Inflation rises 7.5% over past year, more than expected and highest since 1982

https://www.cnbc.com/2022/02/10/january-2022-cpi-inflation-rises-7point5percent-over-the-past-year-even-more-than-expected.html

by koolba • 4 years ago

122 211 4 years ago

cnbc.com

giantg24• 4 years ago

By the time the next performance review hits, I'll have likely sustained a 12% real pay cut. Who knows what the 'merit' increase will bring that out to, but I'm guessing it'll be about an 8% real pay cut.

mym19907• 4 years ago

Can't tell what the point of your post is, but there is a real responsibility for you to see what the job market will bear if you want to not have a 12% pay cut. You are a player in the economy, and I don't understand why people keep thinking that companies are going to kneel and adjust their employees salaries accordingly without a good economic reason to do so.

giantg24• 4 years ago

It's mostly about awareness that the companies will screw people over. My hope is that unionization could help fix this. Although the tech industry seems adverse to that.

I have been looking for jobs. My area sucks. The company has used me for necessary tech that doesn't have a future, so my background sucks. Basically I suck and my area sucks. It will only get worse, no matter what I do. Even though one is a player, there are constraints, and the game can even be rigged.

bko• 4 years ago

Are people still getting "cost of living adjustments"? I remember they were pretty common a few years ago where you got a nominal 1-2% raise every year. I feel like this year they skipped them entirely because it would have been offensive to get bumped 1-2% when you know the cost of living has gone up (conservatively) 7.5%, and obviously they an across the board bump that large would be a lot.

markvdb• 4 years ago

In my native Belgium, indexation is set in law. Price levels up by 6%? Wages up by 6%. There has been tiny bits of nibbling at the edges, but the principle stands and is not up for discussion.

NicoJuicy• 4 years ago

I don't think we are alone though.

Where I work, they pick the highest inflation ( Canadian company). So we get the highest inflation from Canada or Belgium.

sneak2• 4 years ago

It seems a bit silly to do it this way and not authoritatively denominate the salary in a unit of account that isn't subject to such annual volatility in value. Otherwise you're still losing out, due to the fact that for ~11 months of the year your salary is not correctly inflation-adjusted.

I look forward to the technology behind payment systems getting to the point where "streaming" payments are a thing, paid every minute or hour or whatever over months or years. Your salary could be denominated in big macs or grams of gold or shares of BRK.A or whatever, and the streaming process that sends your payments in EUR or USD or whatever simply calculates the current conversion (which would approximate continuous adjustment for inflation).

It's such simple math and APIs. I wish payments (salary especially) weren't so tradition-based.

irrational• 4 years ago

We get a 3% inflation pay bump every year. It will be interesting to see if it will be a >3% bump this year or if they will leave it the same but change the name to something other than inflation pay bump.

jghn• 4 years ago

My company made a big point that compensation adjustments did not include CoL and was just based on merit.

mc323• 4 years 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.

nimbius• 4 years 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.

treis2• 4 years ago

Here's the data:

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.

rory2• 4 years ago

Have we ever had inflation that was not caused by demand/supply issues? Isn't that kind of definitional to inflation?

flavius296632• 4 years 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)

pdog• 4 years 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.

appleiigs• 4 years 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• 4 years 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• 4 years 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.

CSSer• 4 years 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 [1]https://www.goodcarbadcar.net/usa-auto-industry-total-sales-... [2]https://www.oica.net/category/production-statistics/2020-sta...

stjohnswarts2• 4 years 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• 4 years 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• 4 years 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

yonaguska2• 4 years ago

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

bryanlarsen4• 4 years 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.

yonaguska2• 4 years 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-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.

dragonwriter6• 4 years 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.

derbOac• 4 years ago

Seems like one should be able to provide evidence one way or another for different explanations of inflation pretty easily, like changes in the correlation of prices across sectors or changes in bond prices or something? I'm not an economist though.

caeril• 4 years ago

gas will inevitably drop back down

Why is this inevitable?

Investment in US tight oil is stagnating, OPEC+ lacks either the desire or capability to increase production, Venezuela's production capacity is still terrible, and rumors are getting quite loud that Ghawar has finally peaked.

