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It’s a factor, but a. How meaningful is it? Does it explain 50% or 5% of price increases B. How sustainable? With regards to b, It seems like there were two el

It’s a factor, but a. How meaningful is it? Does it explain 50% or 5% of price increases B. How sustainable? With regards to b, It seems like there were two elements at work, 1. People were generally flush with money and could absorb cost increases, and 2. There was a frenzied period of price hikes/volatility, where everything was in motion and I think most people just said “it’s crazy eggs and steak are this expensive, but it is a few extra bucks I can afford right now, and things will eventually calm down” The combination of the above led to consumer price inelasticity allowing companies to increase price without effecting volume. I suspect that to change in the coming couple of years as consumer balance sheets and employment weaken, and consumers decide to have two egg omelettes instead of three or buy chicken instead of steak.

autoexec 4y ago
> . People were generally flush with money I have a very hard time believing that most people in the US simply have too much money. I suspect that most people are struggling, and were struggling even before the pandemic and that people's standard of living is declining, their debit is climbing, and they are just a few missed paychecks away from disaster. I think that as the pandemic situation improved, people were simply desperate for a sense of normalcy and for the things they'd gone without and they spent more than they could afford, even going farther into debt. It wasn't "but it is a few extra bucks I can afford right now, and things will eventually calm down" it was "this is more than I can afford, but I need it, and I deserve it, and the world is burning anyway so fuck it". I think to a lesser extent that mentality is still going on, but people are suffering heavily under the increased costs of rent, food, and everything else. Evictions and bankruptcies are increasing and homelessness is rising (https://www.huduser.gov/portal/sites/default/files/pdf/2022-AHAR-Part-1.pdf https://www.huduser.gov/portal/sites/default/files/pdf/2022-...) and has been for years. I can't say to what extent greed is the cause of inflation, but I'm pretty confident it's a bigger factor than how much money most Americans are comfortably sitting on.
- celeritascelery 4y ago
  The federal reserve created 20% of all money ever created in the first year of the pandemic [1][2]. Which is absolutely mind blowing to me. The total cost of Covid stimulus was over 5 trillion dollars. That doesn’t mean all individuals are well off, but there is no doubt that the economy is flush with extra cash. And since the number of physical goods had not changed, that meant inflation. Which honestly nullified any advantage people got from stimulus (which were temporary). [1] https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were-created-this-year/ https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were... [2] https://fred.stlouisfed.org/series/WM1NS https://fred.stlouisfed.org/series/WM1NS
- balderdash 4y ago
  I’m not saying it was evenly spread around, but household net worth increased ~40% between Q4’19 and Q4’21 - that creates a lot of headroom to absorb price increases… https://fred.stlouisfed.org/graph/?g=FBGH# https://fred.stlouisfed.org/graph/?g=FBGH#
cool_dude85 4y ago
Study authors describe it as "predominant". Relevant quote: "In contrast, we argue that the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices."
falcolas 4y ago
> How sustainable I don't think businesses, or rather the boards and shareholders that run them, care about sustainability - especially if it has a neutral (or, god forbid, negative) impact on short term growth-of-growth or stock prices. If a business goes under because of a lack of sustainable practices, everyone just moves on to a different company. I'm starting to think that anymore if you want a sustainable business, you can't go public.
rapnie 4y ago
> it’s crazy eggs and steak are this expensive In supermarkets I noticed a surplus on top of inflation, and my thought was that people would swallow that because their reference frame for proper pricing was out the door. So they wouldn't notice the surplus, blaming all to inflation. And subsequently getting used to new above-inflation levels as their new reference. I'd also guess we get supermarket price wars, when inflation get under control, whereby the supermarkets keep their extra margins and pressure the supply chain below to get prices down.
- balderdash 4y ago
  Agree, my point is more that when your personal net worth is +30% there is a very different willingness to absorb a 20% increase on your weekly grocery bill than when your net worth is -30%

autoexec 4y ago

> . People were generally flush with money I have a very hard time believing that most people in the US simply have too much money. I suspect that most people are struggling, and were struggling even before the pandemic and that people's standard of living is declining, their debit is climbing, and they are just a few missed paychecks away from disaster. I think that as the pandemic situation improved, people were simply desperate for a sense of normalcy and for the things they'd gone without and they spent more than they could afford, even going farther into debt. It wasn't "but it is a few extra bucks I can afford right now, and things will eventually calm down" it was "this is more than I can afford, but I need it, and I deserve it, and the world is burning anyway so fuck it". I think to a lesser extent that mentality is still going on, but people are suffering heavily under the increased costs of rent, food, and everything else. Evictions and bankruptcies are increasing and homelessness is rising (https://www.huduser.gov/portal/sites/default/files/pdf/2022-AHAR-Part-1.pdf https://www.huduser.gov/portal/sites/default/files/pdf/2022-...) and has been for years. I can't say to what extent greed is the cause of inflation, but I'm pretty confident it's a bigger factor than how much money most Americans are comfortably sitting on.

celeritascelery 4y ago
The federal reserve created 20% of all money ever created in the first year of the pandemic [1][2]. Which is absolutely mind blowing to me. The total cost of Covid stimulus was over 5 trillion dollars. That doesn’t mean all individuals are well off, but there is no doubt that the economy is flush with extra cash. And since the number of physical goods had not changed, that meant inflation. Which honestly nullified any advantage people got from stimulus (which were temporary). [1] https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were-created-this-year/ https://www.cityam.com/almost-a-fifth-of-all-us-dollars-were... [2] https://fred.stlouisfed.org/series/WM1NS https://fred.stlouisfed.org/series/WM1NS
balderdash 4y ago
I’m not saying it was evenly spread around, but household net worth increased ~40% between Q4’19 and Q4’21 - that creates a lot of headroom to absorb price increases… https://fred.stlouisfed.org/graph/?g=FBGH# https://fred.stlouisfed.org/graph/?g=FBGH#

cool_dude85 4y ago

Study authors describe it as "predominant". Relevant quote: "In contrast, we argue that the US COVID-19 inflation is predominantly a sellers’ inflation that derives from microeconomic origins, namely the ability of firms with market power to hike prices."

falcolas 4y ago

> How sustainable I don't think businesses, or rather the boards and shareholders that run them, care about sustainability - especially if it has a neutral (or, god forbid, negative) impact on short term growth-of-growth or stock prices. If a business goes under because of a lack of sustainable practices, everyone just moves on to a different company. I'm starting to think that anymore if you want a sustainable business, you can't go public.

rapnie 4y ago

> it’s crazy eggs and steak are this expensive In supermarkets I noticed a surplus on top of inflation, and my thought was that people would swallow that because their reference frame for proper pricing was out the door. So they wouldn't notice the surplus, blaming all to inflation. And subsequently getting used to new above-inflation levels as their new reference. I'd also guess we get supermarket price wars, when inflation get under control, whereby the supermarkets keep their extra margins and pressure the supply chain below to get prices down.

balderdash 4y ago
Agree, my point is more that when your personal net worth is +30% there is a very different willingness to absorb a 20% increase on your weekly grocery bill than when your net worth is -30%