14 ms·

US consumer prices soared 7% in past year, most since 1982

130 points by ushakov 5y ago

atlasunshrugged 5y ago
While not particularly tech focused this will probably be a global issue soon as the Fed/Gov will act to try to crush inflation (or possibly more likely, a massive fight about whether inflation is good, bad, or still transitory will take place) and markets will be in flux because of these actions. Given how interconnected the world is, this'll probably have ramifications globally and given how big tech stocks are right now in the U.S. at least, they might be impacted as well. I'll let someone smarter than me prognosticate on the impacts of non publicly traded companies and the VC market but I'd guess there'll be some second order effects there too.
- cft 5y ago
  Ultimately, the government attempts to crush inflation will amount to feeding excess dollars to the foreign markets. What happens when the capacity of these markets to absorb the newly created dollars is saturated, will play out quite soon.
- michaelt 5y ago
  > a global issue soon as the Fed/Gov will act to try to crush inflation The main tools in their toolbox to do that are "raise interest rates" and "cut government spending" neither of which sound like fun given all the economic damage the pandemic has done. I'm glad I'm not the person who has to decide....
  - throwaway6734 5y ago
    The Volckering 2
    - FooBarBizBazz 5y ago
      If they do that, the economy will crash leading into an election year, with an actual risk of Fascism.
      - FooBarBizBazz 5y ago
        ...which is why rates will stay low. The bulls have no choice but to keep running.
- Der_Einzige 5y ago
  Wait, why? Inflation is happening quickly all across the world, not just in the USA. Inflation is popular with debt holders (home owners!). We can literally just accept modest inflation. Maybe it's politically bad for the party in power, but I just don't see Trump in 2024 calling for interest rate hikes unless he wants a mutiny from his own party on his hands. As such, I don't see why we have to actually fight modest inflation at all.
  - michaelt 5y ago
    > I just don't see Trump in 2024 calling for interest rate hikes You don't need a feasible solution to call out the failings of your political opponents. Trump can just say "the economy under Biden is very bad, a lot of people are saying food is much more expensive, and they're poorer under Biden. America needs a smart leader who is good at business to make america great again"
ErikVandeWater 5y ago
It's funny to me economists think they can measure inflation/deflation down to a single digit percentile with any level of certainty.
- bigbillheck 5y ago
  The thing that BLS measures is measured precisely and accurately. The question is how well this tracks with what gets called 'inflation'. It's like IQ tests. They're measuring something that may or may not be what some people think it measures.
- the_gastropod 5y ago
  Care to elaborate?
  - ErikVandeWater 5y ago
    Sure. For example, healthcare is included in CPI. Let's say a new surgical technique is invented that reduces the chance of dying during a kidney transplant by 20%, and is adopted as a standard practice. The price of kidney transplant surgery does not change. By how much has the price of a kidney transplant deflated, since you are now getting better bang for your buck?
    - rowanajmarshall 5y ago
      That isn't what inflation measures. That's what life expectancy measures.
      - tharne 5y ago
        No, this has to do with prices and values. If you're getting a higher quality of surgery for the same price as before, the cost of a surgery has effectively gone down.
        rubyn00bie 5y ago
hartator 5y ago
> A significant portion of consumer inflation is still being driven by pandemic-driven mismatches between demand and supply. Or maybe printing 40% more dollars is the main driver here? This feels like a very dishonest take.
- khuey 5y ago
  If you drill into the data you can see that large portions of the measured inflation are driven specifically by sectors like automobiles which have known pandemic-induced supply chain problems.
  - seibelj 5y ago
    But why is my grocery bill 40% higher than it was 2 years ago? We have bought the same basket for years.
    - shmatt 5y ago
      The chip shortage can affect farms. Their new pick up or tractor might cost 40% more There is also a big labor shortage. If you're in the U.S a lot of your basket is coming from California. In 2020 H2A visa holders (farm workers) were payed $14.77/hr. In 2022 its $17.51/hr What happens when you can't even get the Visas? You start approaching American locals, who want much more per hour than a Visa holder. They actually want a living wage This whole labor shortage +inflation thing to me just means - people are figuring out how much it actually costs to make what you consume, when employees aren't treated like garbage
    - gruez 5y ago
      The official CPI for "Food at home"[1] rose 10.6% in the past two years, so that accounts for a quarter of the difference. As for the rest, my guess it's a combination of your numbers not being reflective of the nation-wide average, your basket subtly changing (ie. buying more premium goods), and you spending more on "food at home" because you no longer go out to eat. [1] https://fred.stlouisfed.org/series/CUSR0000SAF11 https://fred.stlouisfed.org/series/CUSR0000SAF11
    - 5y ago
jonathan-adly 5y ago
I feel a lot of sympathy to kids graduating in this decade in most careers. Tons of debt, ever increasing asset prices, and terrible job market with stagnating wages. If you don't have rich parents, you are in a terrible spot.
- seibelj 5y ago
  The job market is insanely competitive for hiring managers. I agree with the other stuff but being able to land a job is not an issue.
  - jonathan-adly 5y ago
    Tech job market is a bad proxy for the job market as a whole. The whole job market is basically completely broken now - tons of terrible jobs with no career prospects, but very little progress on "career" jobs unless you are in tech and graduated from a respectable university (which becoming more and more equiv. to having rich parents).
    - 999900000999 5y ago
