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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 roo

by 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?
  - zdkl 5y ago
    As `treis was pointing out, what matters is demand/supply of what. Assets? Labour? Cash?
  - runako 5y ago
    I think the point being made is that the portion of inflation caused by used car inflation is likely transient & due to a well-known cause (automakers shut factories due to Covid) that is being remedied. The question all along has been how much of inflation is due to obvious transitory effects like this one.
    - beerandt 5y ago
      Vehicles are not only "behind" on supply (which is difficult enough to overcome in an industry that's so dialed in to production capacity that quick bumps in production aren't possible), but they continue to be produced at below normal capacity and so the shortage is increasing, not catching up. The chip shortage is playing an outsized role here. Vehicles are being delivered with IOUs to come back in a year or two to have chips retrofitted in order to enable options listed on the window sticker. Everything from climate control and heated seats, to wireless phone charging, to autostop/gas saving measures, to lane keeping and collision avoidance. And delivery numbers are still extremely low. Catching up means either years of bringing up total factory capacity to beyond pre-covid levels and catching up on the chip shortage... or a recession or other event that suppresses demand. Transient in this sense only applies if we're taking about fractions of a decade, not fractions of a year.
      - runako 5y ago
        > Transient in this sense only applies if we're taking about fractions of a decade, not fractions of a year. I don't know the answer to this, but if the choice is either let inflation run hot like this for another couple of years or engineer a recession, is there a clear policy answer? The benefits of a hot economy seem to outweigh the downsides from the perspective of high employment, but perhaps not in other ways. Just 2 years ago, the worry was whether we would end up in a deflationary spiral and have no real policy levers to exit. Given the lag time for any policy response to take effect, it seems really hard to get correct. I definitely don't envy anyone who's making policy decisions on this.
- flavius29663 5y ago
  Not sure what the reasoning is here: of course it's a demand/supply issue. There are too many dollars in the economy. Because people have money, they want to buy cars, and houses and furniture etc. Why do you want to ignore car prices? Haven't they always been a part of inflation? Some people say housing and cars should have a bigger weight in the CPI, because that's where a lot of the money goes for a huge number of American families (that and education+healthcare)
  - wbsss4412 5y ago
    Car prices are being driven by supply chain issues more so than a surplus of dollars.
    - hackeraccount 5y ago
      How would you know that? If say the number of cars went down by 50% and the amount of money in everyone's pocket went up by 100% which would driving the upward price more? If the supply of cars is down why would that in and of itself drive the price up? Surely there's some flexibility in demand for cars? It seems like a price increase in any individual item can be explained as a supply problem but every additional item that that gets added to the list is an argument for a money supply problem because on some level every item is substitutable.
      - wbsss4412 5y ago
        I don’t know in the sense that I have exhaustively researched the topic in exacting detail, but I believe it is mostly supply related because of a combination of factors: 1. Global supply chain disruptions are well documented, multiple automakers have had to shutdown factories for lack of parts. 2. Cars prices are increasing much more rapidly than the overall inflation rate. (I believe another comment in this thread said ~40% for used vehicles) 3. Total vehicle sales are still below their pre pandemic levels. I never said that the money supply isn’t contributing to inflation. But it is quite clear that there is a significant supply problem when it comes to cars.
- pdog 5y ago
  I'm struggling to understand how inflation is only 7.5% when every major line item comprising inflation is up much more than 7.5% over the past year.
  - runako 5y ago
    You want Table 1 in the linked doc. The summary is the things getting more expensive fastest are also things that have lower weighting. In household budget terms, our biggest expenses by far are: - housing - health insurance - childcare Those have not gotten much more expensive (our health insurance got cheaper this year, housing is flat, childcare had a modest increase). Meanwhile gas for the vehicles costs much more, but comparatively fuel is a minor expense. When we weigh everything for our household, 7.5% seems high.
