US Inflation Falls To 3.2% in October 214
US inflation fell to 3.2 per cent in October, lower than economists had expected and the first decline for four months. From a report: Consumer prices rose 3.2 per cent year on year in October, down from an annual rate of 3.7 per cent in September. The annual rise was slightly less than economists had forecast, and prices were flat month on month. The central bank held its benchmark interest rate steady at a 22-year high earlier this month, and investors have become increasingly confident that rates have peaked. Futures markets on Monday afternoon were pricing in a 13 per cent chance of a further rate rise at the Fed's next rate-setting meeting in mid-December.
Core inflation -- which strips out volatile food and energy prices -- was also slightly weaker than economists had predicted, dipping from 4.1 per cent to 4.0 per cent on a year on year basis. Core inflation rose by 0.2 per cent month on month. Fed chair Jay Powell stressed last week that policymakers would not be "misled by a few good months of data," and that the central bank could tighten monetary policy further if necessary, although officials have shown little intention of immediately raising rates beyond the current range of 5.25-5.5 per cent. Stronger-than-expected gross domestic product growth has fanned fears that the slowdown in inflation could stall, but Powell said last week that he and his colleagues expected the pace of economic expansion to slow. Instead of another rate rise, the Fed is increasingly expected to push back the timing of rate cuts deeper into 2024 if consumer prices remain stubbornly high.
Core inflation -- which strips out volatile food and energy prices -- was also slightly weaker than economists had predicted, dipping from 4.1 per cent to 4.0 per cent on a year on year basis. Core inflation rose by 0.2 per cent month on month. Fed chair Jay Powell stressed last week that policymakers would not be "misled by a few good months of data," and that the central bank could tighten monetary policy further if necessary, although officials have shown little intention of immediately raising rates beyond the current range of 5.25-5.5 per cent. Stronger-than-expected gross domestic product growth has fanned fears that the slowdown in inflation could stall, but Powell said last week that he and his colleagues expected the pace of economic expansion to slow. Instead of another rate rise, the Fed is increasingly expected to push back the timing of rate cuts deeper into 2024 if consumer prices remain stubbornly high.
Economy Levels Up: Inflation Boss Fight Continue (Score:5, Insightful)
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Interest rates are probably going to decrease somewhat but rightly not going to come back down to the post 2008 era and if anything it's becoming clear they were left far too low for far too long as we are now feeling some shock at a return to rates that were long the historic norm. Everyone got a little too bought into the idea that ZIRP would never end.
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People don't seem to realize just how unprecedented the long stretch of low inflation [tradingeconomics.com] and low interest rates [tradingeconomics.com] of the recent decaded has been.
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I remember growing up, and home mortgage rates were easily in the 12%-14% and higher levels back in the day, for everyone.
Not sure why it's killing some folks today....it's a change for sure, but this isn't unprecedented and it certainly wasn't the end of the world for us back then as that people STILL bought houses, business continued and people actually could save money and enjoy it growing in an interest bearing savings account.
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12% on twice your annual income isn't nearly as bad as 5% on ten or 15 times your annual income.
Most people "buy" houses based on how much money the bank will give them. It's really more like renting. If your rent is $2000 a month you don't really care whether some abstract entity "values" the place you live at $100,000 or a $1,000,000, it still costs you $2000/month.
If you can afford $2000/month and interest rates are low, you buy a house with that size mortgage payment. When interest rates go up, you're s
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Looks like the US economy is taking cues from classic video games - just when you think you've beat the final boss (inflation), it respawns with a new power level (interest rates).
That's, literally, the primary reason why the federal reserve has the power to adjust interest rates. It's to keep inflation in check. The US saw various European economies being crushed by inflation after World War I, and decided a hedge against inflation would be a good idea. It's not voodoo or magic, it's *very* basic monetary policy.
Initially, adjusting interest rates was only supposed to prevent inflation, or deflation, but since it's been used to try to "goose" the economy when it falls into recession
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Purely academic hypothetical: if wages were cut in half and the cost of living was cut in half, would that be ok?
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Purely academic hypothetical: if wages were cut in half and the cost of living was cut in half, would that be ok?
