12 ms·

Inflation rises 7.5% over past year, more than expected and highest since 1982

122 points by koolba 5y ago

giantg2 5y ago
By the time the next performance review hits, I'll have likely sustained a 12% real pay cut. Who knows what the 'merit' increase will bring that out to, but I'm guessing it'll be about an 8% real pay cut.
- mym1990 5y ago
  Can't tell what the point of your post is, but there is a real responsibility for you to see what the job market will bear if you want to not have a 12% pay cut. You are a player in the economy, and I don't understand why people keep thinking that companies are going to kneel and adjust their employees salaries accordingly without a good economic reason to do so.
  - giantg2 5y ago
    It's mostly about awareness that the companies will screw people over. My hope is that unionization could help fix this. Although the tech industry seems adverse to that. I have been looking for jobs. My area sucks. The company has used me for necessary tech that doesn't have a future, so my background sucks. Basically I suck and my area sucks. It will only get worse, no matter what I do. Even though one is a player, there are constraints, and the game can even be rigged.
    - mym1990 5y ago
      100%. I like the company culture aspect of working, but I have stopped deluding myself that a company won't cut me as soon as it is impractical to keep me, just because of loyalty or good will. I don't know that unionization is the answer though, I would lean towards competition as a better scenario.
bko 5y ago
Are people still getting "cost of living adjustments"? I remember they were pretty common a few years ago where you got a nominal 1-2% raise every year. I feel like this year they skipped them entirely because it would have been offensive to get bumped 1-2% when you know the cost of living has gone up (conservatively) 7.5%, and obviously they an across the board bump that large would be a lot.
- markvdb 5y ago
  In my native Belgium, indexation is set in law. Price levels up by 6%? Wages up by 6%. There has been tiny bits of nibbling at the edges, but the principle stands and is not up for discussion.
  - NicoJuicy 5y ago
    I don't think we are alone though. Where I work, they pick the highest inflation ( Canadian company). So we get the highest inflation from Canada or Belgium.
  - sneak 5y ago
    It seems a bit silly to do it this way and not authoritatively denominate the salary in a unit of account that isn't subject to such annual volatility in value. Otherwise you're still losing out, due to the fact that for ~11 months of the year your salary is not correctly inflation-adjusted. I look forward to the technology behind payment systems getting to the point where "streaming" payments are a thing, paid every minute or hour or whatever over months or years. Your salary could be denominated in big macs or grams of gold or shares of BRK.A or whatever, and the streaming process that sends your payments in EUR or USD or whatever simply calculates the current conversion (which would approximate continuous adjustment for inflation). It's such simple math and APIs. I wish payments (salary especially) weren't so tradition-based.
    - BoiledCabbage 5y ago
      > I look forward to the technology behind payment systems getting to the point where "streaming" payments are a thing, paid every minute or hour or whatever over months or years. Why? > It's such simple math and APIs. I wish payments (salary especially) weren't so tradition-based. Yes, it's conceptually easy math (ignoring all the infrastructure needing to be updated to support this), but I'm not seeing the huge benefit here. If people are having trouble making ends meet, do more to improve the balance of labor in society rather than just let people get access to their middle of the month check a few days sooner. That's a bandaid on a larger problem.
newaccount2021 5y ago
ettubrutus 5y ago
Isn't it a little remiss to report on inflation without even mentioning the huge increase in M1/M2 money supply since the pandemic began? [1] [1] https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL
- yostrovs 5y ago
  It seems usually, when inflation is reported on, the printing of money is not mentioned, though far and away it is the main factor causing substantial inflation.
  - wbsss4412 5y ago
    Inflation can driven by two things: the money supply and overall productive capacity. Both are driving inflation.
  - wycy 5y ago
    It's humorous how certain all the libertarian armchair economists are that this inflation is caused by the money supply rather than the extremely visible effects of the broken supply chain. No no, the everything shortage, massive backups at the ports, the trucker blockade, and everything else are totally unrelated; clearly it's a problem of fiscal policy.
    - salawat 5y ago
      Constraint engineering: You mitigated the money supply constraint. If Supply Chain is the new constrain as you posit, it means structurally, the infra we've got is breaking down, and that money should be re-settling in tooling or re-establishment of manufacturing/factories to mitigate the unreliable supply chain. In order for that to take place, we need a prioritized list of what goods can be focused on economically. Then we need to get people organized and hop to it. That isn't happening. Either because investors are to squeamidh to take a risk, or Execs aren't popping up with ideas for execution to get invested. Execs aren't starting businesses, because that takes significant capital and stability from which to embark on the journey of fund raising from. Increasingly, that gets further and further out of reach as people don't get paid enough/the right experience to build up the springboard to jump off of, or even if they do the list for industrial sectors without value deserts is shrinking due to hyperoptimization fueled my mergers and acquisitions combined with an optimization to minimize worker pay, silo people, and an increased tendency to poach advice only from an entrenched "management" class. I mean, none of these problems seem terribly obscure or hard to reach from my perspective. Capital is increasingly centralized, and if you've got international players not playing nice enough to keep JIT feasible, you have to go old school.