EV sales are still far less than 50% of total sales, so net global fuel demand will continue to increase in the face of tight supply.

Barring another severe COVID variant outbreak, I don't see fuel prices declining anytime soon.

And the cool thing about energy prices is they feed forward into the cost of literally everything else in future PPI/CPI prints.

hourislate2• 4 years 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• 4 years ago

It's different this time

Good job inventing a strawman and then knocking it down with sarcasm.

shmatt2• 4 years 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• 4 years 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• 4 years ago

but this time it is different

notch656a7• 4 years 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• 4 years 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• 4 years 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.

wbsss44125• 4 years 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.

dragonwriter6• 4 years 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.

mc323• 4 years 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=...

engineeringwoke6• 4 years 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-adly2• 4 years 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?

mym19907• 4 years ago

Your username checks out. Economics is hardly an ideological backwater of science, but politics might definitely be. Economics simply comes down to cause and effects of different decisions...how those are actually applied in the real work is policy related, and that part is littered with trash.

TuringNYC• 4 years 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• 4 years 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___keller2• 4 years 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• 4 years ago

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

zozbot234• 4 years 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.)

ettubrutus• 4 years ago

Isn't it a little remiss to report on inflation without even mentioning the huge increase in M1/M2 money supply since the pandemic began? [1]

[1] https://fred.stlouisfed.org/series/M2SL

yostrovs• 4 years ago

It seems usually, when inflation is reported on, the printing of money is not mentioned, though far and away it is the main factor causing substantial inflation.

wbsss44125• 4 years ago

Inflation can driven by two things: the money supply and overall productive capacity.

Both are driving inflation.

wycy2• 4 years ago

It's humorous how certain all the libertarian armchair economists are that this inflation is caused by the money supply rather than the extremely visible effects of the broken supply chain.

No no, the everything shortage, massive backups at the ports, the trucker blockade, and everything else are totally unrelated; clearly it's a problem of fiscal policy.

silent_cal• 4 years ago

It's crazy how often people miss this.

jonathan-adly2• 4 years ago

Has any economy gotten out of 5%+ inflationary cycle without a painful multi-year recession?

Once the cycle settles, someone eventually has to pull a Paul Volcker, no?

rafale• 4 years ago

It took a recession to tame every inflation above 5% in history (except one time in 1950).

We are just waiting for election to be over. Fed doesn't wanna "meddle".

notch656a7• 4 years ago

A recession was all but guaranteed as soon as governments mandated shutdowns of broad swaths of the economy and scared the ever living hell out of people by making it sound like we were all going to die if we engaged in trade.

They/we just decided to delay the pain by printing lots of money and handouts which decouple the pain from the shutdown, instead 2-3 years later we can blame it on some vague 'inflation' and the massive loss of quality of life, suicide, drug addiction and other results of recession can be blamed on something other than the mismanagement of the nation in the pandemic.

Amasuriel• 4 years ago

I think the psychology of pay raises and inflation is interesting. I’ve never heard anyone when inflation was low taking about how their 20% pay raise (from moving to another company for example) was 18% over inflation. This comparison of pay raises to inflation only happens when inflation is higher THAT YEAR, which I emphasize because technology salaries as a whole are one area that has greatly outstripped inflation over the the years.

I’m not trying to dismiss or minimize people who are not happy they effectively got a negative pay adjustment this year, just commenting that the perspective on how to measure pay relative to the economy and market doesn’t seem consistent, and I think that says a lot about psychology of rewards for work.

Obviously this also has different meaning in jobs where wages have been largely stagnant for many years, and weren’t keeping up with cost of living even before large inflation.

