Yet somehow our consumer price index shows inflation rising at only 2%
As the article notes, some things like consumer electronics are still getting cheaper.
How prices changed at a Walmart in a year
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Re: How prices changed at a Walmart in a year
#22> At the same time, higher prices of garlic — they soared 53% — actually illustrate tariffs working as intended. > China had been the biggest exporter of garlic to the U.S. and domestic garlic growers have long argued they were being undercut by cheaper Chinese competition. Now that Chinese garlic faces higher tariffs, domestic companies can charge higher prices. Domestic companies being able to charge higher prices…
Why would garlic prices rise 53% if the tariffs are only 30%? Are there really no other factors at play?
>Why would garlic prices rise 53% if the tariffs are only 30%?
One purely theoretical explanation is demand elasticity - if you can sell 20 items at 3$ now your costs increase to 5$ - you can sell 10 items at 5$ but 8 at 10$ it makes sense to sell at 10$ - not saying that's the case with garlic - but it explains how a 30% cost increase could cause higher price increase.
Re: How prices changed at a Walmart in a year
#23Yet somehow our consumer price index shows inflation rising at only 2%
Do you believe the CPI is a good measure of inflation?
Re: How prices changed at a Walmart in a year
#24The goal of the tariffs is to improve the bargaining position of America in getting better trade deals with China... not to move manufacturing back to the US. That might be what’s fed to the average Joe the plumber Trump supporter but common sense easily precludes that motivation. To actually move manufacturing back you’d have to tariff every country with a lower cost of living than the US, and that’s most of the wor…
It's even more likely that China will switch to a higher level of automation and robotics before the West does. They already have the production, and can incrementally adapt and upgrade, whereas in the West, it would have to be (re-)built from the ground-up with intent to directly compete against low-labor markets (though arguably, in some industries this would probably be an advantage), and that would require far more investments up front, which carries a higher risk.
Re: How prices changed at a Walmart in a year
#25The goal of the tariffs is to improve the bargaining position of America in getting better trade deals with China... not to move manufacturing back to the US. That might be what’s fed to the average Joe the plumber Trump supporter but common sense easily precludes that motivation. To actually move manufacturing back you’d have to tariff every country with a lower cost of living than the US, and that’s most of the wor…
You would have to tariff every country with a comparative advantage in manufacturing cheap goods, not just “the cheapest countries” in general. Otherwise, we’d be moving our production to Pakistan and not India (a country with a comparably low cost of living)
The biggest factor in cheap manufacturing is labor cost. Even if the place doesn’t have existing infrastructure it’s better investment there than domestically.
The article even says it: most companies have stayed in China or moved to other countries like Vietnam.
Re: How prices changed at a Walmart in a year
#26Yet somehow our consumer price index shows inflation rising at only 2%
Not only is 2% a fairly tepid number, we’ve had to cut rates, make promises to “sustain the expansion”, stop the tapering of The Fed’s balance sheet just to get that 2%.
All throughout 2013-2017, the CPI number has hovered either close to 2% or been below it. Keep in mind that the Fed’s goal is symmetric, meaning that to make up for the times when CPI is below 2%, there needs to be other times when CPI is above 2%. It blows my mind that throughout the late 80s and 90s we were hitting anywhere from 3-5% and now we’re struggling to get 2%.
Re: How prices changed at a Walmart in a year
#27Earlier quoted context omitted.
You would have to tariff every country with a comparative advantage in manufacturing cheap goods, not just “the cheapest countries” in general. Otherwise, we’d be moving our production to Pakistan and not India (a country with a comparably low cost of living)
Supply chains are another reason, why shifting production to a lower-cost labour country is not done overnight.
It’s also why they wouldn’t shift to the US overnight. And for over many nights, it’d still not shift to the US which is my point.
Re: How prices changed at a Walmart in a year
#28The goal of the tariffs is to improve the bargaining position of America in getting better trade deals with China... not to move manufacturing back to the US. That might be what’s fed to the average Joe the plumber Trump supporter but common sense easily precludes that motivation. To actually move manufacturing back you’d have to tariff every country with a lower cost of living than the US, and that’s most of the wor…
Common sense is not a strong suit of this administration.
I don’t think the administration is deluded by that reality, but many of the supporters are. They just wanted jobs and Trump said yes, but he’s essentially misleading them.
Re: How prices changed at a Walmart in a year
#29Yet somehow our consumer price index shows inflation rising at only 2%
Do you believe the CPI is a good measure of inflation?
Hypothetically, the Core PCE would be a better metric of inflation, but Core Urban Consumer NSA CPI works pretty well.
It has some flaws, like failing to take into account new products or improvements in products, as well as being susceptible to swings in volatile food and energy prices. But Core CPI excludes the more volatile pieces and I think it’s a reasonably good indicator.
Perhaps my single biggest gripe with CPI is that it fails to properly reflect changes in housing prices, because of how infrequently people sell/buy their house, and because in some parts of the country nobody rents, so price discovery is a little wonky in those places.
Re: How prices changed at a Walmart in a year
#30> At the same time, higher prices of garlic — they soared 53% — actually illustrate tariffs working as intended. > China had been the biggest exporter of garlic to the U.S. and domestic garlic growers have long argued they were being undercut by cheaper Chinese competition. Now that Chinese garlic faces higher tariffs, domestic companies can charge higher prices. Domestic companies being able to charge higher prices…
What is 55% higher though - from $0.50 to $0.76 per bulb? Garlic doesn't seem like an elastic enough good where $0.25 would make a difference. It's a staple food in almost every American household. With that being said it's sad to hear that so many people purchase Chinese produce.
Why is it sad?