mc32 5y ago
It feels like I’ve been hearing that this is transitory, there was nothing to worry about. Worrywarts we’re exaggerating… and now the chickens come home to roost. And, I can understand that coming from the Whitehouse, after all it’s a political liability… but news organizations, economists, journals, Twitter, publications… as if they all just joined a narrative to wish something untrue. There is no “fourth estate”. That looks to have been a myth to perpetrate unwarranted prestige.
- newaccount2021 5y ago
- nimbius 5y ago
  it was never 'transient.' this was a platitude espoused by the fed to assuage rising fears of stagflation. the only way to fight inflation is to raise interest rates, but since the fed is only now in the next month or so ceasing buyback operations for bonds, its hard to imagine theyll have the momentum within the year to stop the quantitative easing binge thats left the US (and the world) with a corporate credit bubble. tl;dr its here to stay. raising the prime interest rate is the only way to really combat stagflation, but the fed cant do it without triggering a corporate credit crisis.
- treis 5y ago
  Here's the data: https://www.bls.gov/news.release/pdf/cpi.pdf https://www.bls.gov/news.release/pdf/cpi.pdf It's more complicated than the headline number. There's a lot of big numbers that are clearly demand/supply issues. Like energy being up 27%, furniture up 17%, used cars up 40.5%, and so on. If I'm doing my math right, that 40.5% increase in used car prices is responsible for 1.6% of the head line number (40.5% * 4.1% weighting). Meaning, if we ignore the increase in used car prices the headline number would be 5.9% instead of 7.5%. The economy is still reeling from covid and settling on what a "new normal" looks like.
  - rory 5y ago
    Have we ever had inflation that was not caused by demand/supply issues? Isn't that kind of definitional to inflation?
jonathan-adly 5y ago
Has any economy gotten out of 5%+ inflationary cycle without a painful multi-year recession? Once the cycle settles, someone eventually has to pull a Paul Volcker, no?
- rafale 5y ago
  It took a recession to tame every inflation above 5% in history (except one time in 1950). We are just waiting for election to be over. Fed doesn't wanna "meddle".
- notch656a 5y ago
  A recession was all but guaranteed as soon as governments mandated shutdowns of broad swaths of the economy and scared the ever living hell out of people by making it sound like we were all going to die if we engaged in trade. They/we just decided to delay the pain by printing lots of money and handouts which decouple the pain from the shutdown, instead 2-3 years later we can blame it on some vague 'inflation' and the massive loss of quality of life, suicide, drug addiction and other results of recession can be blamed on something other than the mismanagement of the nation in the pandemic.
Amasuriel 5y ago
I think the psychology of pay raises and inflation is interesting. I’ve never heard anyone when inflation was low taking about how their 20% pay raise (from moving to another company for example) was 18% over inflation. This comparison of pay raises to inflation only happens when inflation is higher THAT YEAR, which I emphasize because technology salaries as a whole are one area that has greatly outstripped inflation over the the years. I’m not trying to dismiss or minimize people who are not happy they effectively got a negative pay adjustment this year, just commenting that the perspective on how to measure pay relative to the economy and market doesn’t seem consistent, and I think that says a lot about psychology of rewards for work. Obviously this also has different meaning in jobs where wages have been largely stagnant for many years, and weren’t keeping up with cost of living even before large inflation. Anyway, if you are a software engineer or other highly paid professional, it might be an good thought exercise to examine your lifetime (or some other timeframe) increases vs inflation, or look at your spending that will be actually impacted by inflation (groceries etc) and calculate the tangible impact on your life in terms of cost. Again not to say that high inflation is positive or anything, just as a way of adding context and additional perspectives that are missing if you look at this year in isolation and it wasn’t a year you got a substantial increase in pay.
- lkxijlewlf 5y ago
  I can absorb a 7% inflation rise. I have friends who can't. I can't just look at myself in isolation; I care too much about people to do that.
echopurity 5y ago
davmonk 5y ago
This is the reason why the stocks and other tech plummeted down.
agilob 5y ago
8.2% inflation means next year you are working one month for free
- bladegash 5y ago
  If I am understanding the numbers correctly, I am pretty sure inflation adjusted wage growth outpaced inflation (barely), so assuming both trends continue, it’ll just be a wash.
  - hmate9 5y ago
    real wages are not keeping up with inflation
    - bladegash 5y ago
      What is your source? From the article: “ The burst in inflation has muted the sizeable earnings growth workers have seen. Real average hourly earnings rose just 0.1% for the month, as the 0.7% monthly gain in wages was almost completely wiped out by the 0.6% inflation gain.”
      - bitshiftfaced 5y ago
        Real median wages is a good indicator of what most people are going through: https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
  - mcguire 5y ago
    Hypotheses: wage growth and inflation (ignoring monetary policy for the moment) are if not the same thing, tightly coupled. The effects of anti-inflation policy since the 1980s have been a major component of flat wages since then.
    - bladegash 5y ago
      I think that is a perfectly reasonable and likely hypothesis. It would make sense for prices to rise simultaneous to wages, as companies are not cutting their profit margins out of the goodness of their hearts to pay increased wages.
qsi 5y ago
