10 ms·

Wholesale prices measure rises 9.6% in Nov from year ago, fastest pace on record

154 points by koolba 5y ago

MisterBastahrd 5y ago
Wonder if this continues how long it'll take Amazon and Walmart to construct their own ports so that they don't have to deal with the higher costs and supply chain delays.
thedudeabides5 5y ago
"transitory"
- deleted 5y ago
  [deleted]
- xapata 5y ago
  All things are transitory. Amusingly, current inflation being (depending on your industry) most intense for transport gives the label a new significance.
  - jiocrag 5y ago
    A daring new tack in fed apologism: everything is transitory. Guys—don’t worry about the heat emanating from our sun; it’s only a multi-billion year transitory phase!
    - thatguy0900 5y ago
      The fed may find themselves transitory at some point.
    - downrightmike 5y ago
      Give it a few billion years it will both cool down AND wipe out the inner planets. Win WIn.
    - draw_down 5y ago
      Exactly. How shameless can you get.
    - xapata 5y ago
      What are we trying to optimize for anyway, low inflation or high growth? If policy manages to have sustained high growth, why do we care about inflation?
      - mym1990 5y ago
        The policy changes the more one of those things swings to the extreme. Ultimately growth should be moderated...despite what some believe, high growth all the time is not a good thing.
        xapata 5y ago
        Indeed, the question is how fast is too fast. Right now, the supply problems seem to be dead weight loss, but those are causing inflation and aren't a symptom of it. We should worry when people start hoarding in warehouses, and then only to the extent that we think it's truly a waste and not a reasonable precaution to avoid, say, a toilet paper panic. Purchasing power for the bulk of the US population had been falling since the 70's. We called it low inflation, but that's more from the perspective of an employer than an employee. It seems the low employment rate has finally resulted in purchasing power increases. If prices go up a little as well, I don't mind. Reprinting menus isn't hard.
      - jiocrag 5y ago
        Because inflation’s effects are uneven. On the plus-ish side: -Optically better revenue and profits for companies (albeit fundamentally similar or worse because of increased supplier prices), -better fixed income returns (again though, relative; and bond prices themselves decline), and -(historically) equity appreciation. On the negative-ish side: -wage increases tend to lag and underperform inflation, so people who earn their income primarily via wages suffer, at least in the near term. -capital gets a lot more expensive if the fed raises rates. While equities generally increase during times of inflation, there can be huge downdrafts as valuation models adjust to the increased cost of capital. Given where the market is trading right now on a virtually any valuation basis vs previous fed hike cycles, things could get really ugly for a while. (*none of above is investment advice. Good chance it’s all proven totally wrong, actually, given how unprecedented market and economic behavior has been over the past decade)
- jihadjihad 5y ago
  "In the long run, we're all dead"
testcase_delta 5y ago
I own a wholesale toy business and the entire cost increase for us is ocean freight. A 40’ container from Asia used to cost 3k, now it’s 12k to 15k (and takes months longer). If a 40’ container can carry 10k units, that’s a unit cost increase of over a dollar just for freight.
- gt565k 5y ago
  I feel like it'll only get worse as we move past covid and everything is open at 100% like it was pre-covid.
  - Zigurd 5y ago
    Ocean shipping has been a boom/bust business since forever. It is possible "this time is different," and there are articles with exactly that headline, citing moderation in ordering new ships, but I don't see why such restraint will last.
- TakuYam 5y ago
  Is that due to capacity at ports being restricted by lack of downstream capacity (ie trailer availability)?
  - cool_dude85 5y ago
    I have read, without a lot of evidence to be fair, that port capacity is a small part of it. Overseas container shipping companies had, pre-pandemic, been competing so heavily that they were often running a loss and hoping to make it up on volume. They used the pandemic to sort of consolidate and lower capacity by decommissioning ships and so dramatically increase per-container price. Not sure if there's a lot of clear evidence for it, but it's one explanation I read.
- acd 5y ago
  Central banks try to keep inflation at 2% by controlling local wage inflation. However markets are globalized so price of imported goods are energy price shipping plus foreign wage inflation. Thus local central banks cannot control foreign wage inflation and thus inflation. Local inflation is also exported through export prices but that currency exchange rate can control to some extent.
topaz0 5y ago