      Eh. At least a few years back you could get in as long as you could code. I got to 6 figures without a degree, it might be harder now, but you don't need to attend a top school to become a programmer.
      - bumby 5y ago
        They were saying you shouldn't generalize the "job market" by taking anecdotes from "the tech job market." Responding with another tech market anecdote doesn't refute their claim.
        999900000999 5y ago
        >unless you are in tech and graduated from a respectable university I was refuting this. I've never heard of anyone needing to attend a prestigious University to become a programmer?
wjej333i2j 5y ago
Meanwhile, in Germany grocery prices increased by ~14% * (not confuse with inflation) and there is little to none salary increase comparing to US... An average software engineer in Germany only makes ~3000 euro per month after tax and even less in other European countries. * https://www.morgenpost.de/vermischtes/article233549815/aldi-lidl-rewe-edeka-kaufland-preise-supermarkt.html https://www.morgenpost.de/vermischtes/article233549815/aldi-...
- aantix 5y ago
  Why are software engineer salaries so low in Germany?
  - engineeringwoke 5y ago
    I've worked in US and northern EU and in the latter there is basically no funding (relatively) and no talent feeders like FAANG. Senior engineers are also enamored with unnecessary complexity and founders still want to treat technical folks (even very senior) like cogs in a machine.
  - moneywoes 5y ago
    I believe the better question is why US salaries are so high
    - aantix 5y ago
      Scalability of work? The work of a few engineers can support a workflow of a million users. That spending $1 on engineering can bring in $10 of revenue.
      - ahtihn 5y ago
        Is that work somehow less scalable when done in Germany?
        ushakov 5y ago
Hokusai 5y ago
Less goods were produced during the pandemic, the ones available are sold at higher prices. Even worse, tech products, that used to be cheaper by the year and drive down inflation, are now in high demand as employees work from home driving prices up. And just wait for people to travel again and catch up with lost trips. Hotels are going to be quite expensive, and that industry is in need of money so do not expect them to moderate that increase.
- oneoff786 5y ago
  Hotel prices seem pretty… unimportant?
  - bool3max 5y ago
    For yourself, perhaps.
    - notdemo88 5y ago
      [dead]
    - oneoff786 5y ago
      For whom are hotel prices important?
- landemva 5y ago
  'And just wait for people to travel again and catch up with lost trips.' It doesn't work like this in my family. A couple years of limited eating out and limited vacations are gone. It's not like a person can abstain until 70 years old and then make up for a lifetime of no sex.
NewLogic 5y ago
This pandemic has crushed the middle class to prop up asset holders and wallstreet. Tense times ahead.
- newaccount2021 5y ago
- tomrod 5y ago
  I hear this from time to time. Is this common knowledge, or is there some academic literature that reviews?
  - NewLogic 5y ago
    The top 10% of individuals own a record 89% percent of all the stocks [1]. Using never before seen measures to support the US bond market and at one stage buy individual corporate bonds has created a market in which participants believe they will always be back stopped by the Fed. Hell they are still doing 60 billion of monthly bond purchases (extreme monetary policy) [2] when inflation is printing multi decade highs. I have seen it quoted that in order to repair the Fed balance sheet by "running off" their purchases it will take them close to 30 years of continued "tightening". This is the new normal for centrally planned economic policy in the US, socialising losses to the government balance sheet. [1] https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-americans-own-a-record-89percent-of-all-us-stocks.html https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-... [2] https://www.cnbc.com/2021/12/15/fed-will-aggressively-dial-back-its-monthly-bond-buying-sees-three-rate-hikes-next-year.html https://www.cnbc.com/2021/12/15/fed-will-aggressively-dial-b...
moneywoes 5y ago
Could stagflation be on the horizon?
wolverine876 5y ago
Inflation is a phenomenon caused partly by human expections - if you think your costs will increase, you increase what you charge (to customers, employers, etc.). You can create inflation, to a degree, by making people believe it is happening. (That doesn't rule out all actual inflation and it helps to have some price increases - for whatever reason - as kernels of truth) During the recovery from the 2008 Great Recesssion, reactionaries pushed inflation, inflation, inflation - they sold gold on popular national shows of a certain cable news channel - but to no apparent effect. The economy was at much more risk of deflation and only their own tribe seemed to listen at all (afaik). But the world has changed significantly since then. Now the most powerful actors in our society are now the mass reactionary disinformation campaigns, which very broadly seem to serve the interests of the same or similar groups. They seeem almost unchallenged in their supremecy over 'truth' for much of the population - even people I know who should know better seem to just accept them. It seems that they can merely repeat just about any claim and no matter how nonsensical, people will join in (in fact maybe the more nonsensical the better). With their new tools, their inflation push is arguably much more powerful. Are there resources which track the activities and focuses of disinformation campaigns?
dukeofdoom 5y ago
Mainstream media is making Alex Jones to look like the calm and rational one with all the fear mongering. Sota Mayorga at the Supreme Court hearing this week, citing 100k kids in hospital with Covid, is an example how misinformation is fuelling these terrible fiscal policies. Rationality is out. Scary "Virus" panic is still in.
RickJWagner 5y ago
“It hasn’t been this high since the days of Thatcher and Reagan..." Typical AP article. Reagan came into office facing high inflation (it started when Carter was in office), it broke when he was in office. Fact: Reagan won re-election with 49 of 50 states. Had inflation still been raging, that's not likely, is it? So disappointed with yellow journalism.

