7 ms·

I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal.

by fenek 4y ago

I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?

boringg 4y ago
Gas isn't the only thing that is responsible for inflation it's only part of the equation.
erellsworth 4y ago
The price of labor. Their goal is to suppress wages. Gotta put workers back in their place or the whole system collapses.
- just_steve_h 4y ago
  Which is also why there's bipartisan consensus on giving lots more money to police and the military. After all, someone has to control the violent rabble as they are priced out of decent living!
  - vorpalhex 4y ago
    The wealthy can afford private security. Crime mostly hurts less fortunate people and has had a significant jump: https://abcnews.go.com/US/12-major-us-cities-top-annual-homicide-records/story?id=81466453 https://abcnews.go.com/US/12-major-us-cities-top-annual-homi... In terms of military spending, you may have heard of an illegal invasion and war happening in Eastern Europe...
- JumpCrisscross 4y ago
  Broadly speaking, if complaints oscillate between the central bank punishing savers one year and workers the other, that bank is doing something right.
- vorpalhex 4y ago
  Inflation hurts labor, not the wealthy. Bill Gates doesn't care if his groceries are 10% more expensive. Inflation is outpacing wage increases so effective wages are actually lower in terms of buying power. Housing is getting more expensive at a faster rate than wages are increasing. If you are pro-labor you want the fed to aggressively raise rates because that makes life harder for business.
  - colinsane 4y ago
    > If you are pro-labor you want the fed to aggressively raise rates because that makes life harder for business. the fed presents its goals as balancing low unemployment against low inflation. any projections for unemployment have it increasing as the fed tightens. i haven’t seen anyone say who these newly unemployed are, nor where they end up. but if the tradeoff were “low unemployment, but those at the bottom of the wrung have to move to cheaper housing (and commute further, etc)” vs “higher unemployment: those at the bottom of the wrung are SOL and end up on the streets”… well, i certainly hope that’s not the tradeoff we’re actively choosing here.
    - deleted 4y ago
      [deleted]
  - erellsworth 4y ago
    Yes, inflation hurts workers. You know what also hurts workers? Low wages. The fed has specifically stated that reducing wages is one of their goals. I'm not against the fed raising rates. But any benefit workers see from such a policy is unintentional.
    - vorpalhex 4y ago
      > The fed has specifically stated that reducing wages is one of their goals. Citation? I would be surprised for the fed to have such a thing as their goal.
      - erellsworth 4y ago
- tdhz77 4y ago
  Yes, Space X.
- jason-phillips 4y ago
  I see what you're saying, but taking that logically a few steps further, I see this round of inflation is simply a rebalancing of prices relative to finite supply at the hands of a more empowered worker class. But I think you're right too.
- adrr 4y ago
  There is a labor shortage not caused by covid but due to significant portion of the population retiring. We're missing 2 million workers from 2019. Biggest issue is that raising rates actually exacerbates the issue due to increased expense in investing in automation. From a society standpoint and an economic standpoint, people shouldn't be manually picking and packing things in a warehouse when we have automation that can drastically improve this. Businesses are to blame because labor was so cheap that they never invested in automation.
game-of-throws 4y ago
1. Gas prices are regional 2. The economy is more than just gas
aresant 4y ago
Gas isn't a great indicator as it's currently being subsidized with the US + allies from their strategic reserves to the tune of ~240,000,000 barrels https://home.treasury.gov/news/press-releases/jy0887 https://home.treasury.gov/news/press-releases/jy0887
vorpalhex 4y ago
Inflation (food, transport) is still about 10%. > The CPI figures in the latest report were grim. Food prices rose 1.0% in June and are 10.4% above year-ago levels. Food at home costs 12.2% more than a year ago. Energy prices overall rose 7.5% in June and stand 41.6% above where they were in June of 2021. Gasoline prices rose 11.2% in June and are a whopping 60% higher than a year ago. The so-called “core” inflation measure of goods and services other than food and energy rose 0.7% in June and are 5.9% above year-ago levels.
throwaway0a5e 4y ago
Gas is highly volatile on a good day and we're coming off of an exceptionally high spike. 20% off of a high that's ~2x what it was a year ago and ~3x what it was a year before that. Gas prices will likely continue on a generally downward arc. The shape/timeline of the arc nobody knows and how low it will go nobody knows. I doubt it will hit the 2s nationally. Energy in the general sense underpins the entire economy but there is so much more on top of that making inflation more complex.
post_break 4y ago
The price for a package of oreos is about $5 now. Diesel is still way up over a year ago. Prices for food will not go back down, this is the new normal at the grocery store.
WebbWeaver 4y ago
Probably cost of living versus income. Though gas has dropped some may consider it demand destruction.
tcmart14 4y ago
I am not an economic expert, so you may take with a grain of salt. Gases, prices, a complex topic. From my understanding there are/were two things causing increases in price. First is just inflation across the board that affects all items. The second is the oil specific problem of, there is plenty of crude oil, but not enough was being refined, leading to a lack of supply for actual gasoline. Some measures have been taken to curb the later problem of not enough refining. The prices dropping could be a product of that. To my knowledge the cause of that was exposing some of the crude supply to the wider world so places that had the capacity to refine more could take it and refine it. The US and several other nations were already running at capacity. Building more capacity is a long term solution, but needs year to build new refineries. The short term solution is to let whoever had slack capacity to take it, refine it, and put back out into the global market. So the price decrease we see is probably more from the later, but there is still impact from the former. As a reminder, this goes more specifically for gas prices and not necessarily all prices on all items in general.
- JamesBarney 4y ago
  There is also the supply side constraints of businesses reducing their capacity or not investing in new capacity during covid.