One pet peeve of mine in all of this inflation talk is that all of the comparisons are to a year ago, i.e. to a very unusual year. I'd much rather see the annualized increases from two years ago. Better yet, show both numbers so we can understand the both the trend and the covid effect.
- gruez 5y ago
  >One pet peeve of mine in all of this inflation talk is that all of the comparisons are to a year ago, i.e. to a very unusual year. you mean the YOY numbers? That might have been a big issue for the march-may numbers (where the dip was the most dramatic), but for the latest inflation data (november) we see that the YOY data it was comparing against (ie. november of last year) has mostly recovered back to the trendline. https://i.imgur.com/0ufS56V.png https://i.imgur.com/0ufS56V.png
  - topaz0 5y ago
    The plot you share is exactly the context I am asking for. It looks like "mostly recovered back to the trendline" is technically true, but it's still measurably below that trendline. And my point is that, even if it was fully at the trendline last Nov, I would want the article to say that, because it's not something that I would a priori expect. To be clear, I am not arguing that the narrative is wrong, just that the article doesn't have the context to convince me that the narrative is right.
    - spiralx 5y ago
      Last years huge dip due to COVID has been great for spinning all different kinds of narratives that fall apart when you look beyond last May. There are definitely those with vested interests in pushing the "economy is in tatters and spiralling out of control" angle, I'm sure you can think of some.
bshipp 5y ago
I know the common refrain with this inflation is that it's temporary due to COVID, but when I talk to suppliers and customers I'm finding that everyone's costs are skyrocketing this year (and last, as well). I have no illusions that companies will immediately lower their prices the moment their input costs start dropping, not after weathering decades of pressure from buyers to race to the bottom. They are going to cling to these gains for as long as possible, which is going to influence downstream prices for years to come. More importantly, the inflation is showing up in gas and highly sensitive related costs like transportation. But businesses are currently in the process of baking those costs into current and future B2B contracts, which are being negotiated now. We are just entering the period where all of those renegotiated higher-cost contracts are going to start showing up in final product values. In my humble opinion, I expect to see CPI start reflecting cost increases throughout the economy over the next 12-18 months.
- samwillis 5y ago
  It’s a tiny datapoint but my B2C company is probably going to put prices up in January. Our costs have risen, we have held off as long as possible but will probably have to make the change.
- BobbyJo 5y ago
  Totally agree. Historically, prices only go down during recessions, and only barely. The only way these gains don't stick is if our economy falls off a cliff.
  - WalterBright 5y ago
    Before 1914, when the US switched to a fiat money system, inflation netted out to zero change for the previous century. Since then, inflation has stayed pretty consistently positive. Inflation is caused by the government printing money to spend rather than raising the money via taxation. It's a politically cheap way to buy votes, which is why fiat money systems became universal among governments.
    - mistrial9 5y ago
ArtDev 5y ago
Costs have gone up but there is also too much consolidation in many areas of the US economy. Not enough competition means prices will rise simply because they can.
fallingfrog 5y ago
The problem is, this time they can't pull the interest rates lever like they did with the Volcker Shock, because we have so many zombie companies that would instantly fold if they couldn't keep rolling their debt over.
- bequanna 5y ago
  This isn’t at all true. In addition to very favorable net income/interest expense ratios, most large companies have increased the duration of their debt. So, pretty low interest expense relative to income plus longer dated, low interest debt. Will refinancing some of this debt be more expensive if rates increase? Maybe a little, but this definitely does not look to be a systemic risk.
  - fallingfrog 5y ago
    OK, but during the Volcker shock interest rates when up to 18%. Not just a little. Go to an online loan calculator and try this: If you have a loan for 100k dollars, and the interest rate is 4%, your payment is 477 dollars a month. If the interest rate is 18%, the payment is 1507 dollars a month. The difference is not minor.
fallingfrog 5y ago
Another aspect of this is that right now inflation is high in the United States relative to other countries. In the worst case scenario, this is what the beginning of a dollar collapse looks like, or at least, a devaluation of the currency.