    - tenuousemphasis 5y ago
      Housing is flat?! That does not seem to track with the real world.
      - CameronNemo 5y ago
        Because of the way shelter costs enter into the CPI, these increases in owned home and rental costs have not yet contributed much to overall inflation. Our analysis, however, suggests that these higher shelter prices are likely to soon show up more clearly in the monthly CPI, potentially adding several more basis points (hundredths of a percentage point) to monthly inflation than they do now. https://www.whitehouse.gov/cea/written-materials/2021/09/09/housing-prices-and-inflation/ https://www.whitehouse.gov/cea/written-materials/2021/09/09/...
        wonderwonder 5y ago
        That is a pretty convenient way to calculate CPI. Rents are up over 20% and the cost of homes has been a rocket ship.
- deleted 5y ago
  [deleted]
- appleiigs 5y ago
  The push towards green energy has reduced investment in coal, oil & gas and pipelines. This has pushed up energy prices. Sustainable energy can't be built fast enough. This is not transitory.
- _ea1k 5y ago
  The funny thing is that it wasn't that long ago that people were arguing that the pandemic would have a lasting impact in the opposite way. A popular theory was that rental car companies will dump their inventory, there'd be a glut of used cars, and both used and new car prices would crash as a result. They overlooked that eventually demand would return and those empty inventories would have to be refilled at a time that was just 12-24 months removed from massive decreases in production. And that it'd correlate with every other industry scrambling for supplies and transportation at the same time. This too shall pass.
- vgeek 5y ago
  More importantly missed from the CPI calculations are the prices of pinball machines. It seems like the prices on the used market have nearly doubled over the last 12-18 months.
  - Ancapistani 5y ago
    This is actually a more interesting trend than it might appear at first glance. The prices of _all_ of my hobbies have gone up quite a bit over the past year or so. It seems to be consistent that discretionary/luxury goods are increasing in price significantly faster than the CPI.
- CSSer 5y ago
  That used car statistic is truly quite staggering. It's pretty frustrating how much of that is initially due to major manufacturer's own misread of the situation too, but no point in crying over spilled milk, right? Anyway... > "The used cars and trucks index rose 1.5 percent in January, a deceleration from the 3.3-percent increase reported in December." (from your link) It's good to see that this is slowing down. I was curious so I took it upon myself to gather a few links[0][1][2] with statistics on U.S. and global auto production. I wanted to know what the "old normal" looked like, what kind of drop in production is required to trigger this kind of inflation, and how close we are to getting back to normal. In short, my answers were our manufacturing numbers have been on a slow, steady decades long decline for some time now anyway[0] so I guess it depends on your level of pessimism, a 16-17% drop overall[1] (coincidentally about the same worldwide)[2], and about halfway back to normal but progress is slow and inconsistent[0]. Everything blew up in March 2020, somehow managed to snap back to normal temporarily in July 2020, and finally proceeded to spend the rest of 2020 and all of 2021 on an increasingly bleak rollercoaster that is just now beginning to rebound (hopefully). [0]https://tradingeconomics.com/united-states/car-production https://tradingeconomics.com/united-states/car-production [1]https://www.goodcarbadcar.net/usa-auto-industry-total-sales-figures/ https://www.goodcarbadcar.net/usa-auto-industry-total-sales-... [2]https://www.oica.net/category/production-statistics/2020-statistics/ https://www.oica.net/category/production-statistics/2020-sta...
- stjohnswarts 5y ago
  Yeah used car prices are amazing right now. If I was closer to work I'd sell my car and ride a bike to work and get a little bit more for my car than I paid for it 5 years ago (it was a 1 year old used car at the time). As it stands I'll ride it out for at least another five years or until sanity returns. Friends are being called by dealerships interested in buying back their cars (not trade-ins, straight up cash offers). It has been interesting this past year.
- malandrew 5y ago
  Just wait until rents start resetting and catching up. My understanding is that rent inflation is one of the slowest to be factored in because many leases need to expire before it’s inflationary impact is fully represented.
