Inflation Appears to Be Over

https://politicalwire.com/2023/11/15/inflation-appears-to-be-over/

by MilnerRoute • 3 years ago

23 72 3 years ago

politicalwire.com

hncensorship695• 3 years ago

Um...inflation is still over 3%. That's using bogus government computed CPI. Well in excess of the 2% target.

Since the fed moved to an average inflation target, shouldn't the fed be targeting sub-2%?

object-a7• 3 years ago

The article is reporting that wholesale prices (measured by the PPI) have declined 0.5% Y/Y. It might take a while to affect CPI, but that would strongly suggest that inflation has reached a turning point.

uoaei2• 3 years ago

Wholesale prices are not consumer prices.

hncensorship695• 3 years ago

Perhaps. A turning point is not the same as "over" though.

tea-coffee• 3 years ago

I believe CPI is unchanged in October. I did not take a close look at the CPI numbers, but I believe the steady index is in part due to energy falling. But rents and food are increased. Not an economist, so I'm not sure how much to read into that.

dragonwriter4• 3 years ago

No, it wouldn't, because PPI rate of change isn't a leading indicator of CPI rate of change, and, anyhow, PPI inflation has recently been unusually elevated compared to CPI inflation, so if it indicates anything (doubtful) its a more normal relationship between CPI inflation and PPI inflation, not what direction CPI inflation is heading.

xnx2• 3 years ago

I still hold that a huge part of the frustration with price changes over the past four years is people hearing news about inflation and thinking it means prices.

Inflation has returned to normal levels, but I don't think most economists expect prices to broadly decrease. Decreasing prices can be a (very) bad thing.

throwitaway2222• 3 years ago

People know that, that's not the issue. The issue is that wages over 4 years have not kept pace, which means that not only did they go in the hole (debt) during this time, but they're still either adjusting what they purchase or continuing to slide.

Debt has skyrocketed if anyone's had their head under a rock.

martinko• 3 years ago

wages over 4 years have not kept pace

That's a feature of the system, not a bug.

ActionHank• 3 years ago

Could you please let grocery stores know this, because they think prices are going to the moon.

recursive2• 3 years ago

people hearing news about inflation and thinking it means prices

Does it not mean prices? Anyway, prices are up. A lot of people are frustrated. I believed inflation was a measure of that, but if inflation is actually something else, it wouldn't make people any less frustrated.

alexb_6• 3 years ago

Inflation is the change in prices. We ideally want a little bit of it to get money moving around the economy. With stimulus checks and low interest rates, there was too much money chasing too little goods, causing prices to rise and YoY inflation went up to 10%. Rising interest rates brought inflation back down to where it should be. But the prices themselves aren't going to go down. That would be deflation, which causes money to stop moving around in the economy.

Money has to move around the economy for it to be a good one. Every single dollar you earn, someone else spent. Every dollar you spend, someone else earns. Deflation gets people to stop spending, which means people stop earning, which means people stop spending (since they have to tighten budgets or don't have money), which means people stop earning, and soon enough the economy goes in the shitter.

We've had extended periods of deflation exactly two times since we've had the means to start tracking it. The first time was called The Great Depression. The second time was called The Great Recession.

dllthomas• 3 years ago

It doesn't mean prices in the same way that velocity doesn't mean position. We stopped moving North as fast, back near the speed we usually move North. That doesn't put us back where we were - we have to actually go South (deflation) for that, and there are reasons that's likely to be a bad idea even if people are mad about how far North we've recently come.

partiallypro• 3 years ago

Also, prices in some instances increased drastically, let's say something went up 15%-25% in price, and now is going to only go up 3%. That 3% gain is MUCH more than it was before the 15%-25% price increase. Like interest, inflation compounds. This is one reason people are still feeling the pinch of inflation even as it has slowed.

