitory-higher-prices-fed-chair-powell-treasury-yellen/ https://fortune.com/2021/12/03/inflation-no-longer-transitor...
  - apeescape 5y ago
    You could ask your employer to match the inflation with a raise every year (on top of the actual raises you might've earned). I think this is a reasonable ask, though understandably not all companies are able to cover the inflation by raising their prices etc. When it comes to protecting your assets from inflation, I suppose investing in companies that pay good dividends and are able to cover the inflation in their business model should be a relatively safe bet, as they continue to provide a steady cashflow. If you think the inflation is here to stay and you want to take on more risk, you could take out a loan and leverage that by investing it, as the inflation should cover the interest. Note that this is NOT financial advice -- I'm anyway not qualified to give that, so take this only as food for thought.
  - 5y ago
nabla9 5y ago
all items ............ 6.8% food ................. 6.1% all less food & energy 4.9% energy ............... 33.3% energy commodities ... 57.5% energy services ...... 10.7%
- INGELRII 5y ago
  Thanks. Another number to watch is core inflation in the last 2 years. From a few months before covid to the latest number: Nov 2019: 265427, Nov 2021: 283201 Annualized Core CPI is 3.29%. +1.3% higher than the target. My first order guess is that Fed will decrease asset purchases gradually and an interest rate hike in the next summer might happen if the long-term core inflation is higher than normal. This seems to be what they are communicating.
baggy_trough 5y ago
Oddly, the New York Times failed to send a breaking news push notification for the highest inflation in close to 40 years, while it did for some positive but fairly normal employment numbers a week ago. (Oops, not true, I just didn't notice it. Good job NYT!)
- sneak 5y ago
  I've been reading this book this week: https://www.thegrayladywinked.com/ https://www.thegrayladywinked.com/ This isn't a recommendation (I'm not through it yet) but it's an interesting perspective.
  - etchalon 5y ago
    I'm immediately turned off by "rewriting American History with the 1619 project." It looks like the author is taking well-known, well-covered historical embarrassments by the Times, and plugging in current conservative talking points.
    - sneak 5y ago
      I was turned off by that too, but I'm actually the kind of person who makes a point of reading things written by intelligent people with whom I ideologically diverge. I also acknowledge that I lack the authoritative knowledge of history to evaluate whether assertion that the 1619 project is rewriting history is true or not. I rather like the 1619 project and its narratives, so perhaps I'll add some books to my list for the coming year to be able to call bullshit on that or not. In general my promotion of things that increase skepticism in statements made by authority (such as the NYT) outweighs my disdain for the brawlers in the current US culture war.
      - etchalon 5y ago
        Weirdly, I tend to only read things which challenge my thinking, and avoid things which confirm it, so I haven't read the 1619 project itself, only the commentary around it. I understand the behavior makes no logical sense but … it's just the way I am. What I've found is that there is no disagreement over the facts presented, only interpretations of those facts. I've searched, in vain, for reputable historians challenging specific factual claims made by the project. I haven't read one. The largest, credible criticisms are more or less either a tone argument ("Slavery was A motivation of SOME") or alternate fact discussions, some of which are interesting but none of which I'd count as discrediting anything. The rest of what I've read is mostly Founding Father Worship which I have zero time for.
credit_guy 5y ago
There's one cause of this inflation that the Fed doesn't like to talk about. It's the clampdown on immigration that started during the previous administration and is continuing with the current one. Wage inflation is then a logical outcome, and people should be celebrating it.
- jetsetgo 5y ago
  Wage inflation that never has come since half a century. Also, it's delusional to think that immigration is related to national inflation.
- josephcsible 5y ago
  Is there any evidence this is true? For example, of the unfilled jobs today, what proportion of them were filled by immigrants vs. US citizens 2 years ago?
- notacoward 5y ago
  People should celebrate inequity and nationalism? No. Not even if it benefits me, which ultimately it doesn't anyway.
michaelt 5y ago
We've also seen a lot of "shadow inflation" in my country. Pre-Covid I could send a parcel with two-day delivery for $X or next-day delivery for $1.5X Now, I can still buy "next-day delivery" for $1.5X but the parcel takes two days to arrive. On paper, the service's price hasn't changed - but in reality, it's 50% more expensive.
- seneca 5y ago
  Yes, this is an unspoken facet of inflation it seems. Many goods are both increasing in price and decreasing in quality or quantity. You're getting less for your money, but only the price increases are counted. I'm curious if economists have a formal study of this.
  - MacroChip 5y ago
    I assume that decreases in services will create decreases in goods. So GDP and CPI will reflect this.
  - rurp 5y ago
    I've seen at least some of this effect covered by the term "shrinkflation", basically the concept of companies reducing quantities rather than increasing prices. Customers tend to be most sensitive to price changes, so we'll probably see more and more of these non-price inflation changes.
  - sbelskie 5y ago
    The CPI does have formal methods for attempting to account for this: https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm https://www.bls.gov/cpi/quality-adjustment/questions-and-ans... This can occasionally result in odd things, like when the introduction of unlimited cell phone data plans led core inflation to drop one month for first time in seven years: https://www.wsj.com/articles/BL-REB-37505 https://www.wsj.com/articles/BL-REB-37505
- umeshunni 5y ago
  This is similar to a concept called 'Shrinkflation' https://en.wikipedia.org/wiki/Shrinkflation https://en.wikipedia.org/wiki/Shrinkflation
pradn 5y ago
Nearly all of the inflation is coming from energy prices (driven by the post-covid recovery in demand and petrostates declining to raise prices to protect their revenues) and cars (used and new; driven by chip shortages and the increase in demand for consumer durables as spending moved away from experiences out of the house). To reduce energy prices, the US will need to increase domestic production or pressure petrostates into increasing production. Biden has a testy relationship with MBS, so the latter is being a bit harder than it would be otherwise. Still, Saudi Arabia is one of several large producers, all of which depend on oil for government revenues. The government can't do too much about reducing demand for cars or reallocating chip producers abroad to make prioritize making chips for car makers. I suppose we'll have to wait it out, and it'll probably take a while for these underlying factors to settle. If you're not driving or buying a car, it doesn't look as bad, though energy prices affect everything else, too.
seanalltogether 5y ago
I'm guessing this is all related to this? https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were-created-this-year/ https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were...
- throw0101a 5y ago
  No: * https://fredblog.stlouisfed.org/2021/01/whats-behind-the-recent-surge-in-the-m1-money-supply/ https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...
  - bsedlm 5y ago
    so if they make more money (vast incrase in money supply) does not lead to inflation? (not anymore?, what's changed?)
    - throw0101a 5y ago
      Just creating money doesn't necessarily mean much: > But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy. * https://www.pragcap.com/three-things-i-think-i-think-i-see-dead-mutual-funds/ https://www.pragcap.com/three-things-i-think-i-think-i-see-d... It actually has to be used, which it generally has not been: * https://econbrowser.com/archives/2021/11/so-you-want-to-be-a-monetarist https://econbrowser.com/archives/2021/11/so-you-want-to-be-a... * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
      - bsedlm 5y ago
        > It actually has to be used, which it generally has not been: maybe it comes down to where does it need to be used (as in which level, capital investment and other long-term assets in contrast with consumer goods)? This money is quickly finding its way to consumable (and other rent-like) purchases, so now it does trigger inflation whereas in the time around 08 the end consumption was not really affected (it is now because pandemic)
marcodiego 5y ago