Anyway, if you are a software engineer or other highly paid professional, it might be an good thought exercise to examine your lifetime (or some other timeframe) increases vs inflation, or look at your spending that will be actually impacted by inflation (groceries etc) and calculate the tangible impact on your life in terms of cost. Again not to say that high inflation is positive or anything, just as a way of adding context and additional perspectives that are missing if you look at this year in isolation and it wasn’t a year you got a substantial increase in pay.

lkxijlewlf2• 4 years ago

I can absorb a 7% inflation rise. I have friends who can't. I can't just look at myself in isolation; I care too much about people to do that.

davmonk• 4 years ago

This is the reason why the stocks and other tech plummeted down.

agilob• 4 years ago

8.2% inflation means next year you are working one month for free

bladegash6• 4 years ago

If I am understanding the numbers correctly, I am pretty sure inflation adjusted wage growth outpaced inflation (barely), so assuming both trends continue, it’ll just be a wash.

hmate93• 4 years ago

real wages are not keeping up with inflation

mcguire• 4 years ago

Hypotheses: wage growth and inflation (ignoring monetary policy for the moment) are if not the same thing, tightly coupled.

The effects of anti-inflation policy since the 1980s have been a major component of flat wages since then.

qsi• 4 years ago

Minor pedantic point: prices (or specifically, the consumer price index) rose 7.5%, not inflation. It IS 7.5% YoY and did not rise 7.5%.

(Sorry, switching off Man-Shouts-At-Cloud Mode).

Inflationary expectations are definitely getting reanchored at a higher level, so it's hard to see an easy/painless exit. Helps deflate the debt/GDP ratio though (it's nominal GDP in the denominator, which includes inflation), so some folks will be happy.

jhickok2• 4 years ago

My student debt is getting a little cheaper! Unfortunately, the next time I need to buy a vehicle those gains will be wiped out.

cptnapalm• 4 years ago

The stock market's reaction was "Oh no!" followed a few minutes later with "Anyway."

vizzah• 4 years ago

Nope, stock market already "pricing in" rate cuts after "policy error". But that's pretty stupid to price in right now.

causi• 4 years ago

Is this not what we anticipated when world governments pulled ten trillion dollars out of thin air for economic stimulus? The bill always comes due.

pessimizer• 4 years ago

If this is the result of a lot of very marginal people getting pay raises and $1600 checks, it would show how much of the real economy rests on slave wages.

droopyEyelids• 4 years ago

I'd like to see how much of the money went to individuals vs the amount captured by the finance industry from Quantitative Easing and the other more targeted programs.

wonderwonder3• 4 years ago

I did not get a raise this year, just paid vacation. So I essentially took a ~7.5% pay cut. awesome

In reality even more because groceries are up way more than 7.5%

gtmitchell• 4 years ago

6% core inflation with wage growth flat. And that doesn't even include housing prices, which went up 25% last year alone where I live.

Am I the only one feeling entirely hopeless about the prospects for my financial future? How does everyone else deal with this?

snikeris• 4 years ago

Find a higher paying job. Inflation screws people who sit tight.

bladegash6• 4 years ago

Wage growth was flat when taking into account inflation. It was not flat in and of itself. In other words, I believe inflation adjusted wage growth was 0.1%, or a wash when taking into account inflation, per the #’s.

hourislate2• 4 years ago

You just need to get a job at a FAGMAN company so you can live at the office and eat all the free food. Shower in the gym and sleep in the lounges. If this is not possible you need to stop spending. The only things you should be purchasing in this type of environment is food (real food it's cheaper), fuel and paying bills. No spending on anything else, clothing, going out, Chinese crap. Save what the Government is stealing from you through inflation.

TremendousJudge• 4 years ago

sounds like a really fun and fulfilling life to live

hmate93• 4 years ago

Maybe (and its a big MAYBE) this works if you are 22 years old with no family or relationships. Otherwise this sounds like a terrible option and a depressing way of life.

the_doctah• 4 years ago

I've never seen the FAANG acronym written that way anywhere ever

hmate93• 4 years ago

Spending your money is probably the best option imo. Gold and even some bitcoin as inflation hedge is a good option.

Mezzie• 4 years ago

I saw this coming and knew I'd need some things when the stimuli hit, so I bought a computer and some other stuff I needed. It extended me a little more than I would have liked, but I have to admit it was the right call.

I still would have needed what I bought, but it would have cost more (or I would have had to buy a different - probably more expensive - item due to supply chain issues) if I waited.

I hate being incentivized to be 'irresponsible'. It feels like I'm living in upside-down world.

chrisco255• 4 years ago

Only way to beat inflation is with risk-on assets such as high growth tech stocks or BTC/ETH.