130 points by ushakov 5y ago

While not particularly tech focused this will probably be a global issue soon as the Fed/Gov will act to try to crush inflation (or possibly more likely, a massive fight about whether inflation is good, bad, or still transitory will take place) and markets will be in flux because of these actions. Given how interconnected the world is, this'll probably have ramifications globally and given how big tech stocks are right now in the U.S. at least, they might be impacted as well. I'll let someone smarter than me prognosticate on the impacts of non publicly traded companies and the VC market but I'd guess there'll be some second order effects there too.

cft 5y ago
Ultimately, the government attempts to crush inflation will amount to feeding excess dollars to the foreign markets. What happens when the capacity of these markets to absorb the newly created dollars is saturated, will play out quite soon.
michaelt 5y ago
> a global issue soon as the Fed/Gov will act to try to crush inflation The main tools in their toolbox to do that are "raise interest rates" and "cut government spending" neither of which sound like fun given all the economic damage the pandemic has done. I'm glad I'm not the person who has to decide....
- throwaway6734 5y ago
  The Volckering 2
  - FooBarBizBazz 5y ago
    If they do that, the economy will crash leading into an election year, with an actual risk of Fascism.
    - FooBarBizBazz 5y ago
      ...which is why rates will stay low. The bulls have no choice but to keep running.
Der_Einzige 5y ago
Wait, why? Inflation is happening quickly all across the world, not just in the USA. Inflation is popular with debt holders (home owners!). We can literally just accept modest inflation. Maybe it's politically bad for the party in power, but I just don't see Trump in 2024 calling for interest rate hikes unless he wants a mutiny from his own party on his hands. As such, I don't see why we have to actually fight modest inflation at all.
- michaelt 5y ago
  > I just don't see Trump in 2024 calling for interest rate hikes You don't need a feasible solution to call out the failings of your political opponents. Trump can just say "the economy under Biden is very bad, a lot of people are saying food is much more expensive, and they're poorer under Biden. America needs a smart leader who is good at business to make america great again"

ErikVandeWater 5y ago

It's funny to me economists think they can measure inflation/deflation down to a single digit percentile with any level of certainty.