Meanwhile, in Brazil: 10.74%. Now, the pandemic first made consumption decrease and it created deflation in the beginning. As people start buying again, and employment still hasn't fully recovered, it is normal for inflation to become stronger. The next year pandemic will hopefully be over, but if employment still hasn't fully recovered, we can see even more inflation.
wonderwonder 5y ago
Based on my anecdotal experience this seems to very much understate inflation. How is housing up only 3.8%? This site says over 17% rent increase nationally over the last year: https://www.apartmentlist.com/research/national-rent-data https://www.apartmentlist.com/research/national-rent-data which seems to be more accurate. Anyone with a web browser knows that home prices have experienced a monumental increase. Also a trip to the grocery store appears to cost me 50% more now for essentially the same goods. Every trip to the store pre-covid cost me around $100, now its $150. I do buy primarily proteins so that is the source of the increase but to ignore that seems ill advised. Not generally a conspiracy theorist but unless the people that built this report are using some accepted formula that is very different than the real world this report seems to be intentionally underselling inflation.
- gangaputra 5y ago
  Lots of good replies here. One other thing to be conscious of is that inflation expectations play a large role in determining how actual inflation will pan out, so to raise the alarm on it in earnest is to the play a very dangerous game.
- mitigating 5y ago
  That site only does apartments for rent not purchased condos or houses right?
  - wonderwonder 5y ago
    Perhaps but even if that is the case, the general consensus appears to be that home purchase prices increased ~17 - 19% over the last year so right in line with the estimate by this site. If anything it would drag the estimate upwards.
    - Rebelgecko 5y ago
      OTOH, low interest rates have balanced that out, and let people who already have mortgages lower their monthly payment drastically. I wonder if monthly payment is perhaps a better metric than purchase price? At least for me, that's what actually determined how much home I'd be able to buy.
chrisacky 5y ago
How do you guys normally handle pay reviews? Curious how each company operates.. I know the saying is that if you don't get a raise AT LEAST on par with inflation, you are taking a cut, but at what point do you take this to employer?
- kilbuz 5y ago
  Usually doesn't hurt to ask, but if you really want a raise, in my experience the most reliable method is to have a better offer ready.
xapata 5y ago
Good news for debtors! Remember that "cross of gold" speech? There was a time when it was popular to ask the government for inflation.
MrPowers 5y ago
The Fed was initially saying the inflation was transitory, but have recently dropped the "transitory" label. Back in July, Siegel pointed out that the M2 money supply is 30% over pre-pandemic levels and predicted that would translate into 20% cumulative inflation over the next 3 years. Here are my talk notes / video links if you're interested: https://neapowers.com/investing/jeremy-siegel/ https://neapowers.com/investing/jeremy-siegel/ In July Siegel said "There is zero need for the Fed to be buying $120 billion in bonds every month given market conditions." I don't know why the Fed is buying mortgage backed securities in the midst of an apparent housing bubble. Larry Summers was voicing inflation concerns back in March: https://www.youtube.com/watch?v=PBnaahSe7JU&ab_channel=BloombergMarketsandFinance https://www.youtube.com/watch?v=PBnaahSe7JU&ab_channel=Bloom... The main macroeconomists I follow (Siegel, Gundlach, Summers) are all puzzled by the Feds actions recently.
- magila 5y ago
  I don't know if you were being rhetorical, but the Fed's motivation doesn't seem like that big of a mystery. They're succumbing to political pressure not to induce a recession or allow asset prices to drop.
  - handrous 5y ago
    As far as I can tell, the political class decided that no cost was too high to avoid being the one left standing when the music stops, after the '08 crash. So we'll just inflate until someone gets unlucky and is the one stuck with the blame for a massive crash rather than 2-3 smaller recessions inconveniencing some other politicians, who are actually the ones to blame for the whole situation. [EDIT] actually, arguably, the '08 crash was already an in-the-works recession delayed and made worse by exactly this kind of thing. Another possibility is that someone realized something really awful, like that the global economy had shifted such that anything like the "asian contagion" crash (no, nothing to do with COVID[0]) can't be contained next time, so they're desperately trying to keep the plates spinning until they can figure something out, because they expect the next major crash will be a true global depression and don't know how to stop/mitigate it if it's triggered. [0] https://en.wikipedia.org/wiki/1997_Asian_financial_crisis https://en.wikipedia.org/wiki/1997_Asian_financial_crisis
jjmorrison 5y ago
But clearly not because of Biden printing money...
- jonnycomputer 5y ago
  Sarcasm is a beautiful tool, but it must be used wisely.
- quadrangle 5y ago
  In a complex system, there's a lot of actors. Take ANY one actor as the only one with a choice, presume all the rest as a given, and you can blame that one actor. The socialist argument does it this way: inflation obviously only happens when prices are actually raised, and that's done by the sellers of things, so if the sellers simply decided to keep their prices unchanged, they would stay unchanged. That's absolutely true and doesn't depend on anyone else. Biden didn't sign a law requiring anyone to raise prices. I suspect you can find some way to complain about that argument, and maybe your complaint will make sense. But if you want to pick ONE blame point for price increases, the one that is best is the point where some person directly chooses to raise prices. Besides that, it's all very complex.
- whateveracct 5y ago
  It's clearly not primarily driven by the "printing money" HNers are not a rational bunch when it comes to economic and monetary policy lmao
  - spiralx 5y ago
    90% of HNers couldn't tell you what fiscal and monetary policy even are, let alone have a sensible debate on the economy.
asdfsd234234444 5y ago
This is good for bitcoin.
- seoaeu 5y ago
  Which is presumably why it is down 27% over the last month
  - asdfsd234234444 5y ago
    Zoom out a little
    - seoaeu 5y ago
      You are saying that this November's inflation numbers caused bitcoin to do well back in October?
      - asdfsd234234444 5y ago
        yes, people saw this coming well before October...
savant_penguin 5y ago
The 3.5 trillion bill will cost zero
mempko 5y ago
If you think that's impressive, you should see asset price inflation!
protomyth 5y ago
I think the increase (over a $1/gallon since last year) in gas prices is doing a number on not only shipping but a large group of low income folks. For a lot of the country, public transportation is either limited or non-existent. Higher gas prices not only affect the cost of goods but increase the cost of going to a job.
lettergram 5y ago
Wait until they raise cereal prices 20% at the beginning of next year lol
- SamuelAdams 5y ago
  Not a bad thing, people need to stop eating cereal anyways. Most of it is packed with sugar.
  - lettergram 5y ago
    “inflation is good because it’ll make people skinnier as they can’t afford food” Wonderful argument lol
pezzana 5y ago
The consensus view is that this is the result of QE. The Fed has "pumped trillions of dollars into the economy." And that explains the blistering inflation print today. But consider: 1. gold, the traditional inflation hedge, is at the same price it was in 2011 (~$1,800) after having gone nowhere in the last year 2. the 30-year treasury is yielding 1.85%, a real yield of -4.95% 3. the Eurodollar futures curve recently inverted [1] 4. The dollar is up noticeably against other currencies [4] The "pumping money" idea makes no sense based on what QE actually does. Here's how QE works. The Fed buys a Treasury from a bank. In exchange, the Fed credits the bank with a reserve asset. That reserve asset is held in an account at the Fed and can not leave the Federal Reserve system. Nor can it be used to buy stocks, bonds, or CEO yachts. This is not "money" in the sense that most people think of the word. It's more like a kind of utility token. QE is a way to turn treasuries into reserve assets. In other words, it's a swap with no net money creation. Regarding (1), some say derivatives are to blame for gold's abysmal performance. Well, similar derivatives markets exists for stocks, and those have been ripping higher thank you very much. Well, the consensus view says, (2) is explained by the fact that the Fed controls the Treasury market. But does it really? Consider the observable effects of QE by taking a look at a chart of 30-year treasury yields since the early 1980s and you'll see a straight channel running down and to the right. QE had zero effect on this long term trend line.