Minor pedantic point: prices (or specifically, the consumer price index) rose 7.5%, not inflation. It IS 7.5% YoY and did not rise 7.5%. (Sorry, switching off Man-Shouts-At-Cloud Mode). Inflationary expectations are definitely getting reanchored at a higher level, so it's hard to see an easy/painless exit. Helps deflate the debt/GDP ratio though (it's nominal GDP in the denominator, which includes inflation), so some folks will be happy.
- jhickok 5y ago
  My student debt is getting a little cheaper! Unfortunately, the next time I need to buy a vehicle those gains will be wiped out.
cptnapalm 5y ago
The stock market's reaction was "Oh no!" followed a few minutes later with "Anyway."
- vizzah 5y ago
  Nope, stock market already "pricing in" rate cuts after "policy error". But that's pretty stupid to price in right now.
causi 5y ago
Is this not what we anticipated when world governments pulled ten trillion dollars out of thin air for economic stimulus? The bill always comes due.
pessimizer 5y ago
If this is the result of a lot of very marginal people getting pay raises and $1600 checks, it would show how much of the real economy rests on slave wages.
- droopyEyelids 5y ago
  I'd like to see how much of the money went to individuals vs the amount captured by the finance industry from Quantitative Easing and the other more targeted programs.
wonderwonder 5y ago
I did not get a raise this year, just paid vacation. So I essentially took a ~7.5% pay cut. awesome In reality even more because groceries are up way more than 7.5%
gtmitchell 5y ago
6% core inflation with wage growth flat. And that doesn't even include housing prices, which went up 25% last year alone where I live. Am I the only one feeling entirely hopeless about the prospects for my financial future? How does everyone else deal with this?
- hmate9 5y ago
  Spending your money is probably the best option imo. Gold and even some bitcoin as inflation hedge is a good option.
  - Mezzie 5y ago
    I saw this coming and knew I'd need some things when the stimuli hit, so I bought a computer and some other stuff I needed. It extended me a little more than I would have liked, but I have to admit it was the right call. I still would have needed what I bought, but it would have cost more (or I would have had to buy a different - probably more expensive - item due to supply chain issues) if I waited. I hate being incentivized to be 'irresponsible'. It feels like I'm living in upside-down world.
- snikeris 5y ago
  Find a higher paying job. Inflation screws people who sit tight.
- bladegash 5y ago
  Wage growth was flat when taking into account inflation. It was not flat in and of itself. In other words, I believe inflation adjusted wage growth was 0.1%, or a wash when taking into account inflation, per the #’s.
- hourislate 5y ago
  You just need to get a job at a FAGMAN company so you can live at the office and eat all the free food. Shower in the gym and sleep in the lounges. If this is not possible you need to stop spending. The only things you should be purchasing in this type of environment is food (real food it's cheaper), fuel and paying bills. No spending on anything else, clothing, going out, Chinese crap. Save what the Government is stealing from you through inflation.
VincentEvans 5y ago
When I hear “it’s transitory” I feel the urge to point out, that while it may be true and inflation will go to zero for all we know - the change in prices is likely to remain. Here’s something that bothers me most of all and I don’t hear much about: both my water and sewer, and electric utilities - increased prices by nearly 30%. I received notices and accompanying bills a few days ago. This was preceded by garbage pickup company raising rates similarly as well. In my personal life experience - I’ve not seen utility prices go down, ever.
- smeyer 5y ago
  >In my personal life experience - I’ve not seen utility prices go down, ever. I think it depends on the utility. My town dropped electric rates a bit a year ago[0] and I think it's even more common for rates to fluctuate (both up and down) with utilities like natural gas or even oil heat, where it's more closely tied to the price of a single commodity. [0] https://www.cambridgema.gov/news/detail.aspx?path=/sitecore/content/home/cdd/news/2021/1/cambridgecommunityelectricityprogramtooffernewprices https://www.cambridgema.gov/news/detail.aspx?path=/sitecore/... with a caveat that this was for the "standard" rather than the 100% green plan, where prices went up
- hervature 5y ago
  First, utility prices are really your state's responsibility (as in, they ultimately decide how expensive it is). Things like driving for green energy and canceling pipelines add to the cost. Obviously, the hope is that it pays off in the long run. Second, [1] is Nevada decreasing prices last year. Your "lifetime of data" is really a data point of n=1. [1] - https://www.nvenergy.com/about-nvenergy/news/news-releases/pucn-approves-nv-energy-rate-decrease-for-southern-nevada-customers https://www.nvenergy.com/about-nvenergy/news/news-releases/p...
  - VincentEvans 5y ago
    Perhaps you are right. My life experiences in US date back to 1995. I can’t think of a single utility or typical household spending bill that was more expensive in the past than it is now. Can you think of one?
bladegash 5y ago
Might seem counterintuitive, but does anyone else see this as a positive sign? In that, we have been going for about 15 years injecting liquidity into the economy with little to no increase in inflation. That was counterintuitive to most economic assumptions and is something Japan struggled with for some time with quantitive easing, to the point of deflation at times. If nothing else, the Fed and economic theories have tools to counter inflation, which in my mind, isn’t completely bad news.
- giantg2 5y ago
  It would seem a good time to start unwinding the $9T or whatever in treasury held securities so that we'll be ready to keep inflation at 2% for the next deflationary trend.
- Nbox9 5y ago
  It’s potentially bad because the market isn’t as simple as “keep inflation at 2%”. We also want GDP growth and low unemployment. The tools we have to decrease inflation can hurt both of those metrics. This means our position is risky, and the treatment to reduce inflation might have strong consequences.
  - bladegash 5y ago