It's hard to explain to people as you've said that prices aren't going to decrease in 95% of instances. Prices are sticky and outside of some goods with high volatility, the prices of 2019 are never coming back. That's a tough position politically too, and one reason I feel despite the economy having done pretty well that Biden is underwater on the economy as a whole. Especially coupled with interest rates rising.

roflyear6• 3 years ago

It's about a buck on $100 extra for food (over regular inflation) - so not much more, but significant.

glitchc• 3 years ago

Inflation is quite a misunderstood little number. It is actually a measure of the rate of increase in prices i.e. it's a velocity, not a position.

When inflation is low, prices grow slowly over time. When it is high, they grow quickly over time. High inflation over a sustained period of time leads to a meteoric increase in prices.

For prices to decrease, the inflation rate would have to be negative. For them to decrease to pre-pandemic levels, inflation would have to be negative for a sustained period of time.

SAI_Peregrinus• 3 years ago

When inflation is positive but low, prices grow exponentially, but the time it takes to hit the "knee" of the exponential curve is long.

When inflation is negative, it's deflation, and prices drop exponentially.

rkagerer• 3 years ago

> hearing news about inflation and thinking it means prices

Well the article does start with "Wholesale prices in October posted their biggest decline in 3½ years, providing another indication that the worst of the inflation surge may have passed".

I don't think anyone expects prices to go down, just to stop going up so fast.

tempsy• 3 years ago

long term deflation is bad, but a house going from $400k to $1m back to $600k in a few years isn't "a bad thing". same with rents decreasing.

roflyear6• 3 years ago

well, it's bad if you bought at $1m.

smeeth2• 3 years ago

A little deflation can be fine, good even. Inflation oscillated around 0 for most of American history and our economy did great.

Most gut aversion to deflation comes from great depression PTSD.

alexb_6• 3 years ago

Our economy did great, except for the:

- Panic of 1785

- Copper Panic of 1789

- Panic of 1792

- Panic of 1796–1797

- 1802–1804 recession

- Depression of 1807

- 1812 recession

- 1815–1821 depression

- 1822–1823 recession

- 1825–1826 recession

- 1828–1829 recession

- 1833–1834 recession

- 1836–1838 recession

- 1839–1843 recession

- 1847–1848 recession

- 1853–1854 recession

- Panic of 1857

- 1860–1861 recession

- 1865–1867 recession

- Panic of 1873 (which lasted until 1879)

- Depression of 1882–1885

- 1887–1888 recession

- 1890–1891 recession

- Panic of 1893

- Panic of 1896

- 1899–1900 recession

- 1902–1904 recession

- Panic of 1907

- Panic of 1910–1911

- Recession of 1913–1914

But besides that we did fine.

mjh2539• 3 years ago

When you have deflation, people save more money, or delay spending it, because their dollars will be worth more tomorrow; but this reduction in spending just causes more deflationary pressure ("Undercut our competitors or we won't make any sales!").

This process is self-perpetuating and can get out of hand very quickly.

TMWNN• 3 years ago

Inflation oscillated around 0 for most of American history and our economy did great.

I've heard it said that the British pound was worth the same in 1914 as in 1614.

stuckinhell4• 3 years ago

That's because people don't care about the academic definition, they care about direct impact on their lives.

xnx2• 3 years ago

There shouldn't be anything academic or contentious about the meaning of "inflation". Prices are what floor of the building you're on, inflation is how fast the elevator is going.

John7149• 3 years ago

That is BS mantra by economist that failed as entrepreneurs. 1990 to 2010 American booms largely help by lower production prices from China. Your average laptops and computers from the 90s tend to drop prices bigly from $10K mac to somewhere around $2K. Let me know how bad Apple did. Let le know how worst off Americans during those low gas prices and cheap GPUs.

throwitaway2222• 3 years ago

The groceries I'm buying now for $4.79 now were $2.49 in 2019. Roughly 90% overall inflation rate for everything I buy since 2019. That being said I decided not to change my habits and preferences - but it's hurting to say the least.

Dylan168073• 3 years ago

What about all the things you buy that aren't groceries?

