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Inflation rises to 7% in December (led by energy)
- ruuda 5y agoKeep in mind that there were 48% more US dollars in existence in November 2021, than in January 2019. That's a 15.0% increase per year. Most of this happened in March–May 2020. https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
- ur-whale 5y agoAh but just wait, there is an entire horde of people on HN that will more than happy to explain how what you just said and inflation are entirely uncorrelated phenomenons.
- pessimizer 5y agoI can't believe we had 48% inflation, I must have missed it.
- jjcon 5y agoWell they also changed the definition of M2 (how many dollars are used in calculations) in May 2020.
- nabla9 5y agoIn all items less food and energy (Core CPI) these two stand out: New vehicles: 11.8% Used cars and trucks: 37.3%
- lapsedacademic 5y agoThe good news is that the used vehicle market will almost certainly crash around 2022/2023 as new vehicle production catches up with demand. Currently, my 2020 used car with 30K miles can be sold for more than the MSRP for the 2022 model with identical trim. And it can even be sold for slightly more than actual quotes I've gotten for the 2022 model from dealers. There's obviously a supply shortage going on that will subside. The bad news is that the new vehicle and food price increases are almost certainly sticky. Energy is the big tricky question mark. The big worry post-pandemic was about US shale production never returning, but it's starting to look like we'll hit the 2019 highs in US domestic production some time in the next year or so. I suspect we're past the peak in terms of rate of growth, but it's hard to say if the new prices are sticky or if we'll see a meaningful decline in the next year or two. (I've started to build a strategy for selling off my energy holdings and I'm still on the fence about what to do with Ford and GM.)
- xadhominemx 5y agoNew vehicle prices are almost certainly not sticky. Competition between dealers and OEMs is normally fierce, and will revert to normal once we exit this supply-constrained environment. Food price is also highly cyclical and related to supply constraints of pure commodities which always correct.
- lapsedacademic 5y ago> not sticky I guess I should've clarified. Vehicle prices for equivalent vehicles probably aren't sticky, but the statistic reported here is sticky. Electrification will increase average sale price. But the amortization schedule will lengthen, operating cost will decrease, and maintenance will plummet. So might still be a win for consumers. But I don't think avg sale price will come down meaningfully. You'll see a big shift from ICE to E, though, and yes, ICE prices will come down a lot. > Food price is also highly cyclical and related to supply constraints of pure commodities which always correct. Suffice it to say that I'm not betting on commodities in either direction but I've got a huge position in Tyson.
- lotsofpulp 5y agoI never see any electric cars on the road other than Tesla. To me, that means no other automaker has produced a compelling electric option yet, so I would not bet on significant ICE to E within the next few years (other than the increasing numbers of Teslas).
- reducesuffering 5y agoIn the Bay Area, there are many Chevy Bolts, VW ID.4, and Ford Mach-E. They are more competitive economically than their ICE counterparts when you include minimal operating expenses for energy and maintenance, and their possible 7.5k tax credit. Bolts were going for ~$25k at ~250 miles range. 2023 ID.4 is an SUV/Crossover with probably ~240 mile range rumored for ~35k (and $7.5k off tax credit) Mach-E is an SUV/Crossover with ~250 mile range for ~$44k (and $7.5k off tax credit)
- FanaHOVA 5y agoI bought a used Tesla in August 2020 from Tesla.com; I turned it in last month to get a longer range one from them. The trade in value was the same as the price I paid originally.
- lapsedacademic 5y agoExactly. That's clearly not sustainable. Either new car prices will keep going up or used car prices will plummet. I think the latter is much more likely.
- jhallenworld 5y agoNewer vehicles have more DRM and more integrated systems, so they cost more to service and are therefore worth less than older vehicles. So these numbers make sense..
- tpmx 5y agoTo be honest, it's getting a bit scary.
- gedy 5y agoYeah this nice raise many of us got hopping jobs is evaporating quickly
- sokoloff 5y agoHow much of the nice raise came from companies realizing they finally had some pricing power?
- credit_guy 5y ago> companies realizing they finally had some pricing power So companies did not know they had pricing power, and they just realized that? All of them? They all had the same epiphany at the same time?