nabla9 5y ago
Or maybe the facts support their statements. Inflation is still mostly doe to energy prices. You get sustained inflation only after inflation expectations become self sustaining: prices up -> wages up -> prices up -> wages up
- yonaguska 5y ago
  It's totally not the money printers. And wages are not going up for most people.
deleted 5y ago
[deleted]
bryanlarsen 5y ago
The preferred term is "sectoral". In other words, is it just the increase in gas and used cars, or is it broader? The price of used cars and gas will inevitably drop back down, but wages once raised don't. Summer 2021's inflation was clearly sectoral, but that is changing. The next question is whether this is a one time bump or systemic? 10% inflation once is one thing, 10% inflation continuously is a completely different thing. It's very important to get this right, because the only real antidote to inflation is recession. Raising interest rates and raising taxes will stop inflation, but kill the economy. Recession is preferable to stagflation, but nothing else. And remember there are two sides to the political machinations at work here. A good recession will guarantee that the Republicans take the White House in 2024.
- yonaguska 5y ago
  Remember when all those tv hosts were practically salivating over the thought of an recession so as to ensure Trump didn't get reelected? The political machinations you're touching on are a really disgusting reality of our system. People would love to sacrifice the middle and lower class for the sake of having their party in power. https://thehill.com/blogs/in-the-know/in-the-know/456942-bill-maher-roots-for-recession-so-that-trump-loses-in-2020 https://thehill.com/blogs/in-the-know/in-the-know/456942-bil... Edit since I'm getting downvoted, this did happen, and it's gross to see, regardless of what political side you support. I don't want a recession to happen even if my preferred party isn't in power. The people at the bottom are the biggest losers when recessions happen, even if most of the users on this board are largely insulated from the fallout.
- dragonwriter 5y ago
  > The preferred term is "sectoral". In other words, is it just the increase in gas and used cars, or is it broader? That's not “the preferred term” for what you are responding to (whether it is transitory), but an orthogonal concern.
  - bryanlarsen 5y ago
    "Preferred" as in I heard at least a couple of talking heads say "I wish I had used the term sectoral rather than transitory". Yes, they would have preferred using a term that would make them look less foolish.
hourislate 5y ago
This conversation is not productive, nor helpful. Powell/GS has promised it is transitory and so has President Biden. The fact that you are paying more for everything now is just temporary. Soon things will be back to normal, especially after we embrace the new green deal and approve the 3 trillion $$$ stimulus. It's different this time, Powell has the ability to create trillions with the snap of a finger and buy all the US Government debt indefinitely.
- Edman274 5y ago
  >It's different this time Good job inventing a strawman and then knocking it down with sarcasm.
- shmatt 5y ago
  Inflation going down to 0% means prices stay high No one, Powel/GS/Biden et. al, is talking about deflation in the next 5 years Not even once Rs take the house and the Green New Deal is doomed forever and ever. Not even that will bring deflation, sorry to burst your bubble
ren_engineer 5y ago
it's common sense, if you print a bunch of money and production of goods is flat or actually down due to the pandemic, inflation is going to happen. printing money doesn't magically make more houses appear, so the price of houses go up Wealth comes from technological innovation improving productivity, not turning on the money printer
- bliteben 5y ago
  but this time it is different
- notch656a 5y ago
  Yes but it's perfect cover to 'print' and give mostly to our friends via PPP loan and other graft to the rich.
- jjoonathan 5y ago
  We can't print our way to collective wealth, but we can't not-print our way out of overcapacity ports and shutdowns in China. Abstinence isn't magic.
elif 5y ago
It's not just the media, too. In academia, the copium may in fact be strongest. Economics programs groupthink toward the same over-idealistic delusions of dynamic stability over a chaotic and unbounded multiplayer game.
wbsss4412 5y ago
There was plenty of reason to believe inflation would be transitory back in the summer when it looked like Covid was on its last legs with the distribution of vaccines. We are however in February now, and people are still not back in offices, demand for consumer goods vs services is still much higher than pre pandemic, China is shutting down some of the biggest ports in the world for weeks on a moments notice, and supply chain issues abound. The bigger issue now is how many of these factors simply represent a new normal.
