8 ms·

The GDP deflator (inflation adjustor) is lower than CPI. I believe CPI is considerably lower than inflation, so much of this rise is inflation.

epistasis 3y ago
GDP numbers like this are adjusted both for CPI and for seasonal savings. So by any metric that is agreed upon by economists, yes it is growing at a great clip. I'm curious what aspects of inflation you think are not covered by CPI. I see lots of pessimism from people that is not because of their own experience or any numbers that they can point to, and I'm always curious why. For me, it's housing. I want to move to a bigger house but there's almost nothing on the market, and the very few houses in the market at absolutely astronomical prices relative to mortgage cost.
- IggleSniggle 3y ago
  Are you referring to home sticker-price or life-of-mortgage price? Increasing mortgage costs are a direct consequence of Fed inflation-fighting policy. I personally benefited from the Greater Fool, selling and purchasing my home just when the buying frenzy was near its peak, making a tidy profit on my old home and locking in a 2.5% interest rate on the new one. But it was a frenzy. There's no good way to force down housing costs without signaling to sellers that the prices are simply too high (because no one can afford the mortgage). There are costs associated with making it more difficult to move, of course, but the pessimism about being unable to afford loans is the very thing driving down inflation; so I actually consider that mood on the ground to be a positive signal for the economy.
  - willcipriano 3y ago
    > There's no good way to force down housing costs without signaling to sellers that the prices are simply too high The prices aren't too high the dollars are worth too little beacuse there are too many of them. Stop making more and prices will stabilize.
    - epistasis 3y ago
      It's actually not because there are too many doses right now, because most people can mot afford to move to a house of a comparable size. There were way too many dollars when mortgage rates were at 2-3%, not at current mortgage rates there are very few dollars for buying homes. This is less a monetary inflation of prices and more structural and supply related. Whoever said that "inflation is always a monetary phenomenon" was a religious nut, IMHO.
      - zeroonetwothree 3y ago
        One homeowner moving from a house to another similar house has no effect on overall home affordability. So I'm not sure why this is relevant. > Whoever said that "inflation is always a monetary phenomenon" was a religious nut, IMHO. Yes, I'm sure you have many more qualifications than a Nobel Prize winner.
        epistasis 3y ago
        Current homeowners often simply can not move, because the costs of a new mortgage at the same sticker price are too high to afford. This results in an illiquid housing market where people can not move as frequently at they would like.
  - epistasis 3y ago
    Mortgage costs. Most people now have super low mortgage rates, and could not afford to switch to a comparable home, because sticker prices have barely budged. This leads to a very tiny inventory of homes. However, part do the reason that prices are staying high is that we are still under supplied on homes, and interest rates being high also means that construction starts will be way down, keeping those sticker prices higher for longer.
elicash 3y ago
The Real GDP of 4.9% is both seasonally adjusted and inflation adjusted. Nominal GDP was 8.5%.
- jonhohle 3y ago
  As others have pointed out, inflation is gamed. We’re paying 50+% higher prices on food, 100% more for fuel, 200% more in mortgage interest than two years ago, for example, but no inflation print has ever reflected that.
  - roflyear 3y ago
    How is it gamed? Can you show your receipt from a year ago where your food bill was that much less? CPI does include food, fuel, and housing costs (though housing lags very significantly for a few reasons).
    - willcipriano 3y ago
      > How is it gamed? The totally subjective hedonic quality adjustment (sure food is more expensive but iPads have more ram!), also this knife only ever seems to cut one way, enshittification doesn't have a inflationary effect like you would expect. Owner imputed rent as opposed to looking at what consumers actually pay. The basket of goods is unrealistic, most households don't have teams of economists putting their shopping list together in order to maximally limit inflation.
      - 1980phipsi 3y ago
        There is owner imputed rent and rent. It’s two separate categories. Owner imputed rent is meant to capture the implied rent that home owners pay themselves. The old method used interest costs, which historically didn’t do a good job because if you lock in a 30-year mortgage rate then you have no inflation if rates rise. You don’t know what you’re talking about.
      - gruez 3y ago
        >The totally subjective hedonic quality adjustment (sure food is more expensive but iPads have more ram!), also this knife only ever seems to cut one way, enshittification doesn't have a inflationary effect like you would expect. Quality adjustment is only active for a few basket items, and their contribution to the overall cpi is minimal. All the extra food inflation that's supposedly happening isn't being held back by faster iPads. >Owner imputed rent as opposed to looking at what consumers actually pay. Most Americans are homeowners. For them, they don't pay any rent. Pretending that they pay market rent has no relation to what their actual expenses are. How do you propose we capture their expenses? >The basket of goods is unrealistic, most households don't have teams of economists putting their shopping list together in order to maximally limit inflation. Here's the basket the bls uses: https://www.bls.gov/cpi/tables/relative-importance/2022.htm https://www.bls.gov/cpi/tables/relative-importance/2022.htm What specific parts do you think is "unrealistic", and what values would you use instead?

epistasis 3y ago

GDP numbers like this are adjusted both for CPI and for seasonal savings. So by any metric that is agreed upon by economists, yes it is growing at a great clip. I'm curious what aspects of inflation you think are not covered by CPI. I see lots of pessimism from people that is not because of their own experience or any numbers that they can point to, and I'm always curious why. For me, it's housing. I want to move to a bigger house but there's almost nothing on the market, and the very few houses in the market at absolutely astronomical prices relative to mortgage cost.