- Ericson2314 5y agoIf you had any stocks or equity the continuing bubble dwarfs inflation. Lower and upper class both did great in 2020-2021. Only people that got screwed were a thin band of middle class small bussiness owners. Fuck them they're leaches anyways on what has been too-cheap unskilled labor for decades.
- wernercd 5y agoNothing to see here guys... its good for normal people to pay double for things.
- germinalphrase 5y agoWho’s paying double?
- jeffbee 5y agoUsed car buyers.
- oxymoran 5y agoPeople buying used cars.
- Rooster61 5y agoFirst time home buyers
- pessimizer 5y agoPeople vote for that. The same people screaming about inflation would be screaming if house prices failed to beat inflation.
- Rooster61 5y ago
- LUmBULtERA 5y agoIn December my lease renewal offer included a 35% rent increase. I attempted to bargain them down to a lower increase, but the leasing office never even got back to me. At least according to the subreddit for my area, most apartment buildings here seem to be trying to increase rent 20-40%.
- bowmessage 5y agoCrystal City (based on your comment history)? 35% does seem steep, but it doesn't seem fair to compare against last year's rent when it was likely heavily discounted due to COVID.
- LUmBULtERA 5y agoHaha yes -- I was trying to be vaguer in another comment but apparently I already said this a while back :).
- alexk307 5y agoCrystal City is filled with landlords and building owners that feel like they are entitled to price increases ever since Amazon decided to build their HQ2 there. I was there before and after the announcement and the real estate prices doubled based on pure speculation that Amazon employees would come through flush with cash, wanting their 700k+ one bedroom apartments.
- willis936 5y agoThis is the first I've heard of any rent going down anywhere at any time.
- francisofascii 5y agoMy friend who lives in Chinatown area says his condo value is still down from Pre-Covid. So he thinks city prices in general are down, not up like the rest of the U.S.
- javert 5y agoHah, they say the crooked printed money goes first to those sucking the government teat, so this makes sense...
- deleted 5y ago[deleted]
- josephh 5y agoAnd the administration wants to spend $1.75 trillion more dollars? Give me a break.
- CameronNemo 5y agoHow is spending by the US government related to energy prices? If anything the subsidies for renewable energy (build out and research) would give fossil fuels more competition.
- tpmx 5y agoThis inflation seems like a global thing.
- tartuffe78 5y agoThe US dollar is a global thing as well.
- anderber 5y agoAlthough inflation is global, some countries have it pretty low. For example, Portugal is at 1.16%. Two years ago it was negative. Another point is that Portugal is actively moving to renewable energy. Currently I believe they are at 28% or more.
- mikysco 5y agoI think the logic is government dollars competing with private dollars, especially during a supply shock, will send prices up
- micromacrofoot 5y agoCare to elaborate what you mean, or is this just vague political hand-wringing?
- bequanna 5y agoToo much money chasing too few good causes inflation.
- coding123 5y agoWood is sitting at 3x it was 2 months ago (again).
- brink 5y agoI was unable to build last summer due to soaring prices, and feel like I will be unable to again in the spring. Biden inexplicably doubled the tariffs on imported lumber too. The situation genuinely hurts.
- ProfessorLayton 5y agoThe silver lining here is that most households in the U.S. own their home, so they're either shielded from a significant portion of inflation, or their mortgages are getting cheaper in real terms. Sucks for everyone else though. Especially with the artificial housing shortage.
- the_optimist 5y agoThis isn’t what most people would term a “silver lining.” Inflation is a giant and nearly impossible-to-manage wealth transfer that afflicts everyone productive.
- sokoloff 5y agoIt’s technically “most” but still just under 2 in 3.
- rapind 5y agoI’m trying to find a way out/ hedge our economy (Canada, similar to U.S. except we can’t print money to get out of it). I have a sinking feeling that either the idiots over leveraging themselves on bubble priced homes will get bailed out or the idiot banks who facilitate them will get bailed out… probably both. Which ironically makes me the idiot for not participating in the idiocy. Maybe I’m just getting old, but when I look around at our economy, housing, the crypto fascination, etc. it all looks like scams, hype, and fomo to me. When the big bailouts happen, I’m gonzo. Just don’t know where to yet. Maybe I’ll live on a sailboat to try and minimize the impact of the insanity.