    That’s fair, but we were also running out of tools to increase liquidity/inflation as well. Not many tools to increase inflation to a healthy number when interest rates are already at or approaching 0% and billions of dollars are being created out of air.
fdye 5y ago
So I keep hearing the same two narratives over and over, we printed money and what do we expect (?), and supply chain issues. However, there is a third (and likely more) thing going on and that is megacorporate monopolies. Take toilet paper, the market has now completely consolidate on three major players (rule of three), Proctor & Gamble, Kimberly Clark, and Georgia-Pacific. Just looking at P&G we can see y/y (https://www.google.com/search?q=procter%26+gamble+q4+2021+earnings https://www.google.com/search?q=procter%26+gamble+q4+2021+ea...) Revenue 20.95B +6.12% Net income 4.22B +9.57% Diluted EPS 1.66 +12.93% Net profit margin 20.15% +3.23% During the last year they have paid ~3% dividend on top of buying back billions of stock (https://ycharts.com/companies/PG/stock_buyback https://ycharts.com/companies/PG/stock_buyback), in Q4 they increased their buyback from ~3B->4.75B. With all do respect supply chain/monetary policy concerns are a cover for what is really going on, lack of competition in the market. A rational market with multiple competitors and no price fixing, would prompt at least one of the competitors that is sitting on billions of extra money to drop prices. As a result they would increase sales and make up the profits in volume, this would prompt their competitors to follow suit or else lose customers and market share. You know Econ101. The market is not rationale right now as we have allowed these mega mergers and pushed out all small competitors. That 7.5% inflation is them coordinating prices and sticking the profits back into their investors pockets, then using supply chain and monetary policy as cover in the media.
- d23 5y ago
  I believe this is what Elizabeth Warren has been saying. It struck me as just political theater at first, but this is the second time I've seen people pointing out that profits for some of the largest corporations have actually been increasing.
- HonestOp001 5y ago
  Government edicts prevent any new players from entering the market. In our market we have supply and demand. Currently, there is demand chasing a shrinking supply. We wrecked the status quo by freezing the economy and the jobs held in place. With the stimulus checks, wages were forced up to overcome the challenge of people sitting at home or coming into work. Costs thus increased. Most of the suppliers have held back on price increases because they a. Do not want to hurt the consumer, b. Do not want to have the government thinking they are price gouging (which if you want to be new to market and provide a product similar to everyone else but at a much higher price to cover your entry costs, good luck with the opportunistic folks in congress looking to pin this on the corporations). The small businesses are not nimble enough to make paper towels because of capital investments not being there, the big players having a monopoly on store shelf space, and government agencies ready to swoop in and bury you in legal morass. Now we see the companies realizing they are all in this together, similar to when all the airlines simultaneously declared bankruptcy. I am not saying they are collusion to increase prices, I am saying they are inadvertently appearing to collude based on how they feel out the other corporations going.
runako 5y ago
Obligatory reminder that inflation is likely good for you if you carry mortgage or other similar amortized debt. As salaries ratchet up, it will become progressively easier for you to pay your mortgage. Inflation is not all negative!
- hackeraccount 5y ago
  I (well, realistically my wife and I) just bought a house and I remember thinking "now would be a good time for a bout of inflation." I'm not quite as certain about that anymore but the rate we got is a fair bit less then 7% so I suppose we're making out on this to some degree. Not on groceries though.
  - runako 5y ago
    It's not (just) about the interest rate on your mortgage, though. The real benefit comes as salaries ratchet up in response to inflation, which will happen as long as the inflation is somewhat persistent. Thinking back to the mid-90s, for example, CS grads from prestigious schools were jockeying to earn $40k-$60k at prestigious tech firms. They were able to purchase houses on those salaries. If someone purchased a house in e.g. San Mateo after a couple of promotions to $75k, they might have spent in the neighborhood of $250k[1]. A few rounds of inflation later, the payments on that mortgage are inconsequential to that person (who may still, in 2022, hold a mortgage there). TL;DR; compensation and inflation are linked. 1 - https://www.latimes.com/archives/la-xpm-1996-12-27-mn-12986-story.html https://www.latimes.com/archives/la-xpm-1996-12-27-mn-12986-...
- vinyl7 5y ago
  Sucks for all us millennials who haven't yet been able to buy a home, and probably won't be able to going forward
  - runako 5y ago
    Great thing that it's possible to work remotely from low-cost areas now! If the median home price in your area is more than $320k, you might consider going remote and buying elsewhere. (If home ownership is a top priority.)
alkaloid 5y ago
Well, someone/thing has to set the stage for another war that will "dig us out of recession." I just wonder how many more times we're going to fall for this nonsense.
- dragonwriter 5y ago
  > Well, someone/thing has to set the stage for another war that will "dig us out of recession." Recession and inflation aren't the same thing, in fact, they are more opposed than aligned. The current inflation accompanied, and has in part been driven by, the rapid economic growth coming out of the COVID slowdown.
  - alkaloid 5y ago
    Keep telling yourself that.
deleted 5y ago
[deleted]
1970-01-01 5y ago
I'm certain DeFi, FinTech, NFTs, and crypto are going to save the economy from another depression. /s
xtracto 5y ago
This is the first year I know where US average annual inflation is higher than Mexico's one. It's really interesting to me.