Yes2020• 4 years ago

There was an interesting article on what could be driving housing inflation a couple of weeks ago-cant find the link. It was about the soaring prices on billionaires row in Manhattan.

The idea in the article is investors are trying to increase the liquidity of real estate assets down the line towards the higher liquidity of stocks. The results are more investors seeking returns from real estate, buying up buildings as if they were stocks. This can cause a fast step change in demand against the slower increase in supply, driving up prices quickly, which in turn drives up rents.

Energy costs hit this inflation as well, because most buildings need heating and/ or cooling during the year. With the supply of traditional energy being artificially restricted, this drives up the costs associated with real estate, increasing everyone's costs. Look at what's happening in NYC.

brimble6• 4 years ago

I'm definitely not loving watching the bottom edge of "upper-middle" receed away from me, just as I was approaching it.

VincentEvans3• 4 years ago

When I hear “it’s transitory” I feel the urge to point out, that while it may be true and inflation will go to zero for all we know - the change in prices is likely to remain.

Here’s something that bothers me most of all and I don’t hear much about: both my water and sewer, and electric utilities - increased prices by nearly 30%. I received notices and accompanying bills a few days ago. This was preceded by garbage pickup company raising rates similarly as well.

In my personal life experience - I’ve not seen utility prices go down, ever.

smeyer• 4 years ago

In my personal life experience - I’ve not seen utility prices go down, ever.

I think it depends on the utility. My town dropped electric rates a bit a year ago[0] and I think it's even more common for rates to fluctuate (both up and down) with utilities like natural gas or even oil heat, where it's more closely tied to the price of a single commodity.

[0] https://www.cambridgema.gov/news/detail.aspx?path=/sitecore/... with a caveat that this was for the "standard" rather than the 100% green plan, where prices went up

hervature2• 4 years ago

First, utility prices are really your state's responsibility (as in, they ultimately decide how expensive it is). Things like driving for green energy and canceling pipelines add to the cost. Obviously, the hope is that it pays off in the long run. Second, [1] is Nevada decreasing prices last year. Your "lifetime of data" is really a data point of n=1.

[1] https://www.nvenergy.com/about-nvenergy/news/news-releases/p...

VincentEvans3• 4 years ago

Perhaps you are right. My life experiences in US date back to 1995. I can’t think of a single utility or typical household spending bill that was more expensive in the past than it is now. Can you think of one?

tzs• 4 years ago

I've seen electricity go down.

There were a lot of people complaining on my local Nextdoor about electricity rates being higher recently. I checked my bill and sure enough rates were higher.

But then I checked my old bills. I've been in this house for 15 years and have all my past electric bills. The rates have gone up and down, and have been higher a few times in the past. There was no obvious correlation between when they were high and what political party was running things at the time.

Similar with gasoline prices. I see lots of complaints of record high prices locally. I paid $3.60/gallon a couple weeks ago at ARCO which is indeed quite a bit higher than the ~$3/gallon it has hovered around for a while.

I checked my records. They only go back to the last quarter of 2017. I find that the highest I paid since then was $4.63/gallon on 2017-11-05. Second highest was $4.21/gallon on 2017-09-21. In between those on 2017-10-06 I paid $3.45/gallon and on 2017-10-20 I paid $1.90/gallon. All of those were at the same ARCO station. The next several times over the next several months were all in the ~$2.90/gallon range.

This puzzles me, because I cannot remember anything going on in late September or early November 2017 that would have caused short high spikes in gas prices. Anyone have have a better memory?

bladegash6• 4 years ago

Might seem counterintuitive, but does anyone else see this as a positive sign? In that, we have been going for about 15 years injecting liquidity into the economy with little to no increase in inflation. That was counterintuitive to most economic assumptions and is something Japan struggled with for some time with quantitive easing, to the point of deflation at times. If nothing else, the Fed and economic theories have tools to counter inflation, which in my mind, isn’t completely bad news.

giantg24• 4 years ago

It would seem a good time to start unwinding the $9T or whatever in treasury held securities so that we'll be ready to keep inflation at 2% for the next deflationary trend.