Cost of living being cut in half would be interesting, since as far as I can see it only every goes up, up, up, UP. But, theoretically halving both cost of living and wages, we'd all be in the same place. I'm sure there'd be riots in the streets, but the semi-intelligent among us would shrug and go back to work the next day same as we always do because what difference did it make other than spinning some accountants' heads?
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Not that I agree with it but the idea of crushing the job market is supposed to be that with lower wages, you'll see lower costs to produce/serve and because of competition, prices will come down, too.
This of course fails at the completion and price reduction part in many areas of the economy but that is the theory they are operating on. It is wrong but they're not being evil. Just ignorant of human nature. They're economists after all, you can't expect them to understand the economy.
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Purely academic hypothetical: if wages were cut in half and the cost of living was cut in half, would that be ok?
After a bit of a think about how our country operates, I could see something like this being used to "reform the value of the dollar" or some such, but staggered. Wages drop one month with the promise the cost of living will drop in the following months, then never following through on it because $reasons. I'd expect a government shut-down right before the COL adjustment.
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The problems with an artificial drop are bigger than that. The supply chain is complex and time based. For example, am I selling you those parts at the old price or new price, when you bought them before the drop but they arrive after? Also, as you note there will be exceptions, delays, blah blah blah bullshit. We could never do it. And I'm not sure how that would work in an international market, either.
Any prices decreases would have to occur naturally. No magic wands, unfortunately. But if there was
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I take it you have actual evidence in your hands (a YouTube video doesn't count)
Ah yes, the party's final, essential command.
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To be a bit snarky and cranky on this point, I find it funny they gave business the golden egg of low interest rates for years, well beyond what was needed to recover from the last downturn. It wasn't until the worker started gaining any sort of benefit that the Fed started in on curtailing growth. I know it isn't so simplistic, but the cranky old man in me just shrugs and says "of course they did"
I'm an actual cranky old man, and agree with your inner cranky old man.
Re:Economy Levels Up: Inflation Boss Fight Continu (Score:5, Insightful)
Re:Economy Levels Up: Inflation Boss Fight Continu (Score:4, Insightful)
There were literally stories everywhere a few months back stating EXACTLY that. Here's just one of them. [cnbc.com] The goal was recessing and unemployment. And I swear I saw a direct quote from the Fed stating they weren't going to stop raising interest rates until there were mass layoffs, but I'll withdraw that particular bit as I can't seem to find it today. It's damning enough that the goal of the fed to was to TRY to create a recession.
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The fed didn't say they were trying to cause mass layoffs, their detractors did.
What they DID say was that they weren't going to stop until the people weren't able to spend so much money, which is just another way of saying they were going to drain the bank accounts of the poor and give the money to the rich.
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The fed didn't say they were trying to cause mass layoffs, their detractors did.
What they DID say was that they weren't going to stop until the people weren't able to spend so much money, which is just another way of saying they were going to drain the bank accounts of the poor and give the money to the rich.
You been to a grocery store recently?
The lower your income the higher the portion of your income spent on necessary expenses like groceries and utilities, and wages lag inflation.
Recessions and mass layoffs hurt the poor, but so does inflation.
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The Fed would never say that. ." and ". . . nominal wage growth must ultimately slow to a rate that is consistent with 2 percent inflation . . ."
They would say things like [federalreserve.gov] "The rebalancing of the labor market has continued over the past year but remains incomplete." and "This rebalancing has eased wage pressures. . .
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The Fed would never say that. They would say things like [federalreserve.gov] "The rebalancing of the labor market has continued over the past year but remains incomplete." and "This rebalancing has eased wage pressures. . . ." and ". . . nominal wage growth must ultimately slow to a rate that is consistent with 2 percent inflation . . ."
Considering we haven't seen 2 percent inflation since 2012, that's frightening enough. Jesus. It's like their entire purpose is to beat people into submission.
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What do you think the "economy" is? It's certainly not our personal finances.
Re:Economy Levels Up: Inflation Boss Fight Continu (Score:4, Insightful)
There were literally stories everywhere a few months back stating EXACTLY that. Here's just one of them. [cnbc.com] The goal was recessing and unemployment. And I swear I saw a direct quote from the Fed stating they weren't going to stop raising interest rates until there were mass layoffs, but I'll withdraw that particular bit as I can't seem to find it today. It's damning enough that the goal of the fed to was to TRY to create a recession.