by fenek 4y ago

I don't get it. The price of gas I'm paying in the US, has dropped by 20% in the last month or so. That seems to indicate that prices are going back to normal. What prices is fed concerned about?

boringg 4y ago

Gas isn't the only thing that is responsible for inflation it's only part of the equation.

erellsworth 4y ago

The price of labor. Their goal is to suppress wages. Gotta put workers back in their place or the whole system collapses.

just_steve_h 4y ago
Which is also why there's bipartisan consensus on giving lots more money to police and the military. After all, someone has to control the violent rabble as they are priced out of decent living!
- vorpalhex 4y ago
  The wealthy can afford private security. Crime mostly hurts less fortunate people and has had a significant jump: https://abcnews.go.com/US/12-major-us-cities-top-annual-homicide-records/story?id=81466453 https://abcnews.go.com/US/12-major-us-cities-top-annual-homi... In terms of military spending, you may have heard of an illegal invasion and war happening in Eastern Europe...
JumpCrisscross 4y ago
Broadly speaking, if complaints oscillate between the central bank punishing savers one year and workers the other, that bank is doing something right.
vorpalhex 4y ago
Inflation hurts labor, not the wealthy. Bill Gates doesn't care if his groceries are 10% more expensive. Inflation is outpacing wage increases so effective wages are actually lower in terms of buying power. Housing is getting more expensive at a faster rate than wages are increasing. If you are pro-labor you want the fed to aggressively raise rates because that makes life harder for business.
- colinsane 4y ago
  > If you are pro-labor you want the fed to aggressively raise rates because that makes life harder for business. the fed presents its goals as balancing low unemployment against low inflation. any projections for unemployment have it increasing as the fed tightens. i haven’t seen anyone say who these newly unemployed are, nor where they end up. but if the tradeoff were “low unemployment, but those at the bottom of the wrung have to move to cheaper housing (and commute further, etc)” vs “higher unemployment: those at the bottom of the wrung are SOL and end up on the streets”… well, i certainly hope that’s not the tradeoff we’re actively choosing here.
  - deleted 4y ago
    [deleted]
- erellsworth 4y ago
  Yes, inflation hurts workers. You know what also hurts workers? Low wages. The fed has specifically stated that reducing wages is one of their goals. I'm not against the fed raising rates. But any benefit workers see from such a policy is unintentional.
  - vorpalhex 4y ago
    > The fed has specifically stated that reducing wages is one of their goals. Citation? I would be surprised for the fed to have such a thing as their goal.
    - erellsworth 4y ago
tdhz77 4y ago
Yes, Space X.
jason-phillips 4y ago
I see what you're saying, but taking that logically a few steps further, I see this round of inflation is simply a rebalancing of prices relative to finite supply at the hands of a more empowered worker class. But I think you're right too.
adrr 4y ago
There is a labor shortage not caused by covid but due to significant portion of the population retiring. We're missing 2 million workers from 2019. Biggest issue is that raising rates actually exacerbates the issue due to increased expense in investing in automation. From a society standpoint and an economic standpoint, people shouldn't be manually picking and packing things in a warehouse when we have automation that can drastically improve this. Businesses are to blame because labor was so cheap that they never invested in automation.

game-of-throws 4y ago

1. Gas prices are regional 2. The economy is more than just gas

aresant 4y ago

Gas isn't a great indicator as it's currently being subsidized with the US + allies from their strategic reserves to the tune of ~240,000,000 barrels https://home.treasury.gov/news/press-releases/jy0887 https://home.treasury.gov/news/press-releases/jy0887

vorpalhex 4y ago

Inflation (food, transport) is still about 10%. > The CPI figures in the latest report were grim. Food prices rose 1.0% in June and are 10.4% above year-ago levels. Food at home costs 12.2% more than a year ago. Energy prices overall rose 7.5% in June and stand 41.6% above where they were in June of 2021. Gasoline prices rose 11.2% in June and are a whopping 60% higher than a year ago. The so-called “core” inflation measure of goods and services other than food and energy rose 0.7% in June and are 5.9% above year-ago levels.

throwaway0a5e 4y ago

Gas is highly volatile on a good day and we're coming off of an exceptionally high spike. 20% off of a high that's ~2x what it was a year ago and ~3x what it was a year before that. Gas prices will likely continue on a generally downward arc. The shape/timeline of the arc nobody knows and how low it will go nobody knows. I doubt it will hit the 2s nationally. Energy in the general sense underpins the entire economy but there is so much more on top of that making inflation more complex.

post_break 4y ago

The price for a package of oreos is about $5 now. Diesel is still way up over a year ago. Prices for food will not go back down, this is the new normal at the grocery store.

WebbWeaver 4y ago

Probably cost of living versus income. Though gas has dropped some may consider it demand destruction.

tcmart14 4y ago

I am not an economic expert, so you may take with a grain of salt. Gases, prices, a complex topic. From my understanding there are/were two things causing increases in price. First is just inflation across the board that affects all items. The second is the oil specific problem of, there is plenty of crude oil, but not enough was being refined, leading to a lack of supply for actual gasoline. Some measures have been taken to curb the later problem of not enough refining. The prices dropping could be a product of that. To my knowledge the cause of that was exposing some of the crude supply to the wider world so places that had the capacity to refine more could take it and refine it. The US and several other nations were already running at capacity. Building more capacity is a long term solution, but needs year to build new refineries. The short term solution is to let whoever had slack capacity to take it, refine it, and put back out into the global market. So the price decrease we see is probably more from the later, but there is still impact from the former. As a reminder, this goes more specifically for gas prices and not necessarily all prices on all items in general.

JamesBarney 4y ago
There is also the supply side constraints of businesses reducing their capacity or not investing in new capacity during covid.