Nbox9• 4 years ago

It’s potentially bad because the market isn’t as simple as “keep inflation at 2%”. We also want GDP growth and low unemployment. The tools we have to decrease inflation can hurt both of those metrics. This means our position is risky, and the treatment to reduce inflation might have strong consequences.

bladegash6• 4 years ago

That’s fair, but we were also running out of tools to increase liquidity/inflation as well. Not many tools to increase inflation to a healthy number when interest rates are already at or approaching 0% and billions of dollars are being created out of air.

fdye• 4 years ago

So I keep hearing the same two narratives over and over, we printed money and what do we expect (?), and supply chain issues. However, there is a third (and likely more) thing going on and that is megacorporate monopolies. Take toilet paper, the market has now completely consolidate on three major players (rule of three), Proctor & Gamble, Kimberly Clark, and Georgia-Pacific. Just looking at P&G we can see y/y (https://www.google.com/search?q=procter%26+gamble+q4+2021+ea...)

Revenue 20.95B +6.12% Net income 4.22B +9.57% Diluted EPS 1.66 +12.93% Net profit margin 20.15% +3.23%

During the last year they have paid ~3% dividend on top of buying back billions of stock (https://ycharts.com/companies/PG/stock_buyback), in Q4 they increased their buyback from ~3B->4.75B.

With all do respect supply chain/monetary policy concerns are a cover for what is really going on, lack of competition in the market. A rational market with multiple competitors and no price fixing, would prompt at least one of the competitors that is sitting on billions of extra money to drop prices. As a result they would increase sales and make up the profits in volume, this would prompt their competitors to follow suit or else lose customers and market share. You know Econ101.

The market is not rationale right now as we have allowed these mega mergers and pushed out all small competitors. That 7.5% inflation is them coordinating prices and sticking the profits back into their investors pockets, then using supply chain and monetary policy as cover in the media.

d23• 4 years ago

I believe this is what Elizabeth Warren has been saying. It struck me as just political theater at first, but this is the second time I've seen people pointing out that profits for some of the largest corporations have actually been increasing.

HonestOp001• 4 years ago

Government edicts prevent any new players from entering the market.

In our market we have supply and demand. Currently, there is demand chasing a shrinking supply. We wrecked the status quo by freezing the economy and the jobs held in place. With the stimulus checks, wages were forced up to overcome the challenge of people sitting at home or coming into work. Costs thus increased. Most of the suppliers have held back on price increases because they a. Do not want to hurt the consumer, b. Do not want to have the government thinking they are price gouging (which if you want to be new to market and provide a product similar to everyone else but at a much higher price to cover your entry costs, good luck with the opportunistic folks in congress looking to pin this on the corporations).

The small businesses are not nimble enough to make paper towels because of capital investments not being there, the big players having a monopoly on store shelf space, and government agencies ready to swoop in and bury you in legal morass.

Now we see the companies realizing they are all in this together, similar to when all the airlines simultaneously declared bankruptcy. I am not saying they are collusion to increase prices, I am saying they are inadvertently appearing to collude based on how they feel out the other corporations going.

sleepingadmin• 4 years ago

So I keep hearing the same two narratives over and over, we printed money and what do we expect (?), and supply chain issues.

Supply chain claims are fairly baseless. The assertion being that supply is low, demand stays the same. prices go up. The obvious argument is that when the supply chain issues are resolved, you would require deflation. Which is certainly not coming and not happening.

With all do respect supply chain/monetary policy concerns are a cover for what is really going on, lack of competition in the market.

If this is true, the easiest way to become rich right now is to simply create competitors.

The market is not rationale right now as we have allowed these mega mergers and pushed out all small competitors. That 7.5% inflation is them coordinating prices and sticking the profits back into their investors pockets, then using supply chain and monetary policy as cover in the media.

If this lack of competition is what is happening. They will actually come buy you out and shut you down. You likely wouldn't even have to do much to compete.

CameronNemo2• 4 years ago

They will actually come buy you out and shut you down.