dragonwriter 5y ago
> It feels like I’ve been hearing that this is transitory Where? The first couple months of high inflation numbers there was some of that, but while reactions against it as if it were common remain frequent, it doesn't seem anyone is saying it anymore. > And, I can understand that coming from the Whitehouse The White House isn't saying that, in fact it's leaning on present inflation as a reason to pass it's legislative priorities. > but news organizations, economists, journals, Twitter, publications Major ones of all of those also seem to not be saying it.
- mc32 5y ago
  That beggars belief (we're talking about what they said, not that they didn't sharply change their tune): https://www.google.com/search?q=inflation+is+transitory&biw=1368&bih=805&sxsrf=APq-WBuG62ftX3pBLfrGg22KOfmGvsdYsQ%3A1644508858263&source=lnt&tbs=cdr%3A1%2Ccd_min%3A2%2F1%2F2021%2Ccd_max%3A10%2F1%2F2021&tbm=nws https://www.google.com/search?q=inflation+is+transitory&biw=...
  - bryanlarsen 5y ago
    All the dates on the front page in that list are summer 2021. Which both of you seem to be saying, so I'm not sure why you're arguing with each other.
engineeringwoke 5y ago
It's because they wrongfully believed that they can manage the expectations of reality to the extent that they can change reality. They are of course wrong, but economics is an ideological backwater farce of a science (I am trained in it). It was a convenient belief, because it allowed central bankers to blame their own citizens, rather than interest rate policy.
- jonathan-adly 5y ago
  Can’t upvote this enough. Curious on what your thoughts on getting ahead of it for a pleb? TIPS? House in the suburbs to rent? Bitcoin? Gold?
  - engineeringwoke 5y ago
    Probably shorting high yield. Not investment advice
  - mym1990 5y ago
    Patience. Trying to get ahead of the market will most likely just put you in a bigger hole. There is really no safe haven right now, treasuries pay nothing, inflation is eating savings for breakfast, housing is the worst of all. Your best bet would be to pick 5-15 uncorrelated assets and spread you investment over those assets and just wait. This would simply be to reduce risk.
    - engineeringwoke 5y ago
      The efficient market hypothesis is as dumb and made up as the price/wage spiral
    - 300bps 5y ago
      The person you’re responding to specifically mentioned TIPS. Your response seems to imply you don’t know what they are because they’re explicitly linked to inflation with a factor linked to CPI. So if inflation goes up 7.5% in a year then your principal invested in a TIPS bond goes up 7.5% even before you get the “nothing” coupon payment.
TuringNYC 5y ago
>> It feels like I’ve been hearing that this is transitory, there was nothing to worry about. Please do understand that probably half the US and much of the world live paycheck to paycheck. They consume everything they earn and zero out at the end of the month. A 7.5% increase in costs isnt necessarily matched by an increase in pay...so that means a lot of pain. I realize that as technologists, many of us barely consume everything we earn because many of us earn way above average, but that isnt the average reality for people.
azth 5y ago
It was very obvious that it was not transitory. When are people going to stop trusting the fed? They've been toying with people's livelihood and printing money at will devaluing everyone's hard work to benefit a select few.
helen___keller 5y ago
I’m not sure I agree. Inflation started rocketing up in April 2021 and if I search google for news articles with the word “transitory” before 2021-06-01, the top two results are “The Fed needs to get real about inflation” and “Inflation: transitory or persistent?” Obviously there’s some bias there in regards to ranking (as inflation is a highly charged topic so these articles were probably popular for months), but it seems clearly false that media has taken as fact that inflation will be transitory
cplusplusfellow 5y ago
The criticisms and holding folks accountable seem to be selective, best.
zozbot234 5y ago
> this is transitory, there was nothing to worry about. Worrywarts we’re exaggerating… and now the chickens come home to roost. Thing is, the recent volatility in inflation is a bigger concern than the actual average number (which is still within historical ranges), and also harder to address via policy responses. 7.5% is a bit scary but it's also just the latest residual. We'd like some more meaningful data before we can tell just how much of this is noise. (AIUI, market forecasts also reflect this outlook: sure, they're up, but not that far up.)