bigbillheck 5y ago
The thing that BLS measures is measured precisely and accurately. The question is how well this tracks with what gets called 'inflation'. It's like IQ tests. They're measuring something that may or may not be what some people think it measures.
the_gastropod 5y ago
Care to elaborate?
- ErikVandeWater 5y ago
  Sure. For example, healthcare is included in CPI. Let's say a new surgical technique is invented that reduces the chance of dying during a kidney transplant by 20%, and is adopted as a standard practice. The price of kidney transplant surgery does not change. By how much has the price of a kidney transplant deflated, since you are now getting better bang for your buck?
  - rowanajmarshall 5y ago
    That isn't what inflation measures. That's what life expectancy measures.
    - tharne 5y ago
      No, this has to do with prices and values. If you're getting a higher quality of surgery for the same price as before, the cost of a surgery has effectively gone down.
      - rubyn00bie 5y ago

hartator 5y ago

> A significant portion of consumer inflation is still being driven by pandemic-driven mismatches between demand and supply. Or maybe printing 40% more dollars is the main driver here? This feels like a very dishonest take.

khuey 5y ago
If you drill into the data you can see that large portions of the measured inflation are driven specifically by sectors like automobiles which have known pandemic-induced supply chain problems.
- seibelj 5y ago
  But why is my grocery bill 40% higher than it was 2 years ago? We have bought the same basket for years.
  - shmatt 5y ago
    The chip shortage can affect farms. Their new pick up or tractor might cost 40% more There is also a big labor shortage. If you're in the U.S a lot of your basket is coming from California. In 2020 H2A visa holders (farm workers) were payed $14.77/hr. In 2022 its $17.51/hr What happens when you can't even get the Visas? You start approaching American locals, who want much more per hour than a Visa holder. They actually want a living wage This whole labor shortage +inflation thing to me just means - people are figuring out how much it actually costs to make what you consume, when employees aren't treated like garbage
  - gruez 5y ago
    The official CPI for "Food at home"[1] rose 10.6% in the past two years, so that accounts for a quarter of the difference. As for the rest, my guess it's a combination of your numbers not being reflective of the nation-wide average, your basket subtly changing (ie. buying more premium goods), and you spending more on "food at home" because you no longer go out to eat. [1] https://fred.stlouisfed.org/series/CUSR0000SAF11 https://fred.stlouisfed.org/series/CUSR0000SAF11
  - 5y ago

jonathan-adly 5y ago

I feel a lot of sympathy to kids graduating in this decade in most careers. Tons of debt, ever increasing asset prices, and terrible job market with stagnating wages. If you don't have rich parents, you are in a terrible spot.

seibelj 5y ago
The job market is insanely competitive for hiring managers. I agree with the other stuff but being able to land a job is not an issue.
- jonathan-adly 5y ago
  Tech job market is a bad proxy for the job market as a whole. The whole job market is basically completely broken now - tons of terrible jobs with no career prospects, but very little progress on "career" jobs unless you are in tech and graduated from a respectable university (which becoming more and more equiv. to having rich parents).
  - 999900000999 5y ago
    Eh. At least a few years back you could get in as long as you could code. I got to 6 figures without a degree, it might be harder now, but you don't need to attend a top school to become a programmer.
    - bumby 5y ago
      They were saying you shouldn't generalize the "job market" by taking anecdotes from "the tech job market." Responding with another tech market anecdote doesn't refute their claim.
      - 999900000999 5y ago
        >unless you are in tech and graduated from a respectable university I was refuting this. I've never heard of anyone needing to attend a prestigious University to become a programmer?

wjej333i2j 5y ago

Meanwhile, in Germany grocery prices increased by ~14% * (not confuse with inflation) and there is little to none salary increase comparing to US... An average software engineer in Germany only makes ~3000 euro per month after tax and even less in other European countries. * https://www.morgenpost.de/vermischtes/article233549815/aldi-lidl-rewe-edeka-kaufland-preise-supermarkt.html https://www.morgenpost.de/vermischtes/article233549815/aldi-...