122 points by koolba 5y ago

By the time the next performance review hits, I'll have likely sustained a 12% real pay cut. Who knows what the 'merit' increase will bring that out to, but I'm guessing it'll be about an 8% real pay cut.

mym1990 5y ago
Can't tell what the point of your post is, but there is a real responsibility for you to see what the job market will bear if you want to not have a 12% pay cut. You are a player in the economy, and I don't understand why people keep thinking that companies are going to kneel and adjust their employees salaries accordingly without a good economic reason to do so.
- giantg2 5y ago
  It's mostly about awareness that the companies will screw people over. My hope is that unionization could help fix this. Although the tech industry seems adverse to that. I have been looking for jobs. My area sucks. The company has used me for necessary tech that doesn't have a future, so my background sucks. Basically I suck and my area sucks. It will only get worse, no matter what I do. Even though one is a player, there are constraints, and the game can even be rigged.
  - mym1990 5y ago
    100%. I like the company culture aspect of working, but I have stopped deluding myself that a company won't cut me as soon as it is impractical to keep me, just because of loyalty or good will. I don't know that unionization is the answer though, I would lean towards competition as a better scenario.

bko 5y ago

Are people still getting "cost of living adjustments"? I remember they were pretty common a few years ago where you got a nominal 1-2% raise every year. I feel like this year they skipped them entirely because it would have been offensive to get bumped 1-2% when you know the cost of living has gone up (conservatively) 7.5%, and obviously they an across the board bump that large would be a lot.

markvdb 5y ago
In my native Belgium, indexation is set in law. Price levels up by 6%? Wages up by 6%. There has been tiny bits of nibbling at the edges, but the principle stands and is not up for discussion.
- NicoJuicy 5y ago
  I don't think we are alone though. Where I work, they pick the highest inflation ( Canadian company). So we get the highest inflation from Canada or Belgium.
- sneak 5y ago
  It seems a bit silly to do it this way and not authoritatively denominate the salary in a unit of account that isn't subject to such annual volatility in value. Otherwise you're still losing out, due to the fact that for ~11 months of the year your salary is not correctly inflation-adjusted. I look forward to the technology behind payment systems getting to the point where "streaming" payments are a thing, paid every minute or hour or whatever over months or years. Your salary could be denominated in big macs or grams of gold or shares of BRK.A or whatever, and the streaming process that sends your payments in EUR or USD or whatever simply calculates the current conversion (which would approximate continuous adjustment for inflation). It's such simple math and APIs. I wish payments (salary especially) weren't so tradition-based.
  - BoiledCabbage 5y ago
    > I look forward to the technology behind payment systems getting to the point where "streaming" payments are a thing, paid every minute or hour or whatever over months or years. Why? > It's such simple math and APIs. I wish payments (salary especially) weren't so tradition-based. Yes, it's conceptually easy math (ignoring all the infrastructure needing to be updated to support this), but I'm not seeing the huge benefit here. If people are having trouble making ends meet, do more to improve the balance of labor in society rather than just let people get access to their middle of the month check a few days sooner. That's a bandaid on a larger problem.

newaccount2021 5y ago

ettubrutus 5y ago

Isn't it a little remiss to report on inflation without even mentioning the huge increase in M1/M2 money supply since the pandemic began? [1] [1] https://fred.stlouisfed.org/series/M2SL https://fred.stlouisfed.org/series/M2SL

yostrovs 5y ago
It seems usually, when inflation is reported on, the printing of money is not mentioned, though far and away it is the main factor causing substantial inflation.
- wbsss4412 5y ago
  Inflation can driven by two things: the money supply and overall productive capacity. Both are driving inflation.
- wycy 5y ago
  It's humorous how certain all the libertarian armchair economists are that this inflation is caused by the money supply rather than the extremely visible effects of the broken supply chain. No no, the everything shortage, massive backups at the ports, the trucker blockade, and everything else are totally unrelated; clearly it's a problem of fiscal policy.
  - salawat 5y ago
    Constraint engineering: You mitigated the money supply constraint. If Supply Chain is the new constrain as you posit, it means structurally, the infra we've got is breaking down, and that money should be re-settling in tooling or re-establishment of manufacturing/factories to mitigate the unreliable supply chain. In order for that to take place, we need a prioritized list of what goods can be focused on economically. Then we need to get people organized and hop to it. That isn't happening. Either because investors are to squeamidh to take a risk, or Execs aren't popping up with ideas for execution to get invested. Execs aren't starting businesses, because that takes significant capital and stability from which to embark on the journey of fund raising from. Increasingly, that gets further and further out of reach as people don't get paid enough/the right experience to build up the springboard to jump off of, or even if they do the list for industrial sectors without value deserts is shrinking due to hyperoptimization fueled my mergers and acquisitions combined with an optimization to minimize worker pay, silo people, and an increased tendency to poach advice only from an entrenched "management" class. I mean, none of these problems seem terribly obscure or hard to reach from my perspective. Capital is increasingly centralized, and if you've got international players not playing nice enough to keep JIT feasible, you have to go old school.