- paulpauper 5y ago
  hardly. the US dollar gained a lot this year.
beezle 5y ago
The change really should be view on a 2 year basis as 2020 was an aberration in the other direction. However, exactly what part is here for good and what is transitory is next to impossible to guess. Are food prices up because of increase in cost of production? Drought? Transport costs? Will trucking companies be able to hire new workers to replace the long cycle of retirement? Will ports and other hubs stop being bottlenecks so that companies do not hoard/excessively preorder? How much is from reduced competition as companies finally make use of the scale from the merger frenzy of the past decade? No simple, single explanation.
- WalterBright 5y ago
  It'd probably be worse on a 2 year basis. I'm seeing prices having risen much more than 9%.
CountDrewku 5y ago
“The fact is the unemployment rate is about half what it was a year ago. So a year ago, people were in their homes. Ten percent of people were unemployed. Gas prices were low because nobody was driving. People weren’t buying goods because they didn’t have jobs. Now more people have jobs. More people are buying goods. That’s increasing the demand. That’s a good thing.” -Jen Psaki So, don't worry about it guys Build Back Better will fix it....
- pessimizer 5y ago
  "The average hourly wage for production and non-supervisory workers is up 5.8 percent over the last year. It’s up 10.3 percent if we want to go back two years." "The increases are even larger towards the bottom end of the wage distribution. The average hourly wage for non-supervisory workers in restaurants has risen 12.4 percent over the last year and 13.5 percent over the last two years." https://cepr.net/the-medias-war-against-biden-over-inflation/ https://cepr.net/the-medias-war-against-biden-over-inflation... Inflation is mostly a problem for people who are holding debt, not the bottom 90%.
  - rednerrus 5y ago
    Isn't giving millions of people an additional 10% income boost all at once going to be a disaster from supply chain shock and the environmental impact?
  - mym1990 5y ago
    Inflation is most certainly a problem for the bottom 90%, affecting each part of the 90% differently. An average hourly increase does not mean real income growth by itself. As you move from high to middle to low class, consumption becomes a bigger piece of the expense pie(rent, food, clothes, etc...) and those goods are also the ones that are increasing in price. Meanwhile someone that bought a house last year basically anywhere has probably seen a large appreciation.
  - CountDrewku 5y ago
    Excuse me? What fantasy world are you living in where this isn't affecting you? https://nypost.com/2021/12/10/prices-spike-6-8-percent-most-in-39-years/ https://nypost.com/2021/12/10/prices-spike-6-8-percent-most-... >The average hourly wage for production and non-supervisory workers is up 5.8 percent over the last year. It’s up 10.3 percent if we want to go back two years. Hmmm... https://www.axios.com/wages-inflation-economic-data-c912afdb-b950-4183-8283-50afff593576.html https://www.axios.com/wages-inflation-economic-data-c912afdb... "For all the hype that wage growth has received this year, pay isn’t keeping up with price growth. Real earnings, or wage growth less inflation, turned sharply negative the last two months, after eeking out gains over the summer, consumer price data out Friday show." The article you linked reeks of gaslighting by the administration to try and portray this in a positive light. They literally came out and said they were going to do this- https://nypost.com/2021/12/08/white-house-working-with-media-to-get-positive-biden-coverage/ https://nypost.com/2021/12/08/white-house-working-with-media...
BuyMyBitcoins 5y ago
I’ve heard an interesting hypothesis that one of the reasons inflation had been so low in the last decade was because of the price discovery and competition that the Internet provided. Big retailers tend to offer price matching with sites like Amazon and Newegg. Not only does this make it difficult to compete on price, it has the effect of leveling the prices across the market and keeping them in sync. Members of my extended family are small business owners and they frequently have to explain that they simply cannot match online prices. So, profit margins have been going down steadily on sales. I sense there is a lot of pent up price hike pressure all across the economy. If you’ve been struggling with lower margins and higher costs, the obvious answer is to charge more. What better time to do so than when everyone is expecting it? And, once you have made the decision to raise prices, why not be a little more aggressive because the opportunity to do so doesn’t come along very often? Just my two cents.
- partiallypro 5y ago
  I don't know how true that is, Amazon often has a higher price than Walmart but still has higher sales online (online sellers use this a lot for arbitrage.) A lot of people don't "shop around" anymore, they go with the most convenient route. Price seekers are generally outliers in the vast consumer market nowadays.