by mc32 5y ago

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?
- zdkl 5y ago
  As `treis was pointing out, what matters is demand/supply of what. Assets? Labour? Cash?
- runako 5y ago
  I think the point being made is that the portion of inflation caused by used car inflation is likely transient & due to a well-known cause (automakers shut factories due to Covid) that is being remedied. The question all along has been how much of inflation is due to obvious transitory effects like this one.
  - beerandt 5y ago
    Vehicles are not only "behind" on supply (which is difficult enough to overcome in an industry that's so dialed in to production capacity that quick bumps in production aren't possible), but they continue to be produced at below normal capacity and so the shortage is increasing, not catching up. The chip shortage is playing an outsized role here. Vehicles are being delivered with IOUs to come back in a year or two to have chips retrofitted in order to enable options listed on the window sticker. Everything from climate control and heated seats, to wireless phone charging, to autostop/gas saving measures, to lane keeping and collision avoidance. And delivery numbers are still extremely low. Catching up means either years of bringing up total factory capacity to beyond pre-covid levels and catching up on the chip shortage... or a recession or other event that suppresses demand. Transient in this sense only applies if we're taking about fractions of a decade, not fractions of a year.
    - runako 5y ago
      > Transient in this sense only applies if we're taking about fractions of a decade, not fractions of a year. I don't know the answer to this, but if the choice is either let inflation run hot like this for another couple of years or engineer a recession, is there a clear policy answer? The benefits of a hot economy seem to outweigh the downsides from the perspective of high employment, but perhaps not in other ways. Just 2 years ago, the worry was whether we would end up in a deflationary spiral and have no real policy levers to exit. Given the lag time for any policy response to take effect, it seems really hard to get correct. I definitely don't envy anyone who's making policy decisions on this.
flavius29663 5y ago
Not sure what the reasoning is here: of course it's a demand/supply issue. There are too many dollars in the economy. Because people have money, they want to buy cars, and houses and furniture etc. Why do you want to ignore car prices? Haven't they always been a part of inflation? Some people say housing and cars should have a bigger weight in the CPI, because that's where a lot of the money goes for a huge number of American families (that and education+healthcare)
- wbsss4412 5y ago
  Car prices are being driven by supply chain issues more so than a surplus of dollars.
  - hackeraccount 5y ago
    How would you know that? If say the number of cars went down by 50% and the amount of money in everyone's pocket went up by 100% which would driving the upward price more? If the supply of cars is down why would that in and of itself drive the price up? Surely there's some flexibility in demand for cars? It seems like a price increase in any individual item can be explained as a supply problem but every additional item that that gets added to the list is an argument for a money supply problem because on some level every item is substitutable.
    - wbsss4412 5y ago
      I don’t know in the sense that I have exhaustively researched the topic in exacting detail, but I believe it is mostly supply related because of a combination of factors: 1. Global supply chain disruptions are well documented, multiple automakers have had to shutdown factories for lack of parts. 2. Cars prices are increasing much more rapidly than the overall inflation rate. (I believe another comment in this thread said ~40% for used vehicles) 3. Total vehicle sales are still below their pre pandemic levels. I never said that the money supply isn’t contributing to inflation. But it is quite clear that there is a significant supply problem when it comes to cars.
pdog 5y ago
I'm struggling to understand how inflation is only 7.5% when every major line item comprising inflation is up much more than 7.5% over the past year.
- runako 5y ago
  You want Table 1 in the linked doc. The summary is the things getting more expensive fastest are also things that have lower weighting. In household budget terms, our biggest expenses by far are: - housing - health insurance - childcare Those have not gotten much more expensive (our health insurance got cheaper this year, housing is flat, childcare had a modest increase). Meanwhile gas for the vehicles costs much more, but comparatively fuel is a minor expense. When we weigh everything for our household, 7.5% seems high.