mc32 5y ago

It feels like I’ve been hearing that this is transitory, there was nothing to worry about. Worrywarts we’re exaggerating… and now the chickens come home to roost. And, I can understand that coming from the Whitehouse, after all it’s a political liability… but news organizations, economists, journals, Twitter, publications… as if they all just joined a narrative to wish something untrue. There is no “fourth estate”. That looks to have been a myth to perpetrate unwarranted prestige.

newaccount2021 5y ago
nimbius 5y ago
it was never 'transient.' this was a platitude espoused by the fed to assuage rising fears of stagflation. the only way to fight inflation is to raise interest rates, but since the fed is only now in the next month or so ceasing buyback operations for bonds, its hard to imagine theyll have the momentum within the year to stop the quantitative easing binge thats left the US (and the world) with a corporate credit bubble. tl;dr its here to stay. raising the prime interest rate is the only way to really combat stagflation, but the fed cant do it without triggering a corporate credit crisis.
treis 5y ago
Here's the data: https://www.bls.gov/news.release/pdf/cpi.pdf https://www.bls.gov/news.release/pdf/cpi.pdf It's more complicated than the headline number. There's a lot of big numbers that are clearly demand/supply issues. Like energy being up 27%, furniture up 17%, used cars up 40.5%, and so on. If I'm doing my math right, that 40.5% increase in used car prices is responsible for 1.6% of the head line number (40.5% * 4.1% weighting). Meaning, if we ignore the increase in used car prices the headline number would be 5.9% instead of 7.5%. The economy is still reeling from covid and settling on what a "new normal" looks like.
- rory 5y ago
  Have we ever had inflation that was not caused by demand/supply issues? Isn't that kind of definitional to inflation?

jonathan-adly 5y ago

Has any economy gotten out of 5%+ inflationary cycle without a painful multi-year recession? Once the cycle settles, someone eventually has to pull a Paul Volcker, no?

rafale 5y ago
It took a recession to tame every inflation above 5% in history (except one time in 1950). We are just waiting for election to be over. Fed doesn't wanna "meddle".
notch656a 5y ago
A recession was all but guaranteed as soon as governments mandated shutdowns of broad swaths of the economy and scared the ever living hell out of people by making it sound like we were all going to die if we engaged in trade. They/we just decided to delay the pain by printing lots of money and handouts which decouple the pain from the shutdown, instead 2-3 years later we can blame it on some vague 'inflation' and the massive loss of quality of life, suicide, drug addiction and other results of recession can be blamed on something other than the mismanagement of the nation in the pandemic.

Amasuriel 5y ago

I think the psychology of pay raises and inflation is interesting. I’ve never heard anyone when inflation was low taking about how their 20% pay raise (from moving to another company for example) was 18% over inflation. This comparison of pay raises to inflation only happens when inflation is higher THAT YEAR, which I emphasize because technology salaries as a whole are one area that has greatly outstripped inflation over the the years. I’m not trying to dismiss or minimize people who are not happy they effectively got a negative pay adjustment this year, just commenting that the perspective on how to measure pay relative to the economy and market doesn’t seem consistent, and I think that says a lot about psychology of rewards for work. Obviously this also has different meaning in jobs where wages have been largely stagnant for many years, and weren’t keeping up with cost of living even before large inflation. Anyway, if you are a software engineer or other highly paid professional, it might be an good thought exercise to examine your lifetime (or some other timeframe) increases vs inflation, or look at your spending that will be actually impacted by inflation (groceries etc) and calculate the tangible impact on your life in terms of cost. Again not to say that high inflation is positive or anything, just as a way of adding context and additional perspectives that are missing if you look at this year in isolation and it wasn’t a year you got a substantial increase in pay.

lkxijlewlf 5y ago
I can absorb a 7% inflation rise. I have friends who can't. I can't just look at myself in isolation; I care too much about people to do that.

echopurity 5y ago

davmonk 5y ago

This is the reason why the stocks and other tech plummeted down.

agilob 5y ago

8.2% inflation means next year you are working one month for free

bladegash 5y ago
If I am understanding the numbers correctly, I am pretty sure inflation adjusted wage growth outpaced inflation (barely), so assuming both trends continue, it’ll just be a wash.
- hmate9 5y ago
  real wages are not keeping up with inflation
  - bladegash 5y ago
    What is your source? From the article: “ The burst in inflation has muted the sizeable earnings growth workers have seen. Real average hourly earnings rose just 0.1% for the month, as the 0.7% monthly gain in wages was almost completely wiped out by the 0.6% inflation gain.”
    - bitshiftfaced 5y ago
      Real median wages is a good indicator of what most people are going through: https://fred.stlouisfed.org/series/LES1252881600Q https://fred.stlouisfed.org/series/LES1252881600Q
- mcguire 5y ago
  Hypotheses: wage growth and inflation (ignoring monetary policy for the moment) are if not the same thing, tightly coupled. The effects of anti-inflation policy since the 1980s have been a major component of flat wages since then.
  - bladegash 5y ago
    I think that is a perfectly reasonable and likely hypothesis. It would make sense for prices to rise simultaneous to wages, as companies are not cutting their profit margins out of the goodness of their hearts to pay increased wages.

qsi 5y ago

Minor pedantic point: prices (or specifically, the consumer price index) rose 7.5%, not inflation. It IS 7.5% YoY and did not rise 7.5%. (Sorry, switching off Man-Shouts-At-Cloud Mode). Inflationary expectations are definitely getting reanchored at a higher level, so it's hard to see an easy/painless exit. Helps deflate the debt/GDP ratio though (it's nominal GDP in the denominator, which includes inflation), so some folks will be happy.