  - lotsofpulp 5y ago
    How do you know Amazon is selling more of the same product as Walmart/Costco/Target at a higher price? Does Amazon even show how much it sells separately from 3rd party resellers?
tunesmith 5y ago
No idea how to respond in terms of personal finances other than investing 10k in I-Bonds and agitating for a raise.
- mym1990 5y ago
  It makes it incredibly difficult to allocate resources when pretty much everything feels overbought. Personally, I have put off buying a car(was going to go electric but those 'affordable' model 3 prices not looking so great anymore), have changed some of my grocery habits, and try to consume less in general.
- nostrademons 5y ago
  I-bonds are actually relatively poor inflation hedges because government inflation numbers usually understate actual inflation. This has been constant across multiple countries and multiple hyperinflationary events. It's like entering a contract where the party paying you also gets to set how much they pay you. Real assets that universally desired usually do better. Things like real estate, stocks of consumer staples, and industries that are critical for conducting business (eg. transportation, or anything that's a channel to the consumer). People will continue to need these regardless of what the government does, and as long as contracts hold, their value will increase.
rednerrus 5y ago
The issue now is that business believe that price elasticity is less because of the shortages and are therefore raising the prices beyond what the increases caused by the shortages. There was an article recently, and I'll see if I can dig it up saying that some important part of this inflation is actually price gouging and we are likely to see record profits from some of these businesses.
tmaly 5y ago
I often wonder how accurate the main inflation number is if numbers like this one are much higher. I have made mental notes of consumer goods and food items having price increases of 20-100% over the past year with no retraction in sight. I question if the prevailing attitude towards food and energy are correct in there calculation given this exceptional environment.
vondur 5y ago
It's always interesting every time I see an article posted regarding increasing inflation and we get so many responses from people who are probably in the top 5% income bracket claim how it's not a big deal. The food/energy inflation really hurts the lower income brackets.
- mrjangles 5y ago
  Inflation hurts bankers, but is very good for anyone who has debt. Mild inflation poses zero damage to poor people as wages and interest on their saving increases linearly with the inflation. I don't know where anyone got the idea that inflation was bad for poor people, but it was probably from people associated with the banks. On the other hand, one situation that inflation can be very bad is when the government has a lot of debt and doesn't have a balanced budget, which is just about every first world country at the moment.
  - VirusNewbie 5y ago
    This is exactly backwards. Inflation helps debtors especially those who use debt to be leveraged into assets, who are by and large are upper middle class (housing) and the upper class by proxy with equities. Inflation is robbing poor people and transferring their wealth to the upper class.
    - mrjangles 5y ago
      If something helps debtors, it is clearly to the detriment of creditors. I don't understand how your comment can make sense unless you are claiming that creditors are usually poor and debtors are usually rich, which is a pretty far out claim.
    - xapata 5y ago
      You're both incorrect. Poor people are affected by the ratio of price inflation to wage inflation, which is for the first time in ~50 years flipped such that wages are growing faster than prices. Inflation transfers money from creditors to debtors, to the extent it's a surprise. Interest rates and origination fees incorporate risk of inflation. The US government is in debt to US treasury bill holders. You could say inflation is a wealth transfer from T-bill holders to the government, but the buyers of T-bills knew the risks and made their choices. Maybe they've even hedged. Poor people have credit card debt, payday loan debt, medical debt, etc. I wouldn't say housing is exclusive to the upper middle class, because 65% of Americans own houses. That seems like a low bar for "upper" class.
RickJWagner 5y ago
This is awful news. Inflation hurts people living on fixed income and people with low income. (If you can't afford to fix your car for $500, you surely can't afford to fix it for $1200.) People with some money can invest in equities. Corporations can often pass the costs on down the line. So the shareholders keep up, somewhat. We need some plays from the early 80s playbook. Fast.