  - tenuousemphasis 5y ago
    Housing is flat?! That does not seem to track with the real world.
    - CameronNemo 5y ago
      Because of the way shelter costs enter into the CPI, these increases in owned home and rental costs have not yet contributed much to overall inflation. Our analysis, however, suggests that these higher shelter prices are likely to soon show up more clearly in the monthly CPI, potentially adding several more basis points (hundredths of a percentage point) to monthly inflation than they do now. https://www.whitehouse.gov/cea/written-materials/2021/09/09/housing-prices-and-inflation/ https://www.whitehouse.gov/cea/written-materials/2021/09/09/...
      - wonderwonder 5y ago
        That is a pretty convenient way to calculate CPI. Rents are up over 20% and the cost of homes has been a rocket ship.
deleted 5y ago
[deleted]
appleiigs 5y ago
The push towards green energy has reduced investment in coal, oil & gas and pipelines. This has pushed up energy prices. Sustainable energy can't be built fast enough. This is not transitory.
_ea1k 5y ago
The funny thing is that it wasn't that long ago that people were arguing that the pandemic would have a lasting impact in the opposite way. A popular theory was that rental car companies will dump their inventory, there'd be a glut of used cars, and both used and new car prices would crash as a result. They overlooked that eventually demand would return and those empty inventories would have to be refilled at a time that was just 12-24 months removed from massive decreases in production. And that it'd correlate with every other industry scrambling for supplies and transportation at the same time. This too shall pass.
vgeek 5y ago
More importantly missed from the CPI calculations are the prices of pinball machines. It seems like the prices on the used market have nearly doubled over the last 12-18 months.
- Ancapistani 5y ago
  This is actually a more interesting trend than it might appear at first glance. The prices of _all_ of my hobbies have gone up quite a bit over the past year or so. It seems to be consistent that discretionary/luxury goods are increasing in price significantly faster than the CPI.
CSSer 5y ago
That used car statistic is truly quite staggering. It's pretty frustrating how much of that is initially due to major manufacturer's own misread of the situation too, but no point in crying over spilled milk, right? Anyway... > "The used cars and trucks index rose 1.5 percent in January, a deceleration from the 3.3-percent increase reported in December." (from your link) It's good to see that this is slowing down. I was curious so I took it upon myself to gather a few links[0][1][2] with statistics on U.S. and global auto production. I wanted to know what the "old normal" looked like, what kind of drop in production is required to trigger this kind of inflation, and how close we are to getting back to normal. In short, my answers were our manufacturing numbers have been on a slow, steady decades long decline for some time now anyway[0] so I guess it depends on your level of pessimism, a 16-17% drop overall[1] (coincidentally about the same worldwide)[2], and about halfway back to normal but progress is slow and inconsistent[0]. Everything blew up in March 2020, somehow managed to snap back to normal temporarily in July 2020, and finally proceeded to spend the rest of 2020 and all of 2021 on an increasingly bleak rollercoaster that is just now beginning to rebound (hopefully). [0]https://tradingeconomics.com/united-states/car-production https://tradingeconomics.com/united-states/car-production [1]https://www.goodcarbadcar.net/usa-auto-industry-total-sales-figures/ https://www.goodcarbadcar.net/usa-auto-industry-total-sales-... [2]https://www.oica.net/category/production-statistics/2020-statistics/ https://www.oica.net/category/production-statistics/2020-sta...
stjohnswarts 5y ago
Yeah used car prices are amazing right now. If I was closer to work I'd sell my car and ride a bike to work and get a little bit more for my car than I paid for it 5 years ago (it was a 1 year old used car at the time). As it stands I'll ride it out for at least another five years or until sanity returns. Friends are being called by dealerships interested in buying back their cars (not trade-ins, straight up cash offers). It has been interesting this past year.
malandrew 5y ago
Just wait until rents start resetting and catching up. My understanding is that rent inflation is one of the slowest to be factored in because many leases need to expire before it’s inflationary impact is fully represented.