[2] If the Fed actually "controlled" the treasury market during QE, wouldn't the trend line be broken in some way? The most esoteric of these factors is (3). Still, the Fed's balance sheet has no eurodollar futures. So why is that this market is signaling lower yields and slower economic growth ahead? Bottom line: the Fed is being blamed for skyrocketing inflation. However, there's a case to be made that the Fed's actions have little to do with what's going on because QE's effects on the economy actually make little difference. See, for example, the Bank of Japan, which tried QE long before the US and concluded that its effects were mixed at best.[3] All of this leads to the conclusion that this kind of inflation print is a blip, and the Fed had nothing to do with it. In other words, inflation really is transitory. Gold, treasuries, and the eurodollar market are all signaling slower growth and lower inflation ahead. Possibly much lower. QE is largely a confidence trick. It's time to have a closer look at the man behind the curtain. [1] https://www.bloomberg.com/news/articles/2021-12-03/bets-that-fed-hikes-may-peter-out-spur-inversions-in-eurodollars https://www.bloomberg.com/news/articles/2021-12-03/bets-that... [2] https://fred.stlouisfed.org/series/DGS30 https://fred.stlouisfed.org/series/DGS30 [3] https://www.frbsf.org/economic-research/publications/economic-letter/2006/october/did-quantitative-easing-by-the-bank-of-japan-work/ https://www.frbsf.org/economic-research/publications/economi... [4] https://www.tradingview.com/chart/?symbol=dxy https://www.tradingview.com/chart/?symbol=dxy
techbio 5y ago
As the baseline comparison of inflation rate to all other examples of "year-over-year" is pretty obviously skewed by circumstances, it would be potentially less misleading to the general public to say something contextual like "2021-over-2020" than "year-over-year".
th0ma5 5y ago
There are a lot of opinions on what this means and its effects on our individual lives, but it should be noted that it usually has no effect on people's view of a ruling US party so long as there has been strong economic growth, and there has been extremely strong growth. If you didn't get that raise you want to offset inflation, there has never been a better time in many sectors to find a higher paying job.
deleted 5y ago
[deleted]
dqpb 5y ago
Here is what I think we need: - an operational model of our economy that includes failure modes, like queue failures - open source software that can easily and reliably represent this model and simulate trajectories - government and news reports should reference the exact configuration of the model that expresses what they are reporting In my view, anything less than this is unactionable and basically meaningless.
- nabla9 5y ago
  Project Cybersyn https://en.wikipedia.org/wiki/Project_Cybersyn https://en.wikipedia.org/wiki/Project_Cybersyn
someuser54541 5y ago
If inflation is at %6-%7 and mortgage rates are at ~3%, aren't people literally getting paid to borrow money? Someone please correct me if I am wrong.
- chaorace 5y ago
  Worth noting: mortgages typically compound daily, whilst annualized inflation figures measure inflation as if it compounded annually. A 3% APR mortgage comes out to about 4% APY, which is a little more directly comparable to an annualized inflation figure.
- OrangeMonkey 5y ago
  Things net out at the end for new home buyers. The mortgage rate may be 3%, but the cost of your home increases at a much higher number causing the value you have in mortgage rate to be offset by the higher up front cost of a home. People 'buy' a mortgage payment, not a home. Its why home appreciation 'slows' when rates are high, and we have had record increases in home values with mortgage rates super low.
- xxbondsxx 5y ago
  Yes they are, in a sense that the outstanding mortgage debt grows at a slower pace than inflation. However the 3% is guaranteed for ~30 years, so it's likely the bank would still come out ahead in the long run if inflation settles down. It's also not an infinite money slot machine -- you can only qualify for so many mortgages (which require large down payments) and houses are pretty illiquid assets.
- quadrangle 5y ago
  This gets into a vicious cycle. Given that lots of people are effectively paid to borrow money, that boosts the money people can bid on a house, and so that itself pushes up the prices. Low-interest rates on mortgages are a huge boon for sellers since the buyers have access to more money, and thus they can pay more. So, for the buyers, the "get paid" part only works if they flip a house and become sellers before the cycle bubbles and bursts. Meanwhile, buyers who want to get a house just to live in it for the rest of their lives are having to pay much higher prices, and it has nothing to do with real supply and demand. Cut out all the speculators/investors/flippers and the situation would be very different. Maybe we shouldn't even continue the premise that a person who doesn't live at a property can "own" it.
sebringj 5y ago
This suggests to me if you don't get at least a 6.8% raise as an employee per year, you should start looking for another job. That isn't really a raise mind you. It should be added to whatever % raise they give you IMO.
mcguire 5y ago
It is interesting to note that energy costs are up in significant double digits, except for electricity. This may have environmental (and climate) benefits.
_prototype_ 5y ago
We replaced a president that made mean tweets with one that has directly affected our lives via increased inflation and gas prices, to name a few. Crazy times.
- whateveracct 5y ago
  if you attribute this inflation to the guy in office instead of the global pandemic that's been going on for multiple years, you're nuts lol
  - _prototype_ 5y ago
    Biden directly closed the Keystone XL pipeline after Trump had us at energy independence. Also, he and his democratic party pushed and passed the biggest spending bills in our nations history. You don't think that directly affects inflation and gas prices? You must be living under a rock, or willfully blind.
    - whateveracct 5y ago
      What evidence do you have beyond superficial pattern matching that the Keystone XL closing is a primary driver behind the current fuel prices? https://www.politifact.com/factchecks/2021/dec/01/facebook-posts/no-evidence-biden-canceling-oil-pipeline-caused-hi/ https://www.politifact.com/factchecks/2021/dec/01/facebook-p... says there's none at least (and shows its work)
slackfan 5y ago
..."and here is why this is a good thing!"
koonsolo 5y ago
And then people still question what the use-case of Bitcoin can possibly be. It's nice to be part of the pyramid scheme! ;D
senko 5y ago
I haven't seen anyone comparing that to the previous YoY index rise 2019-2020 of just 1.4%, the least in last 10 years (of also very subdued inflation). When you average those two out (cagr), that's 4%. Nothing to sneeze at, but still a lot less.
RickJWagner 5y ago
What's bad about inflation is that it really hurts people on fixed income and the poor. Fixed income (i.e. retired people) because their stack of savings buys less. The poor because if you can't afford new tires at $600, you're surely not going to be able to afford them at $800. Politicians need to be very careful with inflationary decisions.
mkevac 5y ago
It is interesting that this site is blocked from Russia. I've tried using VPN and going there from different countries and yes, it's only from Russia. Access Denied You don't have permission to access "http://www.bls.gov/news.release/cpi.nr0.htm" on this server. Reference #18.14645e68.1639219418.12814b8e
inthegreenwoods 5y ago
Measuring economics= econometrics. It is a very specialised field of statistics. Which means about 0.01% of the population understands it. The first thing to understand about statistics is that a single point of data is worse than useless. You need to be up to date on hundreds of points of data to be in the game. The second point is that when a single point of data is used in a mass media publication it has been chosen to sell advertising and not because it might be significant. So onto the claim made in the statement.”Annualised”in this case means that the figure for a period of 90 days has been multiplied by 4 to create a completely artificial number that a person who has studied arithmetic can do in their head. It has no particular meaning or significance, it just makes for a flashy headline. Every person and every product has its own inflation rate and it changes by the hour. Assembling billions of these individual points of data into an official figure is on par with astrology in terms of its predictive power. Weather prediction is way ahead of economics. Even the experts are guessing and a guess by an expert is just that, a guess.Your mileage will definitely vary.
declnz 5y ago
Aside: I wish posts like this would be (re)titled "US inflation rises 6.8%..." etc. I'm in no doubt that HN readership is mostly US-based, but it's definitely global...