I'd be surprised if you found that quote because I doubt it exists.
The US Fed didn't/doesn't want a recession or mass layoffs. But they want high inflation even less. Maybe not as much as causing a recession, but they considered it acceptable to risk a recession to bring inflation out of control.
Even if you disagree with those priorities it doesn't mean the US Fed wants those bad outcomes, they don't want people out of work, they're just trying to choose the less of two evils.
Re: Economy Levels Up: Inflation Boss Fight Contin (Score:4, Informative)
The lesser of two evils is still evil.
Ok... but you still need to choose one unless you have a magic wand that both maintains high employment while bringing down inflation (and if you do that I'll throw in a Nobel prize in economics just for kicks).
Remember that the rate of change of inflation is a second derivative. It means that inflation is still accelerating just at a slightly smaller pace.
What are you talking about? No one said anything about "rate of change". Inflation is down, that means.. inflation is down.
What's still increasing is prices, as they always do, but at a lower rate.
It is also important to realize that the feds omit the consumer cost of housing, cars, food, fuel and other necessities.
If those were included then true inflation would be way higher.
From the summary:
Core inflation -- which strips out volatile food and energy prices -- was also slightly weaker than economists had predicted, dipping from 4.1 per cent to 4.0 per cent on a year on year basis.
So 4.0 vs 3.2, higher, but I wouldn't say "way higher".
Granted, that doesn't include housing or vehicles, though I think that's justifiable since people can manage those costs in a way they can't for groceries.
Don't look behind the curtain... (Score:3, Informative)
Don't look behind the curtain. Well, do, by visiting Shadowstats [shadowstats.com]. Journalists forget - or perhaps never knew - that the government has twice redefined "inflation", to make the numbers stay lower. To summarize:
According to current measurements, inflation may be around 3.5% to 4%. Using the measures in place in 1990, it is around 8%. And using the measures in place through 1980, it is around 12%.
Re:Don't look behind the curtain... (Score:5, Interesting)
Shadowstats has long had questionable statistics measurements itself and has been a point of discussion for years now even since 2008, somewhat famously people have pointed out that by using his numbers there in fact was never a housing bubble:
Shadow Stats debunked, part I [jparsons.net]
No, the real inflation rate isn’t 15 percent [fullstackeconomics.com]
Deconstructing ShadowStats. Why is it so Loved by its Followers but Scorned by Economists? [thestreet.com]
Shadowstats debunked [econbrowser.com]
Now that's not to say these numbers don't add any discussion but Williams is also selling a narrative as well.
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Healthcare in the USA has been out of control for my entire life. The ACA certainly didn't do enough to control prices (big piece of blame for that goes to Joe Lieberman who blocked the public option from it which was it's main price control method) but I remember the pricing trajectory for healthcare was out of control pre-ACA. All data shows the rate of increase was slowed by the ACA but slowed isn't stopped and until we actually address the core problems with how we manage insurance it will continue to
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The ACA certainly didn't do enough to control prices
It didn't do anything to control prices, that wasn't really the goal. The goal was to improve access, and especially to help people with pre-existing conditions. It succeeded at that, especially the pre-existing conditions problem. That is basically solved.
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This is not accurate, t did introduce a few control measures:
- It set the 80/20 rule where insurance providers have to use 80% of revenue on healthcare costs
- It introduced the concept of "maximum out of pocket"
- It introduced the concept of Rate Review where premium increases over a certain threshold at least have to be justified.
- Several changes to Medicare/Medicaid
The ACA did slow the rate of increase on healthcare but it was far from what was needed:
How The ACA Dented The Cost Curve [healthaffairs.org]
So it's not exactly
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Healthcare costs are affected by inflation like everything else. Regardless, one of the biggest reasons insurance premiums increased post Obamacare is that kids were now covered on their parents insurance plans for many more years. Pre-Obamacare, many dropped off their parents plans and then being mostly healthy saw no reason to be insured at all. You can't blame the insurance companies for charging for the increased risk and cost, because broken bones, pregnancies, and illness doesn't really care about you
Re:Don't look behind the curtain... (Score:5, Insightful)
>>According to current measurements, inflation may be around 3.5% to 4%. Using the measures in place in 1990, it is around 8%. And using the measures in place through 1980, it is around 12%.