nabla9 5y ago

Or maybe the facts support their statements. Inflation is still mostly doe to energy prices. You get sustained inflation only after inflation expectations become self sustaining: prices up -> wages up -> prices up -> wages up

yonaguska 5y ago
It's totally not the money printers. And wages are not going up for most people.

deleted 5y ago

[deleted]

bryanlarsen 5y ago

The preferred term is "sectoral". In other words, is it just the increase in gas and used cars, or is it broader? The price of used cars and gas will inevitably drop back down, but wages once raised don't. Summer 2021's inflation was clearly sectoral, but that is changing. The next question is whether this is a one time bump or systemic? 10% inflation once is one thing, 10% inflation continuously is a completely different thing. It's very important to get this right, because the only real antidote to inflation is recession. Raising interest rates and raising taxes will stop inflation, but kill the economy. Recession is preferable to stagflation, but nothing else. And remember there are two sides to the political machinations at work here. A good recession will guarantee that the Republicans take the White House in 2024.

yonaguska 5y ago
Remember when all those tv hosts were practically salivating over the thought of an recession so as to ensure Trump didn't get reelected? The political machinations you're touching on are a really disgusting reality of our system. People would love to sacrifice the middle and lower class for the sake of having their party in power. https://thehill.com/blogs/in-the-know/in-the-know/456942-bill-maher-roots-for-recession-so-that-trump-loses-in-2020 https://thehill.com/blogs/in-the-know/in-the-know/456942-bil... Edit since I'm getting downvoted, this did happen, and it's gross to see, regardless of what political side you support. I don't want a recession to happen even if my preferred party isn't in power. The people at the bottom are the biggest losers when recessions happen, even if most of the users on this board are largely insulated from the fallout.
dragonwriter 5y ago
> The preferred term is "sectoral". In other words, is it just the increase in gas and used cars, or is it broader? That's not “the preferred term” for what you are responding to (whether it is transitory), but an orthogonal concern.
- bryanlarsen 5y ago
  "Preferred" as in I heard at least a couple of talking heads say "I wish I had used the term sectoral rather than transitory". Yes, they would have preferred using a term that would make them look less foolish.

hourislate 5y ago

This conversation is not productive, nor helpful. Powell/GS has promised it is transitory and so has President Biden. The fact that you are paying more for everything now is just temporary. Soon things will be back to normal, especially after we embrace the new green deal and approve the 3 trillion $$$ stimulus. It's different this time, Powell has the ability to create trillions with the snap of a finger and buy all the US Government debt indefinitely.

Edman274 5y ago
>It's different this time Good job inventing a strawman and then knocking it down with sarcasm.
shmatt 5y ago
Inflation going down to 0% means prices stay high No one, Powel/GS/Biden et. al, is talking about deflation in the next 5 years Not even once Rs take the house and the Green New Deal is doomed forever and ever. Not even that will bring deflation, sorry to burst your bubble

ren_engineer 5y ago

it's common sense, if you print a bunch of money and production of goods is flat or actually down due to the pandemic, inflation is going to happen. printing money doesn't magically make more houses appear, so the price of houses go up Wealth comes from technological innovation improving productivity, not turning on the money printer

bliteben 5y ago
but this time it is different
notch656a 5y ago
Yes but it's perfect cover to 'print' and give mostly to our friends via PPP loan and other graft to the rich.
jjoonathan 5y ago
We can't print our way to collective wealth, but we can't not-print our way out of overcapacity ports and shutdowns in China. Abstinence isn't magic.

elif 5y ago

It's not just the media, too. In academia, the copium may in fact be strongest. Economics programs groupthink toward the same over-idealistic delusions of dynamic stability over a chaotic and unbounded multiplayer game.

wbsss4412 5y ago

There was plenty of reason to believe inflation would be transitory back in the summer when it looked like Covid was on its last legs with the distribution of vaccines. We are however in February now, and people are still not back in offices, demand for consumer goods vs services is still much higher than pre pandemic, China is shutting down some of the biggest ports in the world for weeks on a moments notice, and supply chain issues abound. The bigger issue now is how many of these factors simply represent a new normal.