361 points by rsj_hn 5y ago

Remember, if you're not getting a 5% raise, you're getting a pay cut. Applies to every year, but this year in particular.

emerged 5y ago
My response to not getting a raise has been to reduce my hours proportionally. Working backwards to maintain the same effective hourly rate. I make enough money already, so it ends up just giving me more free time.

game_the0ry 5y ago

Anecdote time. I live in NYC and went to CVS recently. Picked up the following: * 12 pack of Bounty paper towels * a box of Q-tips * contact lens solution * 6 pack of Smart Water Cost me over $50 bucks. This sucks.

MerelyMortal 5y ago
Two things: "cornerstore" prices, and overpriced water. (CVS isn't as expensive as convenience stores, but they aren't as cheap as grocery stores either.)

davidw 5y ago

Isn't a 'quick fix', but legalizing the production of various shapes and sizes of housing would help a lot of people, especially long term.

dominotw 5y ago
how will that quickly fix inflation ?
- scoopertrooper 5y ago
  Inflation (especially asset inflation) is as much expectations about future price rises as it is anything else. If investors expect to a vast expansion of housing stock in 3 years, they'll start exiting the market today, to get ahead of it.
  - coding123 5y ago
    We should start taxing vacation, abnb, secondary empty homes at 100x the property tax rate. That would provide housing VERY quickly. Rental housing can be taxed at 10x UNLESS it is offered 10% below market rate.
  - hogFeast 5y ago
    The evidence for the expectations model has changed significantly over the past two years or so. Obviously, central banks are going to move slower given that expectations has been the consensus for two decades. But I think academics are realising (about seven years after markets realised) that central banks have a huge role in signalling and the consumers form their expectations about inflation based on the past (note: the last point is compatible with evidence for expectations when inflation is falling...in other words, if inflation was falling over your sample you would be unable to distinguish between an expectations-based theory and a moving average-based theory of inflation). Also, investors won't start exiting the market if they expect expansion in housing stock. Financial markets trend, they absorb information imperfectly, they overreact, and there is massive volatility as all this occurs. Indeed, there are some investors who base their investment strategy on the inability of markets to react to capital cycles (Marathon Asset Management have written books about this). Investors have different time scales, if the housing stock was going to expand then you would see capital pile into the sectors because people will chase that growth expecting to flip at a higher price at the top.
- deleted 5y ago
  [deleted]
- tenuousemphasis 5y ago
  They said it is NOT a quick fix.
dragontamer 5y ago
Shelter is .5% growth. Gasoline is like 5% per month. This is almost entirely an energy problem Gasoline up over 50% over the year, increasing delivery costs and the price of damn near everything else.
- throwawaygh 5y ago
  This. The short term temporary solution is pressure on OPEC+ and jump-starting Shale (no small task). The long term permanent solution is EVs and massive investment in renewable base load power generation.
  - WanderPanda 5y ago
    Your long term part is quite inflationary as well. If it wouldn’t be more expensive everybody would already driving evs
    - toomuchtodo 5y ago
      EVs cost half the cost per mile as an internal combustion vehicle [1], even less as renewables generation increases driving down the price of power. EVs do have a higher upfront cost, but lower total cost of ownership. Issue green bonds to subsidize the capital cost for borrowers, and increase the tax on internal combustion vehicles sales. EV supply is currently manufacturing constrained; provide incentives to rapidly scale EV and battery manufacturing. [1] https://www.energy.gov/eere/vehicles/articles/fotw-1190-june-14-2021-battery-electric-vehicles-have-lower-scheduled https://www.energy.gov/eere/vehicles/articles/fotw-1190-june...
      - throwawaygh 5y ago
        > EVs do have a higher upfront cost For now. Because they are new. But there's every reason to believe this is temporary. Electric cars are way simpler to manufacture. Far fewer moving parts. Literally.
        5y ago
colechristensen 5y ago
People that advocate this are advocating for lowering the quality of life. Long term it raises the price per square foot and makes it harder to have the space you want and need.
- epistasis 5y ago
  Sorry, but that doesn't make any sense. More housing means less sqft per person? The chain of reasoning to get to that conclusion must be long, because it is certainly not obvious.
  - ryandrake 5y ago
    Almost all "moar housing" discussions, at least on HN, call for building medium-and-dense urban apartments, which tend to be smaller than average sizes of housing. You never hear YIMBY advocates calling for building more 3500 sq.ft. single family suburban or rural homes.
    - davidw 5y ago
      It's entirely possible to build large and dense. I knew a pretty wealthy guy in Padova whose family had an enormous home that all happened to be on the 2nd floor of a 4 story building.
    - spamizbad 5y ago
      I don't understand how my quality of life will improve if I go from my current 1500 sqft home to a 3500 sqft home. Living near shops, walking around town with my family and being able to ride my bike brings me more joy than a larger home office. I suppose if I had a larger family I would want more bedrooms. But we are done growing our family at this point - and mine is roughly the size of the median, so I don't see why we need to flood the market with homes that are too big.
      - _Wintermute 5y ago
        Perhaps slightly off-topic, but as someone who has spent most of my time living in European cities these house sizes are just mind-blowing to me. 1500 sqft is 140 m^2, my first apartment was 30m^2. I can't imagine what you would put in a 3500 sqft (325 m^2) house, never mind something like answering the door if you were at the other side of your house.
kiba 5y ago
It would help a lot of people, but it also hurts a lot of people with mortgage. Liberalizing zoning and implementing LVT would help, but it would means massive structural change in our society. It's a true fix, but that true fix requires that we have important and difficult conversations about said structural changes.
- davidw 5y ago
  It's not going to hurt owners that much, really, not those in it for the long haul. It's unlikely that in a liberalized market, all else being equal, prices would truly crater, as builders would pull back. You'd probably get something more like Germany has been, where prices are fairly stable and boring, rather than an exciting market to speculate in.
- epistasis 5y ago
  People with mortgages have been making out like bandits for decades, and have recently locked in historically low interest rates that leverage their economic gains even further. This is a huge drain on the economic productivity of the younger generations, and anybody who was not able to afford to buy in to the scheme before the recent climbs. It's time to make housing behave at most like a savings account, rather than an investment account.
  - davidw 5y ago
    Exactly. > This is a huge drain on the economic productivity of the younger generations Economists have attempted to quantify the effects of this, and the numbers are huge: https://www.aeaweb.org/articles?id=10.1257/mac.20170388 https://www.aeaweb.org/articles?id=10.1257/mac.20170388
  - Marsymars 5y ago
    > People with mortgages have been making out like bandits for decades, and have recently locked in historically low interest rates that leverage their economic gains even further. Depends on jurisdiction. Canada's housing market has most of the same problems as the US's, but you can't really lock in low interest rates for longer than five years - so if you raise interest rates, you leave people five years from now underwater and having to renew for the next two decades at high rates.
anm89 5y ago
This isn't by a long shot a housing policy issue.