While this is technically true, it also doesn't matter unless you are making historical comparisons to pre-1990 prices. The method used now is the same one that's been used for the last 33 years. It's just a different statistical method, not a conspiracy. Don't try to make it sound like this is a recent change introduced by Biden to make the economy look better than it is, because it wasn't. The same system was used under Trump (and Obama, and Bush, and Clinton, and Bush Sr.).
Re:Don't look behind the curtain... (Score:5, Insightful)
Right, it's been a lie, and it's still a lie.
Just like the unemployment rate, which doesn't count people who have been unemployed a long time. The feds just claim they're no longer looking for work. It took me a year and three months to find a job. That means for nine months I was simply removed from the statistics. That's a great way to make the number look better, but it is complete fucking horse shit.
Biden is not a bigger liar on these issues. He's just exactly the same kind of liar. Call me crazy, but I think we need to get past these lies being acceptable.
At some point your measurements (Score:2)
You're focused on perception too much. Yes, consumer confidence is important, but we also need to start thinking about policy changes.
Specifically we need to stop using right wing, trickle down economics and libertarian capitalism. That's been the order of the day for 40+ years. We already knew it didn't work
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Rates counting those that have been unemployed a long time have been published by the government all along. They publish several different rates, it's not a conspiracy to downplay unemployment or inflation, the government publishes a number of different rates because they each have a different place in assessing what's happening.
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I honestly don't understand your comment. "While this is technically true, it also doesn't matter unless you are making historical comparisons to pre-1990 prices."
Of course it matters.
Inflation used to be a measure of "how much more money do you need to maintain a constant standard of living?" Since the government redefined it, starting in 1980, it now means "what number can we pawn off on the populace, and maybe make them believe it?" Look at prices, then tell me: do you really believe that US inflation
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This is true, but like all statistics you are using to say whatever you want.
Don't gloss over the fact that one number is the "raw" inflation, and one is the rate normalized for total spending.
If food prices go up by 33%, but food spending is only 33% of a typical person's budget, the total effect of food on inflation is 33% x 33%, which is about 11%, which is what is claimed in the headline number.
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If food prices go up by 33%, but food spending is only 33% of a typical person's budget
Remember when you were supposed to spend less than 33% of your income on housing, and food was cheaper than that?
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Water.
More behind the curtain (Score:5, Interesting)
Don't look behind the curtain. Well, do, by visiting Shadowstats [shadowstats.com]. Journalists forget - or perhaps never knew - that the government has twice redefined "inflation", to make the numbers stay lower.
According to current measurements, inflation may be around 3.5% to 4%. Using the measures in place in 1990, it is around 8%. And using the measures in place through 1980, it is around 12%.
We can see a lot more behind the curtain.
Nowhere in economics is there a definition of the "correct" or "optimal" amount of inflation. No one knows, and I've asked actual economists this very question.
Some economists will respond "it depends", but then my next question is "So the optimal inflation number is a target that depends on current circumstances, that's fine. What does it depend on, and what is the formula to calculate the optimal value at any point?", and the answer is invariably a blank stare.
The most you can get out of economists is a guess: most economists believe that inflation less than 0 is bad, greater than 10 is bad, and the optimal value is around 2%. That's a "generally held belief" with no mathematical basis (although there is some indication from historical data).
The US produces goods and services and the total (base) value of these services rises over time due to increases in efficiency, technological advancements, economies of scale, and so on. Conceptually, computers get faster and more powerful over time, making a modern computer worth lots more in basic value than a 1990's computer.
As production rises, Washington (Fed or US government or a collusion of both, depending on your point of view) injects money into the system to compensate: They literally make money out of nothing and inject it into the system. If the amount of extra money exactly equaled the increase in production, inflation would be zero: the amount of money would always exactly match the value of production. (Taken as an average over the entire economy. You can always find localized products that will go up in price as well as localized products that will go down in price.)