154 points by koolba 5y ago

Wonder if this continues how long it'll take Amazon and Walmart to construct their own ports so that they don't have to deal with the higher costs and supply chain delays.

thedudeabides5 5y ago

"transitory"

deleted 5y ago
[deleted]
xapata 5y ago
All things are transitory. Amusingly, current inflation being (depending on your industry) most intense for transport gives the label a new significance.
- jiocrag 5y ago
  A daring new tack in fed apologism: everything is transitory. Guys—don’t worry about the heat emanating from our sun; it’s only a multi-billion year transitory phase!
  - thatguy0900 5y ago
    The fed may find themselves transitory at some point.
  - downrightmike 5y ago
    Give it a few billion years it will both cool down AND wipe out the inner planets. Win WIn.
  - draw_down 5y ago
    Exactly. How shameless can you get.
  - xapata 5y ago
    What are we trying to optimize for anyway, low inflation or high growth? If policy manages to have sustained high growth, why do we care about inflation?
    - mym1990 5y ago
      The policy changes the more one of those things swings to the extreme. Ultimately growth should be moderated...despite what some believe, high growth all the time is not a good thing.
      - xapata 5y ago
        Indeed, the question is how fast is too fast. Right now, the supply problems seem to be dead weight loss, but those are causing inflation and aren't a symptom of it. We should worry when people start hoarding in warehouses, and then only to the extent that we think it's truly a waste and not a reasonable precaution to avoid, say, a toilet paper panic. Purchasing power for the bulk of the US population had been falling since the 70's. We called it low inflation, but that's more from the perspective of an employer than an employee. It seems the low employment rate has finally resulted in purchasing power increases. If prices go up a little as well, I don't mind. Reprinting menus isn't hard.
    - jiocrag 5y ago
      Because inflation’s effects are uneven. On the plus-ish side: -Optically better revenue and profits for companies (albeit fundamentally similar or worse because of increased supplier prices), -better fixed income returns (again though, relative; and bond prices themselves decline), and -(historically) equity appreciation. On the negative-ish side: -wage increases tend to lag and underperform inflation, so people who earn their income primarily via wages suffer, at least in the near term. -capital gets a lot more expensive if the fed raises rates. While equities generally increase during times of inflation, there can be huge downdrafts as valuation models adjust to the increased cost of capital. Given where the market is trading right now on a virtually any valuation basis vs previous fed hike cycles, things could get really ugly for a while. (*none of above is investment advice. Good chance it’s all proven totally wrong, actually, given how unprecedented market and economic behavior has been over the past decade)
jihadjihad 5y ago
"In the long run, we're all dead"

testcase_delta 5y ago

I own a wholesale toy business and the entire cost increase for us is ocean freight. A 40’ container from Asia used to cost 3k, now it’s 12k to 15k (and takes months longer). If a 40’ container can carry 10k units, that’s a unit cost increase of over a dollar just for freight.

gt565k 5y ago
I feel like it'll only get worse as we move past covid and everything is open at 100% like it was pre-covid.
- Zigurd 5y ago
  Ocean shipping has been a boom/bust business since forever. It is possible "this time is different," and there are articles with exactly that headline, citing moderation in ordering new ships, but I don't see why such restraint will last.
TakuYam 5y ago
Is that due to capacity at ports being restricted by lack of downstream capacity (ie trailer availability)?
- cool_dude85 5y ago
  I have read, without a lot of evidence to be fair, that port capacity is a small part of it. Overseas container shipping companies had, pre-pandemic, been competing so heavily that they were often running a loss and hoping to make it up on volume. They used the pandemic to sort of consolidate and lower capacity by decommissioning ships and so dramatically increase per-container price. Not sure if there's a lot of clear evidence for it, but it's one explanation I read.
acd 5y ago
Central banks try to keep inflation at 2% by controlling local wage inflation. However markets are globalized so price of imported goods are energy price shipping plus foreign wage inflation. Thus local central banks cannot control foreign wage inflation and thus inflation. Local inflation is also exported through export prices but that currency exchange rate can control to some extent.