nikkinana 5y ago

Let's go brandon! I'll tell you what, Trump gave us big returns in our 401(k)'s, Biden is taking it all back. Remember that next time you get your 3% raise, it's not 3%, it's actually -4%

JavaBatman 5y ago

A lot of this is due to fuel prices. The price of fuel affects the price of everything else. It's a benchmark since everything requires fuel. Manufacturing, transportation, agriculture, etc. It all requires fuel. It doesn't help that OPEC refuses to increase production in order to make up for their budget shortfalls last year. Also doesn't help that the US government is sending signals that it is no longer on board with fossil fuels. The shutting down of pipelines, ending of fossil fuel leasing, etc. sends a market signal to producers and traders that the US is hostile towards the industry, leading the producers to cut production and maintain their profits. Best option would be to have a diverse portfolio of energy production: oil, natural gas, solar, wind, hydroelectric, and nuclear. Don't go all in on one, that's how you arrive at the situation we are currently in.

brianwawok 5y ago
> sends a market signal to producers and traders that the US is hostile towards the industry, leading the producers to cut production and maintain their profits. Great! Puts us one step closer to slowing global warming and giving us a chance to turn this boat around. Rising oil prices makes the market naturally move away, which is really really good in the long run.
- seibelj 5y ago
  Great for rich people on HN. Bad for middle class and poors who need to drive right now, not 20 years in an imagined future.
  - lp0_on_fire 5y ago
    Those middle class and poor people need to just suck it up and cut expenses so they can buy the $35,000 electric cars. /s
- annexrichmond 5y ago
  That will disproportionately affect lower income households who can't as easily withstand these rising costs, which further drives income inequality. > Rising oil prices makes the market naturally move away This is trivialization of the transition as the worlds depends oil in many ways: development of cars (electric or otherwise), airplanes, solar panels, vaccines, acetaminophen, etc. -- these are all petroleum-derived products. I recommend this article on the difficulty of the transition https://www.theatlantic.com/international/archive/2021/11/energy-shock-transition/620813/ https://www.theatlantic.com/international/archive/2021/11/en... Given this dependence, axing our production just means we have to rely more on other countries and given that climate change is a global problem -- what's the difference? If we do it here, perhaps we innovate on making its extraction more eco friendly (which has been the case for the last 20 years)

jrs235 5y ago

Dupe: https://news.ycombinator.com/item?id=29509944 https://news.ycombinator.com/item?id=29509944

boringg 5y ago

Spot check, if I'm not mistaken the benchmark year was a pretty crazy low price year for certain assets classes (gas was absurdly low). Not saying this isn't an issue but just putting some cold water on the media hype storm.

jeffbee 5y ago
https://fred.stlouisfed.org/graph/?g=JJ3V https://fred.stlouisfed.org/graph/?g=JJ3V
OmicronCeti 5y ago
Also, nearly every developed country is experiencing high inflation. Supply << Demand and OPEC wants it that way.
- marcusverus 5y ago
  I'm curious as to why this is being downvoted. The data seem to indicate that the EU is also experiencing significant inflation, with energy costs being the worst offender. What am I missing? https://ec.europa.eu/eurostat/statistics-explained/index.php?title=Inflation_in_the_euro_area https://ec.europa.eu/eurostat/statistics-explained/index.php...
jjk166 5y ago
This is an annualization of the change over the course of November. So the baseline is October 2021.

JohnWhigham 5y ago

We need interest rates raised yesterday

throwaway6734 5y ago
They should've been raised back in 2018 when we had a booming economy
- AlgorithmicTime 5y ago
  The best time to plant a tree is 50 years ago. The second best time is today.
dragontamer 5y ago
Interest rates don't really affect gasoline prices. And raising interest rates won't solve the chip shortage hurting the new / used car industry.
- mupuff1234 5y ago
  But it would probably hit demand for cars as people will be less quick to take out loans.
  - jjk166 5y ago
    No one is buying a car for funsies in this market. Cars break down, people get into accidents, people have kids and need larger vehicles, demand for transportation is inflexible, and people will take out loans to get it regardless of the rate.
    - deleted 5y ago
      [deleted]
    - milkytron 5y ago
      > ...people have kids and need larger vehicles, demand for transportation is inflexible, and people will take out loans to get it regardless of the rate. I think this is true but only to a certain extent. People can make sacrifices to reduce transportation demand. Making a single trip, getting a smaller vehicle, or carpooling are options. The issue is that we've lived in a luxury transportation world for a long time, and people may be unwilling to make those sacrifices.

shmageggy 5y ago

I’d like to see some localized or regional stats. Feels more like 50% for certain things in certain locations.

mikaeluman 5y ago

Crude prices have been a lot higher in the past, 2007-2008. The production is fairly in line with the demand. US actually needs higher crude prices to make sure the incentives exist for shale production to get back to pre covid levels. The supply chain sluggishness (worldwide) combined with excessive, irresponsible spending (although I hear it "costs nothing"...) explain these figures. Euro area has higher inflation than pre covid but nowhere near these levels. It's not transitory, and it's not good.

eloff 5y ago
It's becoming increasingly clear that the "it's transitory" narrative is dead wrong. But now all the policy makers are committed to the lie. I fear this will make any reaction much slower and weaker than it otherwise might be. Are we going back to the stagflation of the 70's? How should one prepare financially for that possibility?
- MrPowers 5y ago
  I think the Fed clarified that they won't be using the word "transitory" anymore last week: https://fortune.com/2021/12/03/inflation-no-longer-transitory-higher-prices-fed-chair-powell-treasury-yellen/ https://fortune.com/2021/12/03/inflation-no-longer-transitor...
- apeescape 5y ago
  You could ask your employer to match the inflation with a raise every year (on top of the actual raises you might've earned). I think this is a reasonable ask, though understandably not all companies are able to cover the inflation by raising their prices etc. When it comes to protecting your assets from inflation, I suppose investing in companies that pay good dividends and are able to cover the inflation in their business model should be a relatively safe bet, as they continue to provide a steady cashflow. If you think the inflation is here to stay and you want to take on more risk, you could take out a loan and leverage that by investing it, as the inflation should cover the interest. Note that this is NOT financial advice -- I'm anyway not qualified to give that, so take this only as food for thought.
- 5y ago

nabla9 5y ago

all items ............ 6.8% food ................. 6.1% all less food & energy 4.9% energy ............... 33.3% energy commodities ... 57.5% energy services ...... 10.7%

INGELRII 5y ago
Thanks. Another number to watch is core inflation in the last 2 years. From a few months before covid to the latest number: Nov 2019: 265427, Nov 2021: 283201 Annualized Core CPI is 3.29%. +1.3% higher than the target. My first order guess is that Fed will decrease asset purchases gradually and an interest rate hike in the next summer might happen if the long-term core inflation is higher than normal. This seems to be what they are communicating.

