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Consumer Price Index September [pdf]
- baxtr 4y agoMarkets reacting already to this: September's CPI inflation rate dipped less than expected, reinforcing Fed rate hikes. Core prices rose at the fastest since 1982. Dow Jones futures tumbled.
- endisneigh 4y agoWhen historians look at this in the future I bet they’ll say there was nothing the fed could’ve done. The fed should increase rates another 200bps, I’m sure that’ll make the winter gas prices go down.
- tiahura 4y agoThey should have started raising rates as the economy started reopening. It wasn’t real hard to see.
- zeusk 4y agoAnd should also cause plenty of pain in financial and job markets.
- duped 4y agoEconomists are looking at this today and saying there's not much the Fed can do. They have crude and big hammers. You need more than just dynamite to sculpt Mt Rushmore. Historians should be looking at Congressional inaction, and how unified obstruction from one party and division in the other made it impossible for the federal government to enact meaningful policy initiatives that could have done anything.
- thehappypm 4y agoCongressional action is a major cause of this, spending trillions.
- hnuser847 4y ago> Congressional action is a major cause of this, spending trillions. And the Fed enabling the Federal government to do so very cheaply, by purchasing a large amount of the newly created Treasuries.
- socialismisok 4y agoIt's not a primary cause, though it likely had a minor impact. We're supply side constrained.
- Axien 4y agoIt is absolutely a primary cause. Adding more demand worsens supply side issues.
- socialismisok 4y agoIf it results in demand. Not all spending by the government leads to demand. I see people blaming student loan forgiveness, for example, and like... No one has redeemed that yet and it's not clear how much that will even have an immediate effect. If someone keeps paying off their loans at the same rate they were, they won't have increased demand right away. Likewise, if people increase their savings or pay down other debts, demand isn't increased right away. It's just not as simple to draw a line to specific government spending and say "that caused inflation".
- thehappypm 4y agoMaybe for some industries, but this inflation is very broad base. A supply constraint is likely to cause inflation in individual sectors, and we certainly see that for things like new cars. But it’s hard to buy into every single sector being supply constrained at the same time.
- taylodl 4y agoReally? We've had a global pandemic wrecking supply chains all over the world, lockdowns continue in China - one of the world's largest manufacturing entities, and we have the Ukrainian War wrecking energy and food supplies. Altogether every single sector of the economy is impacted. I'm not sure why you'd think that wouldn't be the case.
- Axien 4y agoCongressional action made it worse. They literally injected another three trillion dollars of infrastructure spending into an already heated economy. How exactly is the fed suppose to fight the government printing presses?
- philjohn 4y agoThat $3tn is needed desperately, and spending on infrastructure is far less inflationary, especially in a supply crunch.
- ballenf 4y agoCan't wait to see the final accounting on how much of that spending makes it to actual bridges and roads and the like.
- karatinversion 4y agoThe fed is the one with the money printers. The federal government finances its operations through taxes and borrowing.
- starkd 4y agoThe congress sets fiscal policy that choose to fuel deficit spending.
- karatinversion 4y agoYes, and the deficit is equal to net government borrowing, because it is the part of expenditure financed through borrowing rather than taxes.
- acuozzo 4y agoI'm not sure I follow your line of thinking. The cause of inflation is an increase in the cost of goods and services. This is a choice that individuals within companies make. It is not a natural consequence of increasing the money supply.
- caeril 4y ago> You need more than just dynamite to sculpt Mt Rushmore. Not really. Volcker did his job with dynamite just fine. You raise interest rates above prevailing inflation rates. Easy. But the current Fed is stuck. They can't fix inflation Volcker-style (hiking to 9-10%) without destroying the bond market and kicking off a cascading debt crisis. So they're targeting a middle-ground terminal rate of 4.5% and hoping the can will be kicked long enough that it will be someone else's problem in the medium-term future. Good luck to them.
- akmarinov 4y agoDon't know why you're being downvoted. This isn't a problem that raising interest rates can fix. Raising interest rates can't create supply on inelastic demand.
- thehappypm 4y agoDemand is not inelastic. Folks with no jobs don’t buy cars and gasoline.
- akmarinov 4y agoUnemployment is at an all time low, so yeah...
- thehappypm 4y agoSo yeah.. Fed has a tool for that.. which they will keep hammering
- akmarinov 4y agoPeople still need to eat and that food gets processed and delivered with energy. They'll have to heat their homes in the coming months, all of that has been hit hard with energy prices and is something that can't be wished away with higher rates.
- thehappypm 4y agoAre you implying that people have zero control over their spending?