If Washington injects an extra 2% of money into the system, then it's simple supply and demand: more money for the same goods and services, so the price of goods and services will rise to compensate.
Overbudget spending by Washington literally and directly causes inflation.
The Fed tries to limit inflation by slowing down the economy by adjusting interest rates. If fewer people want to buy things, companies have to lower prices to compensate. This doesn't address the base problem of extra money, but it will lower inflation indirectly. The Fed is using an indirect method for control but it's the only method of control they have.
The problem is that inflation (and the economy in general) is essentially an exponential system and the Fed information is always several weeks behind. They're trying to control an exponential system using delayed measurements. Exponential systems (such as nuclear reactors) are notoriously difficult to control, and if the Fed doesn't get it right the economy can boom (inflation remains high) or stall (recession). Putting the brakes on the economy with exactly the right amount of force is tricky and difficult.
If anyone here can enlighten us as to the optimal amount of inflation, or the formula that can calculate the optimal amount of inflation, please post it.
I'm really interested in that answer.
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It's the wrong question, inflation is downstream from deficit (and current account balance, but lets ignore that).
Consistent deficits are convenient for government policy, no ugly surpluses to find something to do with over half the business cycle.
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If anyone here can enlighten us as to the optimal amount of inflation
Yeah. The inflation number doesn't particularly matter, as long as it's predictable. If there is unpredictable inflation/deflation, then it gets too hard to make loans (for various reasons). No one will give a loan at a rate lower than expected inflation, and if deflation happens, the loans get hard to pay back. (Side note: even if inflation is unpredictable, there are ways to deal with it, like adjustable-rate-mortgages, or writing inflation into your salary contract mathematically.)
So in an idealized e
Re:More behind the curtain (Score:5, Informative)
So in an idealized economy, 0% inflation is ideal, because it's predictable and makes everyone's math simpler.
0% inflation is not really possible. The reason it's not is because if you had a predictable 0% inflation rate it would encourage people to leave money sitting idle, reducing the velocity of money and the effective money supply. Reducing the money supply increases the value of money, i.e. deflation, which has all sorts of negative effects. To keep money moving, i.e. keep in invested in productive enterprises, you want to have at least a little inflation.
This is where the 2% figure comes from. It's close enough to zero that people don't feel it pinching, but it's far enough above zero that collapse into a deflationary spiral is unlikely.
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And be sure to calculate the inflation on your computer as -99.999% compared to a Cray-1.
Re:Don't look behind the curtain... (Score:5, Informative)
It's still reported [bls.gov]. No conspiracy to hide it.
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Find a news report that mentions it in the last 15-20 years. Who cares if they produce the figure - the propaganda is propaganda regardless of whether the source is private or public, we should know that by now.
U-3 is a useless measure unless the economy is in free-fall. It's only measuring people who have looked for a job in the last 4 weeks. U-6 doesn't even capture long-term unemployed, but it does capture more of the pain.
U-3 was a lot more representative perhaps in the 1970s, because things were ver
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U-3 is a useless measure unless the economy is in free-fall. It's only measuring people who have looked for a job in the last 4 weeks.
It's harder to have sympathy for people who aren't even trying to help themselves.
Re:Don't look behind the curtain... (Score:5, Informative)
Find a news report that mentions it in the last 15-20 years.
PBS Newshour quotes this figure almost every time they do a piece on unemployment. They don't call it "U-6", nor do they call the usually reported figure "U-3", but they absolutely do report on it. They've also done multiple segments on the overall labor force participation rate and the various factors that take people out of the labor force.
It's total nonsense to claim the media hides this figure. It's even bigger nonsense to claim the Government hides. It's published by a Federal agency and easily found with the search engine of your choice.
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It's still reported. No conspiracy to hide it.
Conspiracy or cartel, either way, the MSM (including Faux News) reports the U-2 rate when it is well known to be complete bullshit. Even the U-6 rate is a lot of shit, but it's less shit... and they choose to report the more bullshit number.