baggy_trough 5y ago

Oddly, the New York Times failed to send a breaking news push notification for the highest inflation in close to 40 years, while it did for some positive but fairly normal employment numbers a week ago. (Oops, not true, I just didn't notice it. Good job NYT!)

sneak 5y ago
I've been reading this book this week: https://www.thegrayladywinked.com/ https://www.thegrayladywinked.com/ This isn't a recommendation (I'm not through it yet) but it's an interesting perspective.
- etchalon 5y ago
  I'm immediately turned off by "rewriting American History with the 1619 project." It looks like the author is taking well-known, well-covered historical embarrassments by the Times, and plugging in current conservative talking points.
  - sneak 5y ago
    I was turned off by that too, but I'm actually the kind of person who makes a point of reading things written by intelligent people with whom I ideologically diverge. I also acknowledge that I lack the authoritative knowledge of history to evaluate whether assertion that the 1619 project is rewriting history is true or not. I rather like the 1619 project and its narratives, so perhaps I'll add some books to my list for the coming year to be able to call bullshit on that or not. In general my promotion of things that increase skepticism in statements made by authority (such as the NYT) outweighs my disdain for the brawlers in the current US culture war.
    - etchalon 5y ago
      Weirdly, I tend to only read things which challenge my thinking, and avoid things which confirm it, so I haven't read the 1619 project itself, only the commentary around it. I understand the behavior makes no logical sense but … it's just the way I am. What I've found is that there is no disagreement over the facts presented, only interpretations of those facts. I've searched, in vain, for reputable historians challenging specific factual claims made by the project. I haven't read one. The largest, credible criticisms are more or less either a tone argument ("Slavery was A motivation of SOME") or alternate fact discussions, some of which are interesting but none of which I'd count as discrediting anything. The rest of what I've read is mostly Founding Father Worship which I have zero time for.

credit_guy 5y ago

There's one cause of this inflation that the Fed doesn't like to talk about. It's the clampdown on immigration that started during the previous administration and is continuing with the current one. Wage inflation is then a logical outcome, and people should be celebrating it.

jetsetgo 5y ago
Wage inflation that never has come since half a century. Also, it's delusional to think that immigration is related to national inflation.
josephcsible 5y ago
Is there any evidence this is true? For example, of the unfilled jobs today, what proportion of them were filled by immigrants vs. US citizens 2 years ago?
notacoward 5y ago
People should celebrate inequity and nationalism? No. Not even if it benefits me, which ultimately it doesn't anyway.

michaelt 5y ago

We've also seen a lot of "shadow inflation" in my country. Pre-Covid I could send a parcel with two-day delivery for $X or next-day delivery for $1.5X Now, I can still buy "next-day delivery" for $1.5X but the parcel takes two days to arrive. On paper, the service's price hasn't changed - but in reality, it's 50% more expensive.

seneca 5y ago
Yes, this is an unspoken facet of inflation it seems. Many goods are both increasing in price and decreasing in quality or quantity. You're getting less for your money, but only the price increases are counted. I'm curious if economists have a formal study of this.
- MacroChip 5y ago
  I assume that decreases in services will create decreases in goods. So GDP and CPI will reflect this.
- rurp 5y ago
  I've seen at least some of this effect covered by the term "shrinkflation", basically the concept of companies reducing quantities rather than increasing prices. Customers tend to be most sensitive to price changes, so we'll probably see more and more of these non-price inflation changes.
- sbelskie 5y ago
  The CPI does have formal methods for attempting to account for this: https://www.bls.gov/cpi/quality-adjustment/questions-and-answers.htm https://www.bls.gov/cpi/quality-adjustment/questions-and-ans... This can occasionally result in odd things, like when the introduction of unlimited cell phone data plans led core inflation to drop one month for first time in seven years: https://www.wsj.com/articles/BL-REB-37505 https://www.wsj.com/articles/BL-REB-37505
umeshunni 5y ago
This is similar to a concept called 'Shrinkflation' https://en.wikipedia.org/wiki/Shrinkflation https://en.wikipedia.org/wiki/Shrinkflation

pradn 5y ago

Nearly all of the inflation is coming from energy prices (driven by the post-covid recovery in demand and petrostates declining to raise prices to protect their revenues) and cars (used and new; driven by chip shortages and the increase in demand for consumer durables as spending moved away from experiences out of the house). To reduce energy prices, the US will need to increase domestic production or pressure petrostates into increasing production. Biden has a testy relationship with MBS, so the latter is being a bit harder than it would be otherwise. Still, Saudi Arabia is one of several large producers, all of which depend on oil for government revenues. The government can't do too much about reducing demand for cars or reallocating chip producers abroad to make prioritize making chips for car makers. I suppose we'll have to wait it out, and it'll probably take a while for these underlying factors to settle. If you're not driving or buying a car, it doesn't look as bad, though energy prices affect everything else, too.

seanalltogether 5y ago

I'm guessing this is all related to this? https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were-created-this-year/ https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were...

throw0101a 5y ago
No: * https://fredblog.stlouisfed.org/2021/01/whats-behind-the-recent-surge-in-the-m1-money-supply/ https://fredblog.stlouisfed.org/2021/01/whats-behind-the-rec...
- bsedlm 5y ago
  so if they make more money (vast incrase in money supply) does not lead to inflation? (not anymore?, what's changed?)
  - throw0101a 5y ago
    Just creating money doesn't necessarily mean much: > But this is what so much of the money supply represents – money that has been issued and is just sitting around unused. Why is this useful? It’s like calculating your weight changes by counting how much food you have in your refrigerator. No. That’s potential calories consumed and potential weight gain. The amount of food in your fridge tells you little about your future weight changes just like the amount of money in the economy tells us little about the actual price changes in the economy. * https://www.pragcap.com/three-things-i-think-i-think-i-see-dead-mutual-funds/ https://www.pragcap.com/three-things-i-think-i-think-i-see-d... It actually has to be used, which it generally has not been: * https://econbrowser.com/archives/2021/11/so-you-want-to-be-a-monetarist https://econbrowser.com/archives/2021/11/so-you-want-to-be-a... * https://fred.stlouisfed.org/series/M2V https://fred.stlouisfed.org/series/M2V
    - bsedlm 5y ago
      > It actually has to be used, which it generally has not been: maybe it comes down to where does it need to be used (as in which level, capital investment and other long-term assets in contrast with consumer goods)? This money is quickly finding its way to consumable (and other rent-like) purchases, so now it does trigger inflation whereas in the time around 08 the end consumption was not really affected (it is now because pandemic)

marcodiego 5y ago

Meanwhile, in Brazil: 10.74%. Now, the pandemic first made consumption decrease and it created deflation in the beginning. As people start buying again, and employment still hasn't fully recovered, it is normal for inflation to become stronger. The next year pandemic will hopefully be over, but if employment still hasn't fully recovered, we can see even more inflation.

wonderwonder 5y ago

Based on my anecdotal experience this seems to very much understate inflation. How is housing up only 3.8%? This site says over 17% rent increase nationally over the last year: https://www.apartmentlist.com/research/national-rent-data https://www.apartmentlist.com/research/national-rent-data which seems to be more accurate. Anyone with a web browser knows that home prices have experienced a monumental increase. Also a trip to the grocery store appears to cost me 50% more now for essentially the same goods. Every trip to the store pre-covid cost me around $100, now its $150. I do buy primarily proteins so that is the source of the increase but to ignore that seems ill advised. Not generally a conspiracy theorist but unless the people that built this report are using some accepted formula that is very different than the real world this report seems to be intentionally underselling inflation.