IggleSniggle 3y ago
Are you referring to home sticker-price or life-of-mortgage price? Increasing mortgage costs are a direct consequence of Fed inflation-fighting policy. I personally benefited from the Greater Fool, selling and purchasing my home just when the buying frenzy was near its peak, making a tidy profit on my old home and locking in a 2.5% interest rate on the new one. But it was a frenzy. There's no good way to force down housing costs without signaling to sellers that the prices are simply too high (because no one can afford the mortgage). There are costs associated with making it more difficult to move, of course, but the pessimism about being unable to afford loans is the very thing driving down inflation; so I actually consider that mood on the ground to be a positive signal for the economy.
- willcipriano 3y ago
  > There's no good way to force down housing costs without signaling to sellers that the prices are simply too high The prices aren't too high the dollars are worth too little beacuse there are too many of them. Stop making more and prices will stabilize.
  - epistasis 3y ago
    It's actually not because there are too many doses right now, because most people can mot afford to move to a house of a comparable size. There were way too many dollars when mortgage rates were at 2-3%, not at current mortgage rates there are very few dollars for buying homes. This is less a monetary inflation of prices and more structural and supply related. Whoever said that "inflation is always a monetary phenomenon" was a religious nut, IMHO.
    - zeroonetwothree 3y ago
      One homeowner moving from a house to another similar house has no effect on overall home affordability. So I'm not sure why this is relevant. > Whoever said that "inflation is always a monetary phenomenon" was a religious nut, IMHO. Yes, I'm sure you have many more qualifications than a Nobel Prize winner.
      - epistasis 3y ago
        Current homeowners often simply can not move, because the costs of a new mortgage at the same sticker price are too high to afford. This results in an illiquid housing market where people can not move as frequently at they would like.
- epistasis 3y ago
  Mortgage costs. Most people now have super low mortgage rates, and could not afford to switch to a comparable home, because sticker prices have barely budged. This leads to a very tiny inventory of homes. However, part do the reason that prices are staying high is that we are still under supplied on homes, and interest rates being high also means that construction starts will be way down, keeping those sticker prices higher for longer.

elicash 3y ago

The Real GDP of 4.9% is both seasonally adjusted and inflation adjusted. Nominal GDP was 8.5%.

jonhohle 3y ago
As others have pointed out, inflation is gamed. We’re paying 50+% higher prices on food, 100% more for fuel, 200% more in mortgage interest than two years ago, for example, but no inflation print has ever reflected that.
- roflyear 3y ago
  How is it gamed? Can you show your receipt from a year ago where your food bill was that much less? CPI does include food, fuel, and housing costs (though housing lags very significantly for a few reasons).
  - willcipriano 3y ago
    > How is it gamed? The totally subjective hedonic quality adjustment (sure food is more expensive but iPads have more ram!), also this knife only ever seems to cut one way, enshittification doesn't have a inflationary effect like you would expect. Owner imputed rent as opposed to looking at what consumers actually pay. The basket of goods is unrealistic, most households don't have teams of economists putting their shopping list together in order to maximally limit inflation.
    - 1980phipsi 3y ago
      There is owner imputed rent and rent. It’s two separate categories. Owner imputed rent is meant to capture the implied rent that home owners pay themselves. The old method used interest costs, which historically didn’t do a good job because if you lock in a 30-year mortgage rate then you have no inflation if rates rise. You don’t know what you’re talking about.
    - gruez 3y ago
      >The totally subjective hedonic quality adjustment (sure food is more expensive but iPads have more ram!), also this knife only ever seems to cut one way, enshittification doesn't have a inflationary effect like you would expect. Quality adjustment is only active for a few basket items, and their contribution to the overall cpi is minimal. All the extra food inflation that's supposedly happening isn't being held back by faster iPads. >Owner imputed rent as opposed to looking at what consumers actually pay. Most Americans are homeowners. For them, they don't pay any rent. Pretending that they pay market rent has no relation to what their actual expenses are. How do you propose we capture their expenses? >The basket of goods is unrealistic, most households don't have teams of economists putting their shopping list together in order to maximally limit inflation. Here's the basket the bls uses: https://www.bls.gov/cpi/tables/relative-importance/2022.htm https://www.bls.gov/cpi/tables/relative-importance/2022.htm What specific parts do you think is "unrealistic", and what values would you use instead?