jhickok 5y ago
My student debt is getting a little cheaper! Unfortunately, the next time I need to buy a vehicle those gains will be wiped out.

cptnapalm 5y ago

The stock market's reaction was "Oh no!" followed a few minutes later with "Anyway."

vizzah 5y ago
Nope, stock market already "pricing in" rate cuts after "policy error". But that's pretty stupid to price in right now.

causi 5y ago

Is this not what we anticipated when world governments pulled ten trillion dollars out of thin air for economic stimulus? The bill always comes due.

pessimizer 5y ago

If this is the result of a lot of very marginal people getting pay raises and $1600 checks, it would show how much of the real economy rests on slave wages.

droopyEyelids 5y ago
I'd like to see how much of the money went to individuals vs the amount captured by the finance industry from Quantitative Easing and the other more targeted programs.

wonderwonder 5y ago

I did not get a raise this year, just paid vacation. So I essentially took a ~7.5% pay cut. awesome In reality even more because groceries are up way more than 7.5%

gtmitchell 5y ago

6% core inflation with wage growth flat. And that doesn't even include housing prices, which went up 25% last year alone where I live. Am I the only one feeling entirely hopeless about the prospects for my financial future? How does everyone else deal with this?

hmate9 5y ago
Spending your money is probably the best option imo. Gold and even some bitcoin as inflation hedge is a good option.
- Mezzie 5y ago
  I saw this coming and knew I'd need some things when the stimuli hit, so I bought a computer and some other stuff I needed. It extended me a little more than I would have liked, but I have to admit it was the right call. I still would have needed what I bought, but it would have cost more (or I would have had to buy a different - probably more expensive - item due to supply chain issues) if I waited. I hate being incentivized to be 'irresponsible'. It feels like I'm living in upside-down world.
snikeris 5y ago
Find a higher paying job. Inflation screws people who sit tight.
bladegash 5y ago
Wage growth was flat when taking into account inflation. It was not flat in and of itself. In other words, I believe inflation adjusted wage growth was 0.1%, or a wash when taking into account inflation, per the #’s.
hourislate 5y ago
You just need to get a job at a FAGMAN company so you can live at the office and eat all the free food. Shower in the gym and sleep in the lounges. If this is not possible you need to stop spending. The only things you should be purchasing in this type of environment is food (real food it's cheaper), fuel and paying bills. No spending on anything else, clothing, going out, Chinese crap. Save what the Government is stealing from you through inflation.

VincentEvans 5y ago

When I hear “it’s transitory” I feel the urge to point out, that while it may be true and inflation will go to zero for all we know - the change in prices is likely to remain. Here’s something that bothers me most of all and I don’t hear much about: both my water and sewer, and electric utilities - increased prices by nearly 30%. I received notices and accompanying bills a few days ago. This was preceded by garbage pickup company raising rates similarly as well. In my personal life experience - I’ve not seen utility prices go down, ever.

smeyer 5y ago
>In my personal life experience - I’ve not seen utility prices go down, ever. I think it depends on the utility. My town dropped electric rates a bit a year ago[0] and I think it's even more common for rates to fluctuate (both up and down) with utilities like natural gas or even oil heat, where it's more closely tied to the price of a single commodity. [0] https://www.cambridgema.gov/news/detail.aspx?path=/sitecore/content/home/cdd/news/2021/1/cambridgecommunityelectricityprogramtooffernewprices https://www.cambridgema.gov/news/detail.aspx?path=/sitecore/... with a caveat that this was for the "standard" rather than the 100% green plan, where prices went up
hervature 5y ago
First, utility prices are really your state's responsibility (as in, they ultimately decide how expensive it is). Things like driving for green energy and canceling pipelines add to the cost. Obviously, the hope is that it pays off in the long run. Second, [1] is Nevada decreasing prices last year. Your "lifetime of data" is really a data point of n=1. [1] - https://www.nvenergy.com/about-nvenergy/news/news-releases/pucn-approves-nv-energy-rate-decrease-for-southern-nevada-customers https://www.nvenergy.com/about-nvenergy/news/news-releases/p...
- VincentEvans 5y ago
  Perhaps you are right. My life experiences in US date back to 1995. I can’t think of a single utility or typical household spending bill that was more expensive in the past than it is now. Can you think of one?

bladegash 5y ago

Might seem counterintuitive, but does anyone else see this as a positive sign? In that, we have been going for about 15 years injecting liquidity into the economy with little to no increase in inflation. That was counterintuitive to most economic assumptions and is something Japan struggled with for some time with quantitive easing, to the point of deflation at times. If nothing else, the Fed and economic theories have tools to counter inflation, which in my mind, isn’t completely bad news.

giantg2 5y ago
It would seem a good time to start unwinding the $9T or whatever in treasury held securities so that we'll be ready to keep inflation at 2% for the next deflationary trend.
Nbox9 5y ago
It’s potentially bad because the market isn’t as simple as “keep inflation at 2%”. We also want GDP growth and low unemployment. The tools we have to decrease inflation can hurt both of those metrics. This means our position is risky, and the treatment to reduce inflation might have strong consequences.
- bladegash 5y ago
  That’s fair, but we were also running out of tools to increase liquidity/inflation as well. Not many tools to increase inflation to a healthy number when interest rates are already at or approaching 0% and billions of dollars are being created out of air.