Is it because of shadowy figures in dark smoky rooms deciding the future of America, or just because all media organizations people have heard of are owned by megacorporations that have their own agendas that have nothing to do with serving the public interest? Either wa
Cumulative effects (Score:4, Informative)
So inflation has "lowered" to about 3%. A recent measure was at 9%. Considering just those two injuries to the value of money:
You have $100.00, which you hold on to, and then...
9% inflation (your $100.00 now has the buying power of ~$91.00)
plus
3% inflation
is
12% inflation (actually more, but close enough) (your $100.00 now has the buying power of ~$88.00)
So unless your wages went up by 12% over the same two intervals, or your $100.00 has earned you at least 12% interest over the same period, you've been fucked. If your wages went up by more than 12% over those two intervals, then it might be reasonable to think you're getting ahead. However, your original $100.00 is still worth only ~$88.00.
This doesn't take into account the things that are inflated way out of scale; house prices, rent, etc.
It's also worth noting that a good deal of this is driven by beyond-interest rate price increases by business entities. It's not all driven by the fed.
Constant inflation devalues currency. If you can't get better interest on your money than the inflation since you acquired it, you'll get more by spending it now than you will by holding on to it in the face of constant devaluation. This is by design; it keeps a considerable amount of currency in constant play.
Re:Cumulative effects (Score:5, Informative)
The numbers reported are year-over-year inflation. So if inflation was 9% last month (i.e. september 2022 compared to september 2023) and it is now 3% (november 2022 compared to november 2023).
Your numbers would be correct if you started out with $100, kept them at home sewn into the mattress, and then for a whole year the inflation was 9% and then the following year was 3%. But it is a bit more complicated than that.
Re:Cumulative effects (Score:5, Interesting)
Not good, but a lot better than during the post-war 1940s or almost the entire decade from 1974 to 1983.
Re: Cumulative effects (Score:2)
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That's year-to-year, which includes the effects of the previous 12 months of inflation. The seasonally adjusted month-to-month inflation was about 0% in October.
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"Constant inflation devalues currency"
You're mixing cause and effect. "Inflation" is simply what happens when currency is devalued. Currency is devalued because half of all US money ever created has been created in the last 4 years. When you see the price of everything go up what you're actually seeing is the value of money going down.
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And right before an election! What a coincidence! This is some dictator/China bullshit.
Elections, politicians, corruption, China, Russia, Ukraine, Israel, Gaza, Hamas, identity politics, sexual politics, entertainment & drugs (bread & circuses)...
So many (fairly successful) attempts to distract citizens from who has been screwing them and why. (Clue: the man behind the curtain. Whom you haven't noticed because he's behind a curtain. However, as a human being you have one of the most powerful brains in the world... why not put it good use?)
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There can be more than one problem at a time. They don't all have the same source.
Re:Don't look behind the curtain... (Score:5, Insightful)
Wait, define "right before an election"
To me, 1 year and change is not "right before" an election.
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doing things like having universal healthcare and tuition free college or automation is going to eat our economy alive.
First clause has no clear relationship to the second there skippy, but good try.
None of those things will protect the labor market from automation. I don't care how many fancy chemistry degrees you have, if the computer can find a suitable formula and process by brute force search fast and cheap, your understanding of things will still be of no real value.
I don't have a good answer for automation destroying the value of almost all labor but one thing is CERTAIN investing more in people only makes the typic
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Lump of Labor Fallacy [wikipedia.org]
What is the magical amount of automation that will lead to this devastation of the labor market? It wasn't the automobile, or mechanized farming, or mechanized factories, or the production line, or computers, or the internet or robotics. We have all those things and yet we have a very low UE rate on both U3 and U6 and plenty of job positions that need to be filled.
Which is it, "automation means mass unemployment" or when we have more jobs than people and "people don't want to work anym
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Approximately, what year is skynet taking over?
Unemployment finally ticked upward too (Score:4, Insightful)
Its good that the FED has managed to get inflation under control. Its probably good that they have reloaded the interest rate gun a little bit, should we need to grease things with monetary stimi again for whatever reason.
I am not sure how much we really should be celebrating. We had lots of Geo-political events to push down oil prices and create a lot pessimism for at least 3 out of our weeks in October.