topaz0 5y ago

One pet peeve of mine in all of this inflation talk is that all of the comparisons are to a year ago, i.e. to a very unusual year. I'd much rather see the annualized increases from two years ago. Better yet, show both numbers so we can understand the both the trend and the covid effect.

gruez 5y ago
>One pet peeve of mine in all of this inflation talk is that all of the comparisons are to a year ago, i.e. to a very unusual year. you mean the YOY numbers? That might have been a big issue for the march-may numbers (where the dip was the most dramatic), but for the latest inflation data (november) we see that the YOY data it was comparing against (ie. november of last year) has mostly recovered back to the trendline. https://i.imgur.com/0ufS56V.png https://i.imgur.com/0ufS56V.png
- topaz0 5y ago
  The plot you share is exactly the context I am asking for. It looks like "mostly recovered back to the trendline" is technically true, but it's still measurably below that trendline. And my point is that, even if it was fully at the trendline last Nov, I would want the article to say that, because it's not something that I would a priori expect. To be clear, I am not arguing that the narrative is wrong, just that the article doesn't have the context to convince me that the narrative is right.
  - spiralx 5y ago
    Last years huge dip due to COVID has been great for spinning all different kinds of narratives that fall apart when you look beyond last May. There are definitely those with vested interests in pushing the "economy is in tatters and spiralling out of control" angle, I'm sure you can think of some.

bshipp 5y ago

I know the common refrain with this inflation is that it's temporary due to COVID, but when I talk to suppliers and customers I'm finding that everyone's costs are skyrocketing this year (and last, as well). I have no illusions that companies will immediately lower their prices the moment their input costs start dropping, not after weathering decades of pressure from buyers to race to the bottom. They are going to cling to these gains for as long as possible, which is going to influence downstream prices for years to come. More importantly, the inflation is showing up in gas and highly sensitive related costs like transportation. But businesses are currently in the process of baking those costs into current and future B2B contracts, which are being negotiated now. We are just entering the period where all of those renegotiated higher-cost contracts are going to start showing up in final product values. In my humble opinion, I expect to see CPI start reflecting cost increases throughout the economy over the next 12-18 months.

samwillis 5y ago
It’s a tiny datapoint but my B2C company is probably going to put prices up in January. Our costs have risen, we have held off as long as possible but will probably have to make the change.
BobbyJo 5y ago
Totally agree. Historically, prices only go down during recessions, and only barely. The only way these gains don't stick is if our economy falls off a cliff.
- WalterBright 5y ago
  Before 1914, when the US switched to a fiat money system, inflation netted out to zero change for the previous century. Since then, inflation has stayed pretty consistently positive. Inflation is caused by the government printing money to spend rather than raising the money via taxation. It's a politically cheap way to buy votes, which is why fiat money systems became universal among governments.
  - mistrial9 5y ago

ArtDev 5y ago

Costs have gone up but there is also too much consolidation in many areas of the US economy. Not enough competition means prices will rise simply because they can.

fallingfrog 5y ago

The problem is, this time they can't pull the interest rates lever like they did with the Volcker Shock, because we have so many zombie companies that would instantly fold if they couldn't keep rolling their debt over.

bequanna 5y ago
This isn’t at all true. In addition to very favorable net income/interest expense ratios, most large companies have increased the duration of their debt. So, pretty low interest expense relative to income plus longer dated, low interest debt. Will refinancing some of this debt be more expensive if rates increase? Maybe a little, but this definitely does not look to be a systemic risk.
- fallingfrog 5y ago
  OK, but during the Volcker shock interest rates when up to 18%. Not just a little. Go to an online loan calculator and try this: If you have a loan for 100k dollars, and the interest rate is 4%, your payment is 477 dollars a month. If the interest rate is 18%, the payment is 1507 dollars a month. The difference is not minor.

fallingfrog 5y ago

Another aspect of this is that right now inflation is high in the United States relative to other countries. In the worst case scenario, this is what the beginning of a dollar collapse looks like, or at least, a devaluation of the currency.

paulpauper 5y ago
hardly. the US dollar gained a lot this year.

beezle 5y ago

The change really should be view on a 2 year basis as 2020 was an aberration in the other direction. However, exactly what part is here for good and what is transitory is next to impossible to guess. Are food prices up because of increase in cost of production? Drought? Transport costs? Will trucking companies be able to hire new workers to replace the long cycle of retirement? Will ports and other hubs stop being bottlenecks so that companies do not hoard/excessively preorder? How much is from reduced competition as companies finally make use of the scale from the merger frenzy of the past decade? No simple, single explanation.