dragonwriter 5y ago

> It feels like I’ve been hearing that this is transitory Where? The first couple months of high inflation numbers there was some of that, but while reactions against it as if it were common remain frequent, it doesn't seem anyone is saying it anymore. > And, I can understand that coming from the Whitehouse The White House isn't saying that, in fact it's leaning on present inflation as a reason to pass it's legislative priorities. > but news organizations, economists, journals, Twitter, publications Major ones of all of those also seem to not be saying it.

mc32 5y ago
That beggars belief (we're talking about what they said, not that they didn't sharply change their tune): https://www.google.com/search?q=inflation+is+transitory&biw=1368&bih=805&sxsrf=APq-WBuG62ftX3pBLfrGg22KOfmGvsdYsQ%3A1644508858263&source=lnt&tbs=cdr%3A1%2Ccd_min%3A2%2F1%2F2021%2Ccd_max%3A10%2F1%2F2021&tbm=nws https://www.google.com/search?q=inflation+is+transitory&biw=...
- bryanlarsen 5y ago
  All the dates on the front page in that list are summer 2021. Which both of you seem to be saying, so I'm not sure why you're arguing with each other.

engineeringwoke 5y ago

It's because they wrongfully believed that they can manage the expectations of reality to the extent that they can change reality. They are of course wrong, but economics is an ideological backwater farce of a science (I am trained in it). It was a convenient belief, because it allowed central bankers to blame their own citizens, rather than interest rate policy.

jonathan-adly 5y ago
Can’t upvote this enough. Curious on what your thoughts on getting ahead of it for a pleb? TIPS? House in the suburbs to rent? Bitcoin? Gold?
- engineeringwoke 5y ago
  Probably shorting high yield. Not investment advice
- mym1990 5y ago
  Patience. Trying to get ahead of the market will most likely just put you in a bigger hole. There is really no safe haven right now, treasuries pay nothing, inflation is eating savings for breakfast, housing is the worst of all. Your best bet would be to pick 5-15 uncorrelated assets and spread you investment over those assets and just wait. This would simply be to reduce risk.
  - engineeringwoke 5y ago
    The efficient market hypothesis is as dumb and made up as the price/wage spiral
  - 300bps 5y ago
    The person you’re responding to specifically mentioned TIPS. Your response seems to imply you don’t know what they are because they’re explicitly linked to inflation with a factor linked to CPI. So if inflation goes up 7.5% in a year then your principal invested in a TIPS bond goes up 7.5% even before you get the “nothing” coupon payment.

TuringNYC 5y ago

>> It feels like I’ve been hearing that this is transitory, there was nothing to worry about. Please do understand that probably half the US and much of the world live paycheck to paycheck. They consume everything they earn and zero out at the end of the month. A 7.5% increase in costs isnt necessarily matched by an increase in pay...so that means a lot of pain. I realize that as technologists, many of us barely consume everything we earn because many of us earn way above average, but that isnt the average reality for people.

azth 5y ago

It was very obvious that it was not transitory. When are people going to stop trusting the fed? They've been toying with people's livelihood and printing money at will devaluing everyone's hard work to benefit a select few.

helen___keller 5y ago

I’m not sure I agree. Inflation started rocketing up in April 2021 and if I search google for news articles with the word “transitory” before 2021-06-01, the top two results are “The Fed needs to get real about inflation” and “Inflation: transitory or persistent?” Obviously there’s some bias there in regards to ranking (as inflation is a highly charged topic so these articles were probably popular for months), but it seems clearly false that media has taken as fact that inflation will be transitory

cplusplusfellow 5y ago

The criticisms and holding folks accountable seem to be selective, best.

zozbot234 5y ago

> this is transitory, there was nothing to worry about. Worrywarts we’re exaggerating… and now the chickens come home to roost. Thing is, the recent volatility in inflation is a bigger concern than the actual average number (which is still within historical ranges), and also harder to address via policy responses. 7.5% is a bit scary but it's also just the latest residual. We'd like some more meaningful data before we can tell just how much of this is noise. (AIUI, market forecasts also reflect this outlook: sure, they're up, but not that far up.)