- akmarinov 4y agoOn inelastic products, if you've read my point above - yeah. Can you turn off your spending on food? Edit: from the report: > Increases in the shelter, food, and medical care indexes were the largest of many contributors to the monthly seasonally adjusted all items increase. Can't turn off spending for food and medical care if you want to live
- dragontamer 4y agoThe core CPI consisting of house and car prices, is absolutely affected by the interest rate environment.
- deleted 4y ago[deleted]
- tiahura 4y agoI wonder if Yellen is starting to realize that the present inflation isn’t so transitory? Apparently not, the administration is still pursuing inflationary policies such as the student loan giveaway and the infrastructure pork bill. The Biden administration gets an F- on fiscal policy.
- thehappypm 4y agoThe infrastructure bill is desperately needed. It’s the best piece of legislation to come in my adult life. It could be the difference between America crumbling into obscurity, or revitalizing the economy. The student loan one.. woof. The timing is rough. I know it’s not popular to say, but all those dollars not going to loans are going to contribute to inflation.
- socialismisok 4y agoThey are going to contribute, but not much. Fundamentally we are dealing with supply constraints due to war and pandemic.
- houstonn 4y agoOnly a small portion of that massive omnibus law, and every massive omnibus bill, is needed. The remainder is made up of special interest lobbying and donor class favors.
- thehappypm 4y agoWelcome to government, pal. Every bill in history is like that. Still worth it.
- hotpotamus 4y agoI have to say that if the economic system is dependent on siphoning off money from young people in the form of student loans, that already sounds like a system ready to crumble if those young people aren't able to establish themselves financially. My impression of the US is that it's already too far gone into various collapses to really recover, but I don't know what that means for its future.
- mirzap 4y agoI thought Cathy said FED is wrong and inflation may have been peaked :/. She may have been right for the first part "FED is wrong", but for the different reasons - not to tame inflation more aggressively.
- dragontamer 4y agoThe growth companies that she invests into cannot take this rising interest rate environment. So she's loudly complaining about deflation to hope that the Fed cuts her (and her investment choices) some slack. Alas, the average American needs to deal with inflation more than the billionaire class needs to feel good about their bets. Don't get me wrong, my stocks and bonds also hate this rising interest rate environment. But I'm also enough of a citizen to see what must be done to tame inflation: more rate hikes and possibly at an even faster pace than originally expected.
- martythemaniak 4y agoOne thing future generations will laugh at is the idea that energy prices were so incredibly important yet so incredibly volatile. We go to great length to tell people not to rely on volatile financial instruments, yet a core part of their day-to-day life can vary so much. Apart from reducing pollution and ending climate change, getting rid of fossil fuels will also get rid of this volatility and all the discontent and issues it is causing.
- gjsman-1000 4y agoInflation is theft, and should (in a managed way) be punished as such. Change my mind. Edit: Imagine if the tax rate every year was the rate minus CPI since the tax rate was created. (I.e. A 30% tax rate, with 2% CPI increase every year, would be only 20% by 2010.) That would get the politicians to kill inflation right quick… or set the tax rate to hilariously unpalatable levels constantly.
- deleted 4y ago[deleted]
- socialismisok 4y agoSome folks benefit from moderate inflation. My house, for instance, is worth more but my mortgage is relatively less.
- starkd 4y agoBut isn't that more of an illusion of greater wealth? I mean, if you don't stay in your current house, you will just swap it for another one. The price level doesn't really matter, just as long as you can still get something of equal value.
- margalabargala 4y agoIt does matter, because the loan is easier to pay off. You're right about house value increases being a wash, but inflation helps people with large loans.
- nemo44x 4y agoIf you borrowed money to pay it off and you're still relatively early in your loan then it's great. You just got a massively discounted house. Anyone who bought a house just before the pandemic and locked in an ultra low interest rate to boot is going to make an absolute fortune on their home in 10 or 15 years time. They probably have already with prices up so much. Interest rates will cool it down but cost of living adjustments will counter that.
- 4y ago
- SSJPython 4y agoIt's mainly a supply issue. There is also a demand component but supply is the main bottleneck causing this sticky inflation. Originally they thought the supply issues would improve by now but it just can't catch up for some reason. So they need to force demand down until supply catches up. China also isn't helping with their foolish lockdown policies that are severely affecting supply chains. Guess this is what happens when Western lawmakers sell out domestic manufacturing because some dickhead MBAs said it would be "efficient".
- ttul 4y agoAnd Xi cannot change China’s zero-Covid policy, because, to do so, he would have to lose face by admitting it’s a failure. He would rather have the population endure continual hell. It’s such a tragedy for China.
- Leader2light 4y ago
- satao 4y agoFaillure how? The west let millions of people die.
- pfortuny 4y agoThe west preferred freedom to life. There are many many historical figuresbwho died for that idea.