fdye 5y ago

So I keep hearing the same two narratives over and over, we printed money and what do we expect (?), and supply chain issues. However, there is a third (and likely more) thing going on and that is megacorporate monopolies. Take toilet paper, the market has now completely consolidate on three major players (rule of three), Proctor & Gamble, Kimberly Clark, and Georgia-Pacific. Just looking at P&G we can see y/y (https://www.google.com/search?q=procter%26+gamble+q4+2021+earnings https://www.google.com/search?q=procter%26+gamble+q4+2021+ea...) Revenue 20.95B +6.12% Net income 4.22B +9.57% Diluted EPS 1.66 +12.93% Net profit margin 20.15% +3.23% During the last year they have paid ~3% dividend on top of buying back billions of stock (https://ycharts.com/companies/PG/stock_buyback https://ycharts.com/companies/PG/stock_buyback), in Q4 they increased their buyback from ~3B->4.75B. With all do respect supply chain/monetary policy concerns are a cover for what is really going on, lack of competition in the market. A rational market with multiple competitors and no price fixing, would prompt at least one of the competitors that is sitting on billions of extra money to drop prices. As a result they would increase sales and make up the profits in volume, this would prompt their competitors to follow suit or else lose customers and market share. You know Econ101. The market is not rationale right now as we have allowed these mega mergers and pushed out all small competitors. That 7.5% inflation is them coordinating prices and sticking the profits back into their investors pockets, then using supply chain and monetary policy as cover in the media.

d23 5y ago
I believe this is what Elizabeth Warren has been saying. It struck me as just political theater at first, but this is the second time I've seen people pointing out that profits for some of the largest corporations have actually been increasing.
HonestOp001 5y ago
Government edicts prevent any new players from entering the market. In our market we have supply and demand. Currently, there is demand chasing a shrinking supply. We wrecked the status quo by freezing the economy and the jobs held in place. With the stimulus checks, wages were forced up to overcome the challenge of people sitting at home or coming into work. Costs thus increased. Most of the suppliers have held back on price increases because they a. Do not want to hurt the consumer, b. Do not want to have the government thinking they are price gouging (which if you want to be new to market and provide a product similar to everyone else but at a much higher price to cover your entry costs, good luck with the opportunistic folks in congress looking to pin this on the corporations). The small businesses are not nimble enough to make paper towels because of capital investments not being there, the big players having a monopoly on store shelf space, and government agencies ready to swoop in and bury you in legal morass. Now we see the companies realizing they are all in this together, similar to when all the airlines simultaneously declared bankruptcy. I am not saying they are collusion to increase prices, I am saying they are inadvertently appearing to collude based on how they feel out the other corporations going.

runako 5y ago

Obligatory reminder that inflation is likely good for you if you carry mortgage or other similar amortized debt. As salaries ratchet up, it will become progressively easier for you to pay your mortgage. Inflation is not all negative!

hackeraccount 5y ago
I (well, realistically my wife and I) just bought a house and I remember thinking "now would be a good time for a bout of inflation." I'm not quite as certain about that anymore but the rate we got is a fair bit less then 7% so I suppose we're making out on this to some degree. Not on groceries though.
- runako 5y ago
  It's not (just) about the interest rate on your mortgage, though. The real benefit comes as salaries ratchet up in response to inflation, which will happen as long as the inflation is somewhat persistent. Thinking back to the mid-90s, for example, CS grads from prestigious schools were jockeying to earn $40k-$60k at prestigious tech firms. They were able to purchase houses on those salaries. If someone purchased a house in e.g. San Mateo after a couple of promotions to $75k, they might have spent in the neighborhood of $250k[1]. A few rounds of inflation later, the payments on that mortgage are inconsequential to that person (who may still, in 2022, hold a mortgage there). TL;DR; compensation and inflation are linked. 1 - https://www.latimes.com/archives/la-xpm-1996-12-27-mn-12986-story.html https://www.latimes.com/archives/la-xpm-1996-12-27-mn-12986-...
vinyl7 5y ago
Sucks for all us millennials who haven't yet been able to buy a home, and probably won't be able to going forward
- runako 5y ago
  Great thing that it's possible to work remotely from low-cost areas now! If the median home price in your area is more than $320k, you might consider going remote and buying elsewhere. (If home ownership is a top priority.)

alkaloid 5y ago

Well, someone/thing has to set the stage for another war that will "dig us out of recession." I just wonder how many more times we're going to fall for this nonsense.

dragonwriter 5y ago
> Well, someone/thing has to set the stage for another war that will "dig us out of recession." Recession and inflation aren't the same thing, in fact, they are more opposed than aligned. The current inflation accompanied, and has in part been driven by, the rapid economic growth coming out of the COVID slowdown.
- alkaloid 5y ago
  Keep telling yourself that.

deleted 5y ago

[deleted]

1970-01-01 5y ago

I'm certain DeFi, FinTech, NFTs, and crypto are going to save the economy from another depression. /s

xtracto 5y ago

This is the first year I know where US average annual inflation is higher than Mexico's one. It's really interesting to me.