aantix 5y ago
Why are software engineer salaries so low in Germany?
- engineeringwoke 5y ago
  I've worked in US and northern EU and in the latter there is basically no funding (relatively) and no talent feeders like FAANG. Senior engineers are also enamored with unnecessary complexity and founders still want to treat technical folks (even very senior) like cogs in a machine.
- moneywoes 5y ago
  I believe the better question is why US salaries are so high
  - aantix 5y ago
    Scalability of work? The work of a few engineers can support a workflow of a million users. That spending $1 on engineering can bring in $10 of revenue.
    - ahtihn 5y ago
      Is that work somehow less scalable when done in Germany?
      - ushakov 5y ago

Hokusai 5y ago

Less goods were produced during the pandemic, the ones available are sold at higher prices. Even worse, tech products, that used to be cheaper by the year and drive down inflation, are now in high demand as employees work from home driving prices up. And just wait for people to travel again and catch up with lost trips. Hotels are going to be quite expensive, and that industry is in need of money so do not expect them to moderate that increase.

oneoff786 5y ago
Hotel prices seem pretty… unimportant?
- bool3max 5y ago
  For yourself, perhaps.
  - notdemo88 5y ago
    [dead]
  - oneoff786 5y ago
    For whom are hotel prices important?
landemva 5y ago
'And just wait for people to travel again and catch up with lost trips.' It doesn't work like this in my family. A couple years of limited eating out and limited vacations are gone. It's not like a person can abstain until 70 years old and then make up for a lifetime of no sex.

NewLogic 5y ago

This pandemic has crushed the middle class to prop up asset holders and wallstreet. Tense times ahead.

newaccount2021 5y ago
tomrod 5y ago
I hear this from time to time. Is this common knowledge, or is there some academic literature that reviews?
- NewLogic 5y ago
  The top 10% of individuals own a record 89% percent of all the stocks [1]. Using never before seen measures to support the US bond market and at one stage buy individual corporate bonds has created a market in which participants believe they will always be back stopped by the Fed. Hell they are still doing 60 billion of monthly bond purchases (extreme monetary policy) [2] when inflation is printing multi decade highs. I have seen it quoted that in order to repair the Fed balance sheet by "running off" their purchases it will take them close to 30 years of continued "tightening". This is the new normal for centrally planned economic policy in the US, socialising losses to the government balance sheet. [1] https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-americans-own-a-record-89percent-of-all-us-stocks.html https://www.cnbc.com/2021/10/18/the-wealthiest-10percent-of-... [2] https://www.cnbc.com/2021/12/15/fed-will-aggressively-dial-back-its-monthly-bond-buying-sees-three-rate-hikes-next-year.html https://www.cnbc.com/2021/12/15/fed-will-aggressively-dial-b...

moneywoes 5y ago

Could stagflation be on the horizon?

wolverine876 5y ago

Inflation is a phenomenon caused partly by human expections - if you think your costs will increase, you increase what you charge (to customers, employers, etc.). You can create inflation, to a degree, by making people believe it is happening. (That doesn't rule out all actual inflation and it helps to have some price increases - for whatever reason - as kernels of truth) During the recovery from the 2008 Great Recesssion, reactionaries pushed inflation, inflation, inflation - they sold gold on popular national shows of a certain cable news channel - but to no apparent effect. The economy was at much more risk of deflation and only their own tribe seemed to listen at all (afaik). But the world has changed significantly since then. Now the most powerful actors in our society are now the mass reactionary disinformation campaigns, which very broadly seem to serve the interests of the same or similar groups. They seeem almost unchallenged in their supremecy over 'truth' for much of the population - even people I know who should know better seem to just accept them. It seems that they can merely repeat just about any claim and no matter how nonsensical, people will join in (in fact maybe the more nonsensical the better). With their new tools, their inflation push is arguably much more powerful. Are there resources which track the activities and focuses of disinformation campaigns?

dukeofdoom 5y ago

Mainstream media is making Alex Jones to look like the calm and rational one with all the fear mongering. Sota Mayorga at the Supreme Court hearing this week, citing 100k kids in hospital with Covid, is an example how misinformation is fuelling these terrible fiscal policies. Rationality is out. Scary "Virus" panic is still in.

RickJWagner 5y ago

“It hasn’t been this high since the days of Thatcher and Reagan..." Typical AP article. Reagan came into office facing high inflation (it started when Carter was in office), it broke when he was in office. Fact: Reagan won re-election with 49 of 50 states. Had inflation still been raging, that's not likely, is it? So disappointed with yellow journalism.