Zandikar2• 3 years ago

Like all the other food, along with energy expenditures, and housing?

Yeah those are all up too. Thankfully, those don't count either. TV's are cheap though!

roflyear6• 3 years ago

Well, sure. If you buy the exact same thing and cherry pick - some things are up 100% (or even more!).

But not on average.

hncensorship695• 3 years ago

I don't understand why this is being downvoted. I'm surprised that people on this site could have lived through covid and still trust anything that comes out of government.

The government has always been incentivized to make inflation numbers lower than they are. There have been numerous changes to CPI methodology, many in just the last few years. Hedonistic adjustments are questionable at best.

Moreover: inflation is a gradient, not a singular vector. You will experience inflation differently depending on where you are in that gradient. Reporting a single number for inflation is about as useful as reporting a single number for the temperature of the planet.

Tagbert• 3 years ago

The government saying that inflation is ending is not contradicted by the OP's comments about previous price increases. When there is not or small inflation, prices don't go back down. they just stay at the current price.

roflyear6• 3 years ago

If you look at 2018-2019 circulars for your supermarket (you can usually find archives online for big chains) and compare them to today, it's easy to see that prices did increase ~30%, but not 100% like it "feels like" they increased.

30% is a lot! But it is what the CPI numbers imply for food, and it's more accurate than "feels like." or "these few things went up 100% so everything went up 100%."

Feelings are important, but they are not the reality, and they don't imply a government conspiracy.

it• 3 years ago

Well sure, because inflation comes from loans, and with high interest rates people are less inclined to take out loans.

macinjosh• 3 years ago

The damage is here to stay though. Prices stopped going up but they did not go back to where they were.

lambdasquirrel• 3 years ago

Well there you have it, folks. The political people have said inflation is over, therefore it must be over.

ruined• 3 years ago

i'm looking for a new apartment at the moment, and i'm noticing that prices seem to actually be in decline. vacancies are staying open, property managers are anxiously calling me for follow-up if they don't hear back, and generally have a less dismissive attitude than before

i'm not sure if it's just this city (i've moved recently) or if it's something broader

roflyear6• 3 years ago

Commercial RE is a real buyer's market.

stuckinhell4• 3 years ago

Like hell it is, my groceries doubled in price from the orange man era. Eggs in my neighborhood went from $2-5 to now $5-10 dollars.

Inflation is only over if you manipulate the stats, the average person is absolutely reeling. Tiktok is full of videos of people asking how they are coping. Mommy net is the exact same, with people asking for diaper donations at a pace I've never seen before. I've been blessed to work in tech, so I've been donating a couple hundred bucks of diapers!

alexb_6• 3 years ago

The average price of eggs hit a high of $4.83. Eggs were extremely expensive for a very short period of time, but have gone down to normal levels. https://fred.stlouisfed.org/series/APU0000708111

Trying to guess economic sentiment from TikTok is not a good idea.

stuckinhell4• 3 years ago

The plural of anecdote is data. Tiktok is just one of many social media sites where people are venting about inflation.

yoav• 3 years ago

Inflation isn’t prices. It’s rate of change of prices.

norwalkbear• 3 years ago

Only when you manipulated the stats heavily.

The average person is hit hard. at happy hour in the city, tons of white collar workers are bitching about two things inflation and layoffs

readthenotes1• 3 years ago

Not credible.

The BLS changed how it measures things so of course inflation went down

https://www.bls.gov/cpi/additional-resources/improvements-cp...

chrismcb• 3 years ago

Unfortunately inflation will never be over. Some economist somewhere came up with the idea that people need to be encouraged to spend our invest their money. And you can do that by slowly making the cost of things go up, reducing the buying power of a dollar. Which forces you to spend it or save it, Rather than stick it under your mattress. But why? I think most people will want to invest their money. And a few will suck it under their mattress, but enough will want to invest it, to keep it circulating. We really need to stop forcing inflation

Inflation Appears to Be Over

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