gangaputra 5y ago
Lots of good replies here. One other thing to be conscious of is that inflation expectations play a large role in determining how actual inflation will pan out, so to raise the alarm on it in earnest is to the play a very dangerous game.
mitigating 5y ago
That site only does apartments for rent not purchased condos or houses right?
- wonderwonder 5y ago
  Perhaps but even if that is the case, the general consensus appears to be that home purchase prices increased ~17 - 19% over the last year so right in line with the estimate by this site. If anything it would drag the estimate upwards.
  - Rebelgecko 5y ago
    OTOH, low interest rates have balanced that out, and let people who already have mortgages lower their monthly payment drastically. I wonder if monthly payment is perhaps a better metric than purchase price? At least for me, that's what actually determined how much home I'd be able to buy.

chrisacky 5y ago

How do you guys normally handle pay reviews? Curious how each company operates.. I know the saying is that if you don't get a raise AT LEAST on par with inflation, you are taking a cut, but at what point do you take this to employer?

kilbuz 5y ago
Usually doesn't hurt to ask, but if you really want a raise, in my experience the most reliable method is to have a better offer ready.

xapata 5y ago

Good news for debtors! Remember that "cross of gold" speech? There was a time when it was popular to ask the government for inflation.

MrPowers 5y ago

The Fed was initially saying the inflation was transitory, but have recently dropped the "transitory" label. Back in July, Siegel pointed out that the M2 money supply is 30% over pre-pandemic levels and predicted that would translate into 20% cumulative inflation over the next 3 years. Here are my talk notes / video links if you're interested: https://neapowers.com/investing/jeremy-siegel/ https://neapowers.com/investing/jeremy-siegel/ In July Siegel said "There is zero need for the Fed to be buying $120 billion in bonds every month given market conditions." I don't know why the Fed is buying mortgage backed securities in the midst of an apparent housing bubble. Larry Summers was voicing inflation concerns back in March: https://www.youtube.com/watch?v=PBnaahSe7JU&ab_channel=BloombergMarketsandFinance https://www.youtube.com/watch?v=PBnaahSe7JU&ab_channel=Bloom... The main macroeconomists I follow (Siegel, Gundlach, Summers) are all puzzled by the Feds actions recently.

magila 5y ago
I don't know if you were being rhetorical, but the Fed's motivation doesn't seem like that big of a mystery. They're succumbing to political pressure not to induce a recession or allow asset prices to drop.
- handrous 5y ago
  As far as I can tell, the political class decided that no cost was too high to avoid being the one left standing when the music stops, after the '08 crash. So we'll just inflate until someone gets unlucky and is the one stuck with the blame for a massive crash rather than 2-3 smaller recessions inconveniencing some other politicians, who are actually the ones to blame for the whole situation. [EDIT] actually, arguably, the '08 crash was already an in-the-works recession delayed and made worse by exactly this kind of thing. Another possibility is that someone realized something really awful, like that the global economy had shifted such that anything like the "asian contagion" crash (no, nothing to do with COVID[0]) can't be contained next time, so they're desperately trying to keep the plates spinning until they can figure something out, because they expect the next major crash will be a true global depression and don't know how to stop/mitigate it if it's triggered. [0] https://en.wikipedia.org/wiki/1997_Asian_financial_crisis https://en.wikipedia.org/wiki/1997_Asian_financial_crisis

jjmorrison 5y ago

But clearly not because of Biden printing money...

jonnycomputer 5y ago
Sarcasm is a beautiful tool, but it must be used wisely.
quadrangle 5y ago
In a complex system, there's a lot of actors. Take ANY one actor as the only one with a choice, presume all the rest as a given, and you can blame that one actor. The socialist argument does it this way: inflation obviously only happens when prices are actually raised, and that's done by the sellers of things, so if the sellers simply decided to keep their prices unchanged, they would stay unchanged. That's absolutely true and doesn't depend on anyone else. Biden didn't sign a law requiring anyone to raise prices. I suspect you can find some way to complain about that argument, and maybe your complaint will make sense. But if you want to pick ONE blame point for price increases, the one that is best is the point where some person directly chooses to raise prices. Besides that, it's all very complex.
whateveracct 5y ago
It's clearly not primarily driven by the "printing money" HNers are not a rational bunch when it comes to economic and monetary policy lmao
- spiralx 5y ago
  90% of HNers couldn't tell you what fiscal and monetary policy even are, let alone have a sensible debate on the economy.

asdfsd234234444 5y ago

This is good for bitcoin.

seoaeu 5y ago
Which is presumably why it is down 27% over the last month
- asdfsd234234444 5y ago
  Zoom out a little
  - seoaeu 5y ago
    You are saying that this November's inflation numbers caused bitcoin to do well back in October?
    - asdfsd234234444 5y ago
      yes, people saw this coming well before October...

savant_penguin 5y ago

The 3.5 trillion bill will cost zero

mempko 5y ago

If you think that's impressive, you should see asset price inflation!

protomyth 5y ago

I think the increase (over a $1/gallon since last year) in gas prices is doing a number on not only shipping but a large group of low income folks. For a lot of the country, public transportation is either limited or non-existent. Higher gas prices not only affect the cost of goods but increase the cost of going to a job.

lettergram 5y ago

Wait until they raise cereal prices 20% at the beginning of next year lol

SamuelAdams 5y ago
Not a bad thing, people need to stop eating cereal anyways. Most of it is packed with sugar.
- lettergram 5y ago
  “inflation is good because it’ll make people skinnier as they can’t afford food” Wonderful argument lol

pezzana 5y ago

The consensus view is that this is the result of QE. The Fed has "pumped trillions of dollars into the economy." And that explains the blistering inflation print today. But consider: 1. gold, the traditional inflation hedge, is at the same price it was in 2011 (~$1,800) after having gone nowhere in the last year 2. the 30-year treasury is yielding 1.85%, a real yield of -4.95% 3. the Eurodollar futures curve recently inverted [1] 4. The dollar is up noticeably against other currencies [4] The "pumping money" idea makes no sense based on what QE actually does. Here's how QE works. The Fed buys a Treasury from a bank. In exchange, the Fed credits the bank with a reserve asset. That reserve asset is held in an account at the Fed and can not leave the Federal Reserve system. Nor can it be used to buy stocks, bonds, or CEO yachts. This is not "money" in the sense that most people think of the word. It's more like a kind of utility token. QE is a way to turn treasuries into reserve assets. In other words, it's a swap with no net money creation. Regarding (1), some say derivatives are to blame for gold's abysmal performance. Well, similar derivatives markets exists for stocks, and those have been ripping higher thank you very much. Well, the consensus view says, (2) is explained by the fact that the Fed controls the Treasury market. But does it really? Consider the observable effects of QE by taking a look at a chart of 30-year treasury yields since the early 1980s and you'll see a straight channel running down and to the right. QE had zero effect on this long term trend line.[2] If the Fed actually "controlled" the treasury market during QE, wouldn't the trend line be broken in some way? The most esoteric of these factors is (3). Still, the Fed's balance sheet has no eurodollar futures. So why is that this market is signaling lower yields and slower economic growth ahead? Bottom line: the Fed is being blamed for skyrocketing inflation. However, there's a case to be made that the Fed's actions have little to do with what's going on because QE's effects on the economy actually make little difference. See, for example, the Bank of Japan, which tried QE long before the US and concluded that its effects were mixed at best.[3] All of this leads to the conclusion that this kind of inflation print is a blip, and the Fed had nothing to do with it. In other words, inflation really is transitory. Gold, treasuries, and the eurodollar market are all signaling slower growth and lower inflation ahead. Possibly much lower. QE is largely a confidence trick. It's time to have a closer look at the man behind the curtain. [1] https://www.bloomberg.com/news/articles/2021-12-03/bets-that-fed-hikes-may-peter-out-spur-inversions-in-eurodollars https://www.bloomberg.com/news/articles/2021-12-03/bets-that... [2] https://fred.stlouisfed.org/series/DGS30 https://fred.stlouisfed.org/series/DGS30 [3] https://www.frbsf.org/economic-research/publications/economic-letter/2006/october/did-quantitative-easing-by-the-bank-of-japan-work/ https://www.frbsf.org/economic-research/publications/economi... [4] https://www.tradingview.com/chart/?symbol=dxy https://www.tradingview.com/chart/?symbol=dxy

