On topic yesterday retails sales reported month over month declines for the first time since the economy started reopening as consumers are shifting spending back toward services and away from goods now that travel and dining are basically fully opened again in the US. IMO more evidence this inflation is starting to unwind itself outside of the real estate market which isn’t unwinding anytime soon at all.
As an aside on real estate was the advice that millennials got coming out of the housing crisis to rent instead of buy the absolute worst advice ever? The single family home is the single biggest driver of wealth for the working American. I have no idea why renting was floated as a good idea for young people. Just pay someone else’s mortgage off instead of your own.
Here is another article discussing autos, lumber, and metals. In summary used auto’s pricing increases leveled off in June signifying a peak. Lumber prices are down 30%ish from their April highs. Industrial metals have also receded off of their April highs, but not as much as lumber. Basically things are peaking out and returning to normal price growth.
My personal thoughts are some of the price increases we have seen are somewhat baked in (they won’t go down from here or back to where they were 2 years ago) but the future increases will be “normal” inflation. Why is that? Because fiscal debt creates a money surplus for citizens, we added more money into our economy over the last year then any time previously in history, but that money has been ingested into the system now for the most part so it should not continue to pressure prices.
I’d say “Thanks scientists”. That would be the scientists who developed a vaccine that’s 95% effective in record breaking time. Consumers felt safe to go out and spend money they had stored up. Prices went up.
This is a Good Thing. It’s far superior to having a vaccine flop or not getting it rolled out promptly.
In March, the Ds had to decide how much “stimulus” they wanted to restart the economy. They decided they’d rather err on the high side than the low side. I don’t fault them for that decision. If you want to thank them for making a decent decision is a situation of not enough information, I’ll join you.
I don’t think you expect 8.8% for Dec-Dec. I don’t either.
I worry about the next round of spending. I think we’ve reached “enough is enough” on stimulus.
I’d even like to see us decrease the deficit. I have some ways that we could collect more taxes from wealthy people if you’re interested.
It’s inflation when the money supply increases. It’s just a phase if it’s anything else.
wiki says:
Economists believe that very high rates of inflation and hyperinflation are harmful, and are caused by excessive growth of the money supply.[8] Views on which factors determine low to moderate rates of inflation are more varied. Low or moderate inflation may be attributed to fluctuations in realdemand for goods and services, or changes in available supplies such as during scarcities.[9] However, the consensus view is that a long sustained period of inflation is caused by money supply growing faster than the rate of economic growth.[10][11]
No, I don’t really expect 8.8% Dec/Dec but I won’t be surprised if we end up with something above 5%, possibly above 6%. I’m guessing retiree’s will be excited about a 5% increase in their SS payments. Though they will probably really need it, just to keep their heads above water.
Retirees who are hoping for a big adjustment don’t get it. They only get the adjustment because prices went up. And, some retirees have DB, non-indexed pensions. The more SS goes up, the less total spending power they have.
And, lots of retirees are conservative and have their financial assets in fixed income stuff. That’s shrinking, too.
I saw this headline: “Yellen sees ‘several more months of rapid inflation’ before easing, worries about housing impact” and went back to try to find the article and searched Yellen Inflation and got a bunch of articles from May and June where she said basically, that there was no worry that inflation would stay high like it was. That it would maybe get up to 3% this year.
Like say there’s a base model car in the basket. Well in 1970 that base model car had manual windows, manual transmission, no power steering, no power brakes, no air conditioning, no heated seats, etc. The tires were probably good for 20,000 miles.
Now a base model will have all of those things and tires that will last 50,000 miles or more.
Yet they make no adjustment for the fact that a 2021 Corolla is a helluva lot nicer than a 1970 Corolla.
Option A:
no power steering
no power brakes
no power windows
no air conditioning
no cruise control
no delay wipers
crappy tires
smaller car
no airbags
no rear shoulder belts
manual transmission
Option B:
Power steering
Power brakes
Power windows w/ one-touch up/down
Air conditioning
Adaptive cruise control
Delay wipers
Pretty good tires
Bigger car
Airbags
Rear shoulder belts
Automatic transmission
I’m going for Option B even though I’d prefer Manual transmission if all else were equal.