- dougmwne 4y agoI think this is a really legitimate question with a complex answer. At the end of the day, Covid is one of the most contagious diseases out there. It has terrible impacts, but China’s policy is like trying to hold back the rising ocean with ever higher sea walls. The cost will continue to mount, the global isolation will continue to take its toll and one day the waters will break through the walls anyway.
- 4y ago
- GiorgioG 4y agoAnyone in tech getting cost of living adjustments in their annual comp?
- ddorian43 4y agoYou do that by changing jobs I believe.
- 11235813213455 4y agoor lifestyle, I earn 50k€ net year, but my expenses are ridiculously low, around 2k€ year total probably counting housing tax (bike, proprietary of small apartment, no consumerist lifestyle, no external services, no shopping, no pets, no pollution also as a result, and I'm super happy like this)
- low_common 4y agoYou're so cool and frugal man. I bet you're fun at parties.
- 11235813213455 4y agodid you mix "frugal" and "parties" in the same sentence?
- s1artibartfast 4y agoThat is great for you, but that is not a cost of living raise. It is just being more frugal.
- ddorian43 4y agoI really doubt it. Try getting a pet, a wife, some children. There's more to life than frugality.
- deleted 4y ago[deleted]
- 4y ago
- compumike 4y agohttps://totalrealreturns.com/ https://totalrealreturns.com/ has now been updated with this morning's CPI-U data release. It continues to update every night a few hours after market close. On an inflation-adjusted (real return), dividend-reinvested (total return) basis (i.e. in terms of real purchasing power): Stocks are down -29.6% from their peak on 2022-01-03 Bonds are down -28.3% from their peak on 2021-08-06 Tech stocks are down -39.0% from their peak on 2021-11-19 https://totalrealreturns.com/s/QQQ https://totalrealreturns.com/s/QQQ In a Bogleheads discussion "How unusual is the current downturn? Actually pretty common." https://www.bogleheads.org/forum/viewtopic.php?t=387569 https://www.bogleheads.org/forum/viewtopic.php?t=387569 it is clarified and discussed that the stocks drawdown is fairly common, while the bonds drawdown is several times worse than the 2002-2003 lows or the 2008-2009 lows. (This website is my side project, released 3 months ago as "Show HN: Inflation-adjusted stock charts – Total Real Returns" https://news.ycombinator.com/item?id=32081943 https://news.ycombinator.com/item?id=32081943 . I've been slowly implementing many of the requested features from the comments thread...)
- dragontamer 4y agoThere's something horribly buggy about VMFXX going on (Money Market fund). Looks like a good website, but I'd like VMFXX to represent how "money markets" would have done over these timelines! VUSXX (Vanguard's "other" money market fund) is closer to what I expected, but seems to be missing all the dividends/interest rates entirely. ------- For money market funds, it could be that daily-dividends are something that your code wasn't expecting and is bugging out on?
- compumike 4y agoGood catch, thank you! I've investigated and it appears that the data comes in already completely buggy from my upstream data provider, https://eodhistoricaldata.com/ https://eodhistoricaldata.com/ . I will open a support ticket with them! In the meantime, perhaps you can use one of these symbols instead: https://totalrealreturns.com/s/MUB,BSV,SHY,VGSH,SCHO,FLTB https://totalrealreturns.com/s/MUB,BSV,SHY,VGSH,SCHO,FLTB
- protoman3000 4y agoI sigh at the foresight of the army of ideologically driven economists, politicians and manipulated voter populace that this was caused by so-called unsolid fiscal policy. Just look at the UK. Why don’t we call this disinformation?
- PubliusMI 4y agoWhat do you think happened in the UK?
- tb_technical 4y agoWhat I take away from this: my savings are fucked and five to ten years of investment progress are gone.
- hotpotamus 4y agoI take it to mean those 5 to 10 years of investment progress were always a fiction. They felt like it at the time to me, but I agree it was nice seeing the numbers go up.
- s1artibartfast 4y agoYeah, is a good reminder that stocks and currency are just a shared fiction while real estate and real goods have that name for a reason
- s1artibartfast 4y agoI'm sorry to hear that. My savings are doing okay because I bought a home with the maximum possible loan. Now I just need to hold on to a job
- neogodless 4y agoAlways find these statements strange, and needing qualification. If I look at the S&P 500[0], it's currently up 27% from what it was 5 years ago (and 152% from 10 years ago), before accounting for dividends and inflation. (Dividends being roughly 2% and approximately matching inflation before 2022.) So what I see is an irrational uptick in 2021, and a correction in 2022. [0] https://finance.yahoo.com/chart/%5EGSPC https://finance.yahoo.com/chart/%5EGSPC
- lamontcg 4y agoWeird that the markets are up today, but this was probably already baked in by this point.