There are a million anticompetitive maneuvers short of a buyout. Off the top of my head:

* dumping to eat into your profit and bleed you out

* punishing retailers who stock your items, or payment providers who service your site

* buying up inputs for several cycles so that you cannot hope to even stock your goods

scohesc• 4 years ago

I feel a bit bittersweet knowing that all this "stuff" is going on behind the scenes.

- Massive companies swallowing smaller, more agile, potentially more competitive companies like some uncaring amoeba allowing for massive silicon valley conglomerates like FAANG companies to influence public policy more and more in their favor, removing any sense of competition in a market, while politicians pad their wallets and purses on the side from "speaking fees" and cash handed under the counter.

- Being told that we're being told by every single media outlet that "inflation is transitory, it'll be over soon" - reminds me of the outright lie of "two weeks to stop the spread" while governments rushed to figure out what they were actually facing instead of being honest.

- Corporations moving to capture more industries that aren't even related to their original core business model to extract more value out of their users. Why does an e-commerce company like Amazon need to buy a fitness company like Peloton? Why does an advertising company like Google need to buy fitness companies like FitBit? Why did Jeff Bezos need to purchase Washington Post?

I'd say "why would society let this happen to us?" but really it's more "Yeah, we did this to ourselves". I'm really not sure what the answer is and I'm not sure if there is only one, or two, or any answer at all.

It's just depressing so I just ignore it until I hear about it again - maybe that's the problem?

sershe• 4 years ago

So, it looks like their revenue went down a tiny bit in inflation-adjusted dollars, and their margins are basically flat - 3% is noise; historically, too - the recent increase was due to a prior COVID drop [1]

That doesn't look like monopoly abusing its power to me.

[1] https://www.macrotrends.net/stocks/charts/PG/procter-gamble/...

It is, though, an excuse used by pretty much every incompetent authoritarian politician from Russia to Venezuela.

runako19• 4 years ago

Obligatory reminder that inflation is likely good for you if you carry mortgage or other similar amortized debt.

As salaries ratchet up, it will become progressively easier for you to pay your mortgage. Inflation is not all negative!

hackeraccount2• 4 years ago

I (well, realistically my wife and I) just bought a house and I remember thinking "now would be a good time for a bout of inflation." I'm not quite as certain about that anymore but the rate we got is a fair bit less then 7% so I suppose we're making out on this to some degree. Not on groceries though.

runako19• 4 years ago

It's not (just) about the interest rate on your mortgage, though. The real benefit comes as salaries ratchet up in response to inflation, which will happen as long as the inflation is somewhat persistent.

Thinking back to the mid-90s, for example, CS grads from prestigious schools were jockeying to earn $40k-$60k at prestigious tech firms. They were able to purchase houses on those salaries. If someone purchased a house in e.g. San Mateo after a couple of promotions to $75k, they might have spent in the neighborhood of $250k[1]. A few rounds of inflation later, the payments on that mortgage are inconsequential to that person (who may still, in 2022, hold a mortgage there).

TL;DR; compensation and inflation are linked.

1 - https://www.latimes.com/archives/la-xpm-1996-12-27-mn-12986-...

vinyl7• 4 years ago

Sucks for all us millennials who haven't yet been able to buy a home, and probably won't be able to going forward

runako19• 4 years ago

Great thing that it's possible to work remotely from low-cost areas now! If the median home price in your area is more than $320k, you might consider going remote and buying elsewhere. (If home ownership is a top priority.)

alkaloid2• 4 years ago

Well, someone/thing has to set the stage for another war that will "dig us out of recession."

I just wonder how many more times we're going to fall for this nonsense.

dragonwriter6• 4 years ago

Well, someone/thing has to set the stage for another war that will "dig us out of recession."

Recession and inflation aren't the same thing, in fact, they are more opposed than aligned. The current inflation accompanied, and has in part been driven by, the rapid economic growth coming out of the COVID slowdown.

alkaloid2• 4 years ago

Keep telling yourself that.

1970-01-01• 4 years ago

I'm certain DeFi, FinTech, NFTs, and crypto are going to save the economy from another depression.

xtracto• 4 years ago

This is the first year I know where US average annual inflation is higher than Mexico's one. It's really interesting to me.

Inflation rises 7.5% over past year, more than expected and highest since 1982

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