I don't see a lot of reason to think any improvement in the inflationary curve isn't driven mostly by the market expecting externalities to be disruptive. The war machine has already been enjoying Ukraine to feed it, so temperature going up in the middle east probably is negative for the market in terms of disruptions than an opportunity for arms sales.
I think the FED is right to be skeptical, it wont take much to send pricing climbing again. Just OPEC deciding to get punitive about Zionist support as we head in the peak heating season, could do it.
WTF Core Inflation (Score:5, Insightful)
"Core inflation -- which strips out volatile food and energy prices"
What the fuck good is that information? It's not like I can strip the price of food and energy out of my budget.
Re:WTF Core Inflation (Score:4, Insightful)
> What the fuck good is that information? It's not like I can strip the price of food and energy out of my budget.
It's filtering out high frequency noise to better examine the longer term tends. Arguably longer term trends are more important for everyone...
=Smidge=
Re:WTF Core Inflation (Score:5, Insightful)
That high frequency noise is what I spend the most on every month.
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The daily and weekly numbers don't tell us anything about the economy, though. The purpose of the number is to give an indictation of the health of the economy overall, not how your household budget changes.
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No, the purpose of the numbers is - and obviously has been for decades - to serve the political ends of the people currently in charge, which is to say, getting reelected. And there's zero difference between the two parties; they both do the exact same thing for the exact same reason.
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And there's zero difference between the two parties; they both do the exact same thing for the exact same reason.
This is not true, at all.
Just look at the every budget fight over the past decade, every threat of a government shutdown, the difference in big legislation (Bipartisan Infrastructure and Inflation Reduction Act versus the 2017 TCJA) also big difference in how foreign policy is handled. The passing of the ACA in 2009 versus no healthcare plan at all.
Could go on and on and I understand having a good amount of cynicism but at this point if you are able to define your own values and dig below the punditry surf
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Do you really spend more than 50% of your income (gross or net, either way would be astonishing) on food and gasoline? More than on housing, insurance premiums, transportation capital cost (e.g, car payment), college loans, utilities, entertainment, or other durable goods?
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Yes, I have no debt. I own all of those things but I live within my means and have paid for them.
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Also, why would you assume I spend over 50% of my income on anything? Just because energy and food are my biggest expenses doesn't mean I spend 50% of my income on them.
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Sorry; I misinterpreted "what I spend the most on" as "the largest share of my spending" instead of "these are the largest line items in by budget".
But even there that sounds odd to me - unless you don't count investments/saving as spending?
Re: WTF Core Inflation (Score:2)
Most of the things you listed are priced based on the cost of food (cost of labor) and energy (cost of fuel).
Yes, the majority of your money goes towards someoneâ(TM)s fuel or food, beyond that there are no core measurements of inflation.
Cost of food is well beyond 10% inflation rate and cost of fuel has roughly doubled since Biden took office. 3.3% is the rate of inflation increasing year over year (if it was 10% last year, it is 13.3% now).
Re:WTF Core Inflation (Score:5, Insightful)
Food and energy inflation is currently lower than core inflation. Do what you will with that information.
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https://www.eia.gov/todayinene... [eia.gov]
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West coast gas prices are pretty bad compared to the rest of the country, but actually a decrease from west coast prices a year ago
So you mean they're down slightly from the inflated peak? I'm so grateful, beat me harder with a gas nozzle daddy.
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In part, because California has its own fuel blend and can't buy/use refined fuel from other states that don't adhere to that standard when there are inevitable blips in the supply chain. Supply and demand is a big part of it. The rest? Because they can. You'll pay it. When I was there I hated it and paid. I took a picture of the first time a tank cost over $100 when gas was about $7.
Where I live now gas is running about $3.20 without shopping around. What's California at these days? $5 you said? T
Re:WTF Core Inflation (Score:4, Insightful)
Hey, hey. They don't want useful information. They just want to whine about the government, the Fed, and Biden! If you're not going to post comments that confirm their crazy biases, you clearly shouldn't post anything at all...
Seriously, I'm amazed at how much people want to believe inflation is high and the economy is poor, despite all evidence to the contrary. I mean, things aren't perfect, but they're doing pretty well.
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What evidence is there that inflation is not high? Are you fucking stoned? Do you live in the US?