- dghlsakjg 5y agoAs one of those people that bought a bubble priced house (rental stock in the town I live in just doesn’t exist for the type of place I wanted) I’m pretty impressed with how much Canada can bury its head in the sand about the problem. I think in 4-5 years when all these mortgages get refinanced at (presumably) higher rates some weird shit is going to happen. The root issue as far as I can tell is supply is incredibly poorly managed. When I was living in Vancouver, there was a lot next to us that was waiting for permission for 2 years to build a low rise, mixed use building in an area already zoned for it. Don’t get me started on “historic” homes in dense areas.
- newaccount2021 5y agoKeep in mind that the Fed is only talking about dialing back accommodation...so right now, strictly speaking, we are still stimulating The inflation from the stimulative policies in effect today won't even show up for six months
- mrleinad 5y agoHow are wages usually managed in the US on scenarios like these? From the outside, it looks like there are no unions to push for wage inflation raises, is that correct? I wish we had only 7% inflation here... (Argentina)
- kamarg 5y agoI wasn't old enough to be employed the last time the US had inflation this high but I can tell you that my current employer has stated that we aren't getting cost of living adjustments despite the high inflation. Instead they're claiming that raises will be based on each employees contribution to the company. Which would be great if they actually meant it since all of us engineers would be getting very significant raises. What will actually happen is that all of us will get about 2% raises, a bunch of people will quit because the job market for developers is great right now, and then the company will hire in a bunch of junior devs for higher wages than the current junior devs are getting.
- nradov 5y agoSo then the labor market is functioning as expected.
- micromacrofoot 5y agoIf you have a good job they recognize inflation and compensate accordingly, if you're 99% of the population you get screwed or find another job.
- Ericson2314 5y agohttps://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q wage earners are up, even adjusted for this inflation. Labor shortage -> real worker power -> solidify gains with unions Trying to boost unions when labor is on the ropes is foolish preaching from vicarious onlookers.
- aparks517 5y agoThe companies I've worked for have had periodic (every 6 or 12 months) performance evaluations with associated pay adjustments. The pay adjustment would be broken out into a cost-of-living increase (notionally tracking inflation) and a performance increase (or decrease I guess) based on the employee's performance evaluation. I'm sure it varies by employer, but this seems to be common in my area and industry at least. We do have unions in the US, though I've not worked in a union shop before. Union contracts vary, but I get the idea it's not uncommon for them to include pay adjustments based on inflation.
- aglavine 5y agoAs a Latin American, welcome to this awful club. And don't let anybody tell you otherwise: This is totally because of fiscal deficit.
- DFHippie 5y ago> This is totally because of fiscal deficit. I think it's because of supply chains inadequate to supply surging demand from people flush with cash. It's the toilet paper drought spread out across the entire economy.
- panick21_ 5y agoThis is a really bad measure of inflation for monetary policy This is a supply shock. This kind of inflation should not heavily impact your monetary policy. This exactly why fixed inflation targeting is a bad idea and Market Monetarist advocated NGDP Level targeting and New Keynesians simply want the Central bank to do that correctly manually. Consumer Price Level measures might be useful for other things, but not at input for your central banking function.
- ur-whale 5y ago> Consumer Price Level measures might be useful for other things, but not at input for your central banking function. It's not about being useful, but about the fact that the mob is growing more unhappy every day because their buying power is dwindling, which in turns makes elected politicians quake in their boots. And as much as everyone would like to claim or even in some case believe that central banks are independent entities, this is a complete pipe dream, they are - at the very least - subject to influence peddling like everyone else.
- hanoz 5y ago> supply shock The supply shock you need to be worried about is the shocking oversupply of new dollars competing for the same resources.
- lumost 5y agoThe major lesson of the Fed’s QE policy has been that QE does not put dollars into the economy evenly. Certain asset classes and professions get first crack at the newly printed dollars, and over time firms and industries specifically designed to capture printed money evolve e.g. wework. It’s not a surprise that we’ll hear tons of information saying that printing money isn’t a bad thing, or that it isn’t the cause of any current monetary outcomes.
- lotsofpulp 5y agoI thought the guy that led Wework captured Saudi Arabian oil money via a Japanese VC.