WalterBright 5y ago
It'd probably be worse on a 2 year basis. I'm seeing prices having risen much more than 9%.

CountDrewku 5y ago

“The fact is the unemployment rate is about half what it was a year ago. So a year ago, people were in their homes. Ten percent of people were unemployed. Gas prices were low because nobody was driving. People weren’t buying goods because they didn’t have jobs. Now more people have jobs. More people are buying goods. That’s increasing the demand. That’s a good thing.” -Jen Psaki So, don't worry about it guys Build Back Better will fix it....

pessimizer 5y ago
"The average hourly wage for production and non-supervisory workers is up 5.8 percent over the last year. It’s up 10.3 percent if we want to go back two years." "The increases are even larger towards the bottom end of the wage distribution. The average hourly wage for non-supervisory workers in restaurants has risen 12.4 percent over the last year and 13.5 percent over the last two years." https://cepr.net/the-medias-war-against-biden-over-inflation/ https://cepr.net/the-medias-war-against-biden-over-inflation... Inflation is mostly a problem for people who are holding debt, not the bottom 90%.
- rednerrus 5y ago
  Isn't giving millions of people an additional 10% income boost all at once going to be a disaster from supply chain shock and the environmental impact?
- mym1990 5y ago
  Inflation is most certainly a problem for the bottom 90%, affecting each part of the 90% differently. An average hourly increase does not mean real income growth by itself. As you move from high to middle to low class, consumption becomes a bigger piece of the expense pie(rent, food, clothes, etc...) and those goods are also the ones that are increasing in price. Meanwhile someone that bought a house last year basically anywhere has probably seen a large appreciation.
- CountDrewku 5y ago
  Excuse me? What fantasy world are you living in where this isn't affecting you? https://nypost.com/2021/12/10/prices-spike-6-8-percent-most-in-39-years/ https://nypost.com/2021/12/10/prices-spike-6-8-percent-most-... >The average hourly wage for production and non-supervisory workers is up 5.8 percent over the last year. It’s up 10.3 percent if we want to go back two years. Hmmm... https://www.axios.com/wages-inflation-economic-data-c912afdb-b950-4183-8283-50afff593576.html https://www.axios.com/wages-inflation-economic-data-c912afdb... "For all the hype that wage growth has received this year, pay isn’t keeping up with price growth. Real earnings, or wage growth less inflation, turned sharply negative the last two months, after eeking out gains over the summer, consumer price data out Friday show." The article you linked reeks of gaslighting by the administration to try and portray this in a positive light. They literally came out and said they were going to do this- https://nypost.com/2021/12/08/white-house-working-with-media-to-get-positive-biden-coverage/ https://nypost.com/2021/12/08/white-house-working-with-media...

BuyMyBitcoins 5y ago

I’ve heard an interesting hypothesis that one of the reasons inflation had been so low in the last decade was because of the price discovery and competition that the Internet provided. Big retailers tend to offer price matching with sites like Amazon and Newegg. Not only does this make it difficult to compete on price, it has the effect of leveling the prices across the market and keeping them in sync. Members of my extended family are small business owners and they frequently have to explain that they simply cannot match online prices. So, profit margins have been going down steadily on sales. I sense there is a lot of pent up price hike pressure all across the economy. If you’ve been struggling with lower margins and higher costs, the obvious answer is to charge more. What better time to do so than when everyone is expecting it? And, once you have made the decision to raise prices, why not be a little more aggressive because the opportunity to do so doesn’t come along very often? Just my two cents.