We paid $50/head for random dinner last night. Health insurance numbers just came in last night, up 18% for next year. Food at the super market is higher than ever. And since we don't see deflation, these prices are locked in as the new normal for most things. If they come down it'll be a lot slower than they went up.
Wtf are you talking about?
Re: WTF Core Inflation (Score:2)
Don't know where you live, but here in middle Michigan costs of everything are up, and up a lot. Grocery bill for my family of 5 has more than doubled. Pre-covid we could go out to eat and expect to pay in the $40-50 range for all of us, now we can't get out of a restaurant for under $80, typically more than that. Streaming services have raised prices, many of them twice, utility costs have gone up, the only bright spot is that our house and vehicle pricing is locked in.
Prices have gotten absolutely insane,
Re:WTF Core Inflation (Score:4, Insightful)
It makes the assumption that stuff is highly volatile, gas prices spike one week as the refiners shift to winter blends and than some other month OPEC will vote to increase production and send things down again, so that stuff should 'come out in the wash' therefore ignoring it gives us a better trend line - that is the theory.
I think this is wrong for a couple reasons. Its the information age now, producers and industrial consumers of energy are much more reactive to prices changes than they used to be. Retail is much more active about repricing things for consumers as well. Watch any product on Amazon, it can easily swing 10% in a month. Its not like 1995 where you just knew a pack of t-shirts was $2 and would be the same $2 at Sears next week as well. So I suspect these price fluctuations hit daily life much much faster, and they don't wash out, stuff might revert to median but producers and retail are never going pass any savings they get on to consumers, unless they are liquidating.
The other thing is I think food and energy are a bigger portion of the typical house holds budget than they used to be. Decades of productivity gains, and trade have made manufactured goods get cheaper with respect to something like produce which must be picked by hand. This is not say that mechanization and chemistry has not increased farm productivity it has over the past decades but not in the way it did in the immediate post war decades! To that end that disparity in productivity gains over say the last 30 years means that CPI excluding food and energy prices makes it less of proxy for what it "feels like" for Americans trying to make ends meet.
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> but producers and retail are never going pass any savings they get on to consumers, unless they are liquidating.
Just a side note on this, I fully agree with everything else you said.
When they liquidate it's not always the case prices come down. Anecdotal: when bed bath n beyond shut their stores, we looked really hard online and the local store for discounts. Nada. Just looking for a few towels, sheets and pillow cases. Prices were astronomical which is probably why they went under in the first pla
Volitility (Score:2)
These metrics are used to measure the *entire* economy.
Because oil and food prices can have rapid price swings, but the overall effect on the economy is *usually* minimal, as most companies hedge against these swings. So, while gas might get expensive for half a year because of high oil prices, plastic doesn't get appreciably more expensive because plastic manufacturers have bought cheap futures.
Just because onions and light sweet crude oil are more expensive doesn't mean the economy will come to a grinding
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Falling inflation doesn't reverse prior prices (Score:5, Insightful)
While I'm sure there are some looking to trumpet the good news that core inflation is falling (which excludes food and energy), it's a good reminder this falling inflation does nothing to reverse the previous 2 years of high inflation. Two years of 8% inflation still impacts the prices we're paying today AND 3% is being added on top of that.
Unless your wages or investments have kept up with that, the fact that inflation is growing less rapidly is no comfort.
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the fact that inflation is growing less rapidly is no comfort.
Well, not no comfort. Predictability matters. And certain things will get cheaper again (looking at you, potatoes), but yes you need to track both things. Good news [statista.com].
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Now I have to ask... (Score:2)
When was the last time they adjusted what items were included in the inflation index? (Like when they changed steak to ground beef, arguing both were beef.)
Like what things were dropped and what were added this month?
Dumb question (Score:2)
How is this tech news?
Or is /. just about politics now?
3.2 - 3.2 = 0 (Score:2)
After the past three years (Score:2)
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With a user number that low I would have thought you were old enough to know that we almost always have some level of inflation going. That's why you cant buy candy bars for pennies any more. A small amount of inflation is generally considered healthy for the economy in fact.
So yes, inflation dropping is meaningful because it's bringing us back to more normal levels of it.