techbio 5y ago

As the baseline comparison of inflation rate to all other examples of "year-over-year" is pretty obviously skewed by circumstances, it would be potentially less misleading to the general public to say something contextual like "2021-over-2020" than "year-over-year".

th0ma5 5y ago

There are a lot of opinions on what this means and its effects on our individual lives, but it should be noted that it usually has no effect on people's view of a ruling US party so long as there has been strong economic growth, and there has been extremely strong growth. If you didn't get that raise you want to offset inflation, there has never been a better time in many sectors to find a higher paying job.

deleted 5y ago

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dqpb 5y ago

Here is what I think we need: - an operational model of our economy that includes failure modes, like queue failures - open source software that can easily and reliably represent this model and simulate trajectories - government and news reports should reference the exact configuration of the model that expresses what they are reporting In my view, anything less than this is unactionable and basically meaningless.

nabla9 5y ago
Project Cybersyn https://en.wikipedia.org/wiki/Project_Cybersyn https://en.wikipedia.org/wiki/Project_Cybersyn

someuser54541 5y ago

If inflation is at %6-%7 and mortgage rates are at ~3%, aren't people literally getting paid to borrow money? Someone please correct me if I am wrong.

chaorace 5y ago
Worth noting: mortgages typically compound daily, whilst annualized inflation figures measure inflation as if it compounded annually. A 3% APR mortgage comes out to about 4% APY, which is a little more directly comparable to an annualized inflation figure.
OrangeMonkey 5y ago
Things net out at the end for new home buyers. The mortgage rate may be 3%, but the cost of your home increases at a much higher number causing the value you have in mortgage rate to be offset by the higher up front cost of a home. People 'buy' a mortgage payment, not a home. Its why home appreciation 'slows' when rates are high, and we have had record increases in home values with mortgage rates super low.
xxbondsxx 5y ago
Yes they are, in a sense that the outstanding mortgage debt grows at a slower pace than inflation. However the 3% is guaranteed for ~30 years, so it's likely the bank would still come out ahead in the long run if inflation settles down. It's also not an infinite money slot machine -- you can only qualify for so many mortgages (which require large down payments) and houses are pretty illiquid assets.
quadrangle 5y ago
This gets into a vicious cycle. Given that lots of people are effectively paid to borrow money, that boosts the money people can bid on a house, and so that itself pushes up the prices. Low-interest rates on mortgages are a huge boon for sellers since the buyers have access to more money, and thus they can pay more. So, for the buyers, the "get paid" part only works if they flip a house and become sellers before the cycle bubbles and bursts. Meanwhile, buyers who want to get a house just to live in it for the rest of their lives are having to pay much higher prices, and it has nothing to do with real supply and demand. Cut out all the speculators/investors/flippers and the situation would be very different. Maybe we shouldn't even continue the premise that a person who doesn't live at a property can "own" it.

sebringj 5y ago

This suggests to me if you don't get at least a 6.8% raise as an employee per year, you should start looking for another job. That isn't really a raise mind you. It should be added to whatever % raise they give you IMO.

mcguire 5y ago

It is interesting to note that energy costs are up in significant double digits, except for electricity. This may have environmental (and climate) benefits.

_prototype_ 5y ago

We replaced a president that made mean tweets with one that has directly affected our lives via increased inflation and gas prices, to name a few. Crazy times.

whateveracct 5y ago
if you attribute this inflation to the guy in office instead of the global pandemic that's been going on for multiple years, you're nuts lol
- _prototype_ 5y ago
  Biden directly closed the Keystone XL pipeline after Trump had us at energy independence. Also, he and his democratic party pushed and passed the biggest spending bills in our nations history. You don't think that directly affects inflation and gas prices? You must be living under a rock, or willfully blind.
  - whateveracct 5y ago
    What evidence do you have beyond superficial pattern matching that the Keystone XL closing is a primary driver behind the current fuel prices? https://www.politifact.com/factchecks/2021/dec/01/facebook-posts/no-evidence-biden-canceling-oil-pipeline-caused-hi/ https://www.politifact.com/factchecks/2021/dec/01/facebook-p... says there's none at least (and shows its work)

slackfan 5y ago

..."and here is why this is a good thing!"

koonsolo 5y ago

And then people still question what the use-case of Bitcoin can possibly be. It's nice to be part of the pyramid scheme! ;D

senko 5y ago

I haven't seen anyone comparing that to the previous YoY index rise 2019-2020 of just 1.4%, the least in last 10 years (of also very subdued inflation). When you average those two out (cagr), that's 4%. Nothing to sneeze at, but still a lot less.

RickJWagner 5y ago

What's bad about inflation is that it really hurts people on fixed income and the poor. Fixed income (i.e. retired people) because their stack of savings buys less. The poor because if you can't afford new tires at $600, you're surely not going to be able to afford them at $800. Politicians need to be very careful with inflationary decisions.

mkevac 5y ago

It is interesting that this site is blocked from Russia. I've tried using VPN and going there from different countries and yes, it's only from Russia. Access Denied You don't have permission to access "http://www.bls.gov/news.release/cpi.nr0.htm" on this server. Reference #18.14645e68.1639219418.12814b8e

inthegreenwoods 5y ago

Measuring economics= econometrics. It is a very specialised field of statistics. Which means about 0.01% of the population understands it. The first thing to understand about statistics is that a single point of data is worse than useless. You need to be up to date on hundreds of points of data to be in the game. The second point is that when a single point of data is used in a mass media publication it has been chosen to sell advertising and not because it might be significant. So onto the claim made in the statement.”Annualised”in this case means that the figure for a period of 90 days has been multiplied by 4 to create a completely artificial number that a person who has studied arithmetic can do in their head. It has no particular meaning or significance, it just makes for a flashy headline. Every person and every product has its own inflation rate and it changes by the hour. Assembling billions of these individual points of data into an official figure is on par with astrology in terms of its predictive power. Weather prediction is way ahead of economics. Even the experts are guessing and a guess by an expert is just that, a guess.Your mileage will definitely vary.

declnz 5y ago

Aside: I wish posts like this would be (re)titled "US inflation rises 6.8%..." etc. I'm in no doubt that HN readership is mostly US-based, but it's definitely global...