partiallypro 5y ago
I don't know how true that is, Amazon often has a higher price than Walmart but still has higher sales online (online sellers use this a lot for arbitrage.) A lot of people don't "shop around" anymore, they go with the most convenient route. Price seekers are generally outliers in the vast consumer market nowadays.
- lotsofpulp 5y ago
  How do you know Amazon is selling more of the same product as Walmart/Costco/Target at a higher price? Does Amazon even show how much it sells separately from 3rd party resellers?

tunesmith 5y ago

No idea how to respond in terms of personal finances other than investing 10k in I-Bonds and agitating for a raise.

mym1990 5y ago
It makes it incredibly difficult to allocate resources when pretty much everything feels overbought. Personally, I have put off buying a car(was going to go electric but those 'affordable' model 3 prices not looking so great anymore), have changed some of my grocery habits, and try to consume less in general.
nostrademons 5y ago
I-bonds are actually relatively poor inflation hedges because government inflation numbers usually understate actual inflation. This has been constant across multiple countries and multiple hyperinflationary events. It's like entering a contract where the party paying you also gets to set how much they pay you. Real assets that universally desired usually do better. Things like real estate, stocks of consumer staples, and industries that are critical for conducting business (eg. transportation, or anything that's a channel to the consumer). People will continue to need these regardless of what the government does, and as long as contracts hold, their value will increase.

rednerrus 5y ago

The issue now is that business believe that price elasticity is less because of the shortages and are therefore raising the prices beyond what the increases caused by the shortages. There was an article recently, and I'll see if I can dig it up saying that some important part of this inflation is actually price gouging and we are likely to see record profits from some of these businesses.

tmaly 5y ago

I often wonder how accurate the main inflation number is if numbers like this one are much higher. I have made mental notes of consumer goods and food items having price increases of 20-100% over the past year with no retraction in sight. I question if the prevailing attitude towards food and energy are correct in there calculation given this exceptional environment.

vondur 5y ago

It's always interesting every time I see an article posted regarding increasing inflation and we get so many responses from people who are probably in the top 5% income bracket claim how it's not a big deal. The food/energy inflation really hurts the lower income brackets.

mrjangles 5y ago
Inflation hurts bankers, but is very good for anyone who has debt. Mild inflation poses zero damage to poor people as wages and interest on their saving increases linearly with the inflation. I don't know where anyone got the idea that inflation was bad for poor people, but it was probably from people associated with the banks. On the other hand, one situation that inflation can be very bad is when the government has a lot of debt and doesn't have a balanced budget, which is just about every first world country at the moment.
- VirusNewbie 5y ago
  This is exactly backwards. Inflation helps debtors especially those who use debt to be leveraged into assets, who are by and large are upper middle class (housing) and the upper class by proxy with equities. Inflation is robbing poor people and transferring their wealth to the upper class.
  - mrjangles 5y ago
    If something helps debtors, it is clearly to the detriment of creditors. I don't understand how your comment can make sense unless you are claiming that creditors are usually poor and debtors are usually rich, which is a pretty far out claim.
  - xapata 5y ago
    You're both incorrect. Poor people are affected by the ratio of price inflation to wage inflation, which is for the first time in ~50 years flipped such that wages are growing faster than prices. Inflation transfers money from creditors to debtors, to the extent it's a surprise. Interest rates and origination fees incorporate risk of inflation. The US government is in debt to US treasury bill holders. You could say inflation is a wealth transfer from T-bill holders to the government, but the buyers of T-bills knew the risks and made their choices. Maybe they've even hedged. Poor people have credit card debt, payday loan debt, medical debt, etc. I wouldn't say housing is exclusive to the upper middle class, because 65% of Americans own houses. That seems like a low bar for "upper" class.

RickJWagner 5y ago

This is awful news. Inflation hurts people living on fixed income and people with low income. (If you can't afford to fix your car for $500, you surely can't afford to fix it for $1200.) People with some money can invest in equities. Corporations can often pass the costs on down the line. So the shareholders keep up, somewhat. We need some plays from the early 80s playbook. Fast.