- lvl100 5y agoRates will have to rise to cut inflation. But EM countries will be the ones to pay the price in the end. I understand most people on HN likely enjoyed a great run in tech bubble but you have to admit speculation here is simply mind boggling (even after the recent SaaS crash).
- jeffreyrogers 5y agoSome recent early rounds put the post money valuation so high that prospective returns for later investors look terrible.
- SubiculumCode 5y agoIts funny how inflation is happening across the whole world, but people want to blame U.S. money printing which got us through the pandemic without an outright DEPRESSION.
- ceejayoz 5y agoThis. The entire global economy ran into a solid brick wall all at once and we came out of it with single-digit inflation and a shockingly mild recession. Thus far, modern economic policy seems to have had a big win here.
- seoulmetro 5y agoJust so long as you're already on top, it's a huge win. For anyone who isn't, it's a huge loss or at the very least, a huge widening of the gap.
- Barrin92 5y agoThis doesn't make much sense. Inflation erodes debt and is largely driven by wage increases among low income workers. >"For example, rank-and-file workers in leisure and hospitality — the lowest-paying sector of the U.S. economy — got a nearly 16% raise in 2021, to $16.97 an hour. That means the average employee at a bar, restaurants and hotel saw pay rise more than two times faster than inflation, amounting to a net 9% increase in annual pay. Similarly, rank-and-file workers in transportation and warehousing saw their annual pay rise 8.4%, to $25.04 an hour in December. Retail workers got a 7% increase to $19.20. These either exceeded or matched inflation." Your dollars being worth less is bad for people who have a lot of dollars. Which by definition isn't people at the bottom. You're seeing prices go up because people at the bottom of the American food-chain have been getting paid more as covid has impacted supply chains and the workforce. https://www.cnbc.com/2022/01/12/higher-pay-eclipses-inflation-bite-for-some-.html https://www.cnbc.com/2022/01/12/higher-pay-eclipses-inflatio...
- seoulmetro 5y ago
- shawn-butler 5y agoUSDA economists last month projected food increase prices in 20202 of 2%-3% and food away from home 3-4%. This doesn't jive with this at all. Meat, poultry, eggs jumped 12-13% and seems like that isn't coming down anytime soon.
- deleted 5y ago[deleted]
- Rebelgecko 5y agoThose aren't mutually exclusive. Beef seems to be one of the things that have gone up substantially, but beef is a small fraction of most people's food budget. I'm currently paying about $0.65 per bell pepper which is something like 20% cheaper than they were when prices peaked in 2011, if you trust The Fed[1] [1]: https://fred.stlouisfed.org/series/APU0000712406 https://fred.stlouisfed.org/series/APU0000712406
- CoastalCoder 5y agoHonest question from someone truly ignorant on these things: To what extent might this affect Bitcoin (or other proof-of-work) mining? I've heard that PoW mining is notoriously energy hungry. Does a big increase in energy prices merely slow the mining down, or is there some tipping point that could make PoW-based crypto markets crash and die? Disclaimer: I'd like to buy a new GPU in 2022.
- janoside 5y agoThe Bitcoin network is a global energy buyer with properties unlike any other. It will continue to bid for stranded and excess energy that cannot be used for other applications. With last year's Chinese mining ban the network has become more distributed than ever and is likely to be very resilient to US domestic energy-price swings. PoW is the solution to an important set of interconnected problems, and as long as the network has value, PoW will keep bidding for energy to secure that network. It's been said, correctly IMHO, there is only Proof-of-Work and obfuscated Proof-of-Work. Rephrased, nothing is cheaper than Proof-of-Work: https://www.truthcoin.info/blog/pow-cheapest/ https://www.truthcoin.info/blog/pow-cheapest/
- analog31 5y agoQuick look suggests that bitcoin energy consumption is a small fraction of world energy consumption. For me, it's hard to guess the effect on pricing. Bitcoin mining seems to be an arbitrage: Turning energy that's priced in one market, into money that can be spent in another market. This would seem to equalize energy prices across markets, while also discouraging countries from subsidizing energy.
- redisman 5y agoYou can’t mine Bitcoin on a GPU in 2022. ETH for a few more months (?) or whenever ETH2 rolls out and kills that too
- blululu 5y agoDigging in it looks like this is mostly driven by energy (oil). Of course there is oil in everything so that will spill everywhere sooner or later.