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Food Prices Are Soaring Faster Than Inflation and Incomes

bloomberg.com

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Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#441

Post by CodeMage »

pnutjam wrote: post #374
em500 wrote: post #336

Earlier quoted context omitted.

There's a ridiculous amount of misconception, FUD, and ignorance around inflation / CPI (it doesn't include housing, it overweights entertainent, it exclude food and energy, hedonic adjustments/basket substitutions make everything look artificially cheap) To professional economists, it can be infuriating to read (I imagine similar as medical professionals reading antivax blogs/comments, or radio engineers reading abo…

You forgot the quotes around "economist". Economics is still not science, it's getting closer; but the whole field ignores stuff and deals with spherical cows to simplify complexities. This, of course, makes it wildly inaccurate.

You know you can be a "professional X" without X being a science, right? It simply means that X is your profession. Some examples of professions that are not sciences: racer, chef, journalist, writer, singer.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#442

Post by pas »

xyzzyz wrote: post #425
Cederfjard wrote: post #412

Earlier quoted context omitted.

I guess that still leaves the question that since it is so difficult, is the CPI actually useful?

Yes, because CPI is a product of both market forces and changes in money supply. The former is not controlled much by anyone, while the latter is controlled by some very rough and not easily predictable knobs held by guys at Fed. Guys at Fed are committed to keep CPI at something like constant 2%, so the must turn these knobs, but for that they need a good feedback as to what their movements are doing. And sure, they…

The Fed's dual mandate is very important here. And there's some movement toward "automatic QE in case unemployment starts to rise" - https://www.stitcher.com/show/voxs-the-weeds/episode/fix-rec... (Matt Yglesias wonktalks with Claudia Sahm, very recommended)

CPI is very important, but the labor numbers are much better (since they are easier to measure), so CPI might become a secondary (high level, target) metric over time.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#444

Post by gruez »

coltons wrote: post #417

Isnt food prices soaring the definition of inflation... haha

food prices is a part of cpi, which is what people typically mean by "inflation". the cpi is also composed of other items (eg. rents, transport), which means it's possible for inflation to be down even though food prices are up.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#445

Post by jeffbee »

jfim wrote: post #386
pwm wrote: post #363

Earlier quoted context omitted.

I'm not an economist. My layman understanding of inflation is that it is the measure of change of purchasing power a unit of currency has over time. I think most laymen, including myself, questions how this rather theoretical concept is actually measured in real life. Eg. I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years…

> I think it is a sensible expectation that if inflation was said to be 2% for 20 years then I should be able to buy a house that cost $200K 20 years ago for ~$300K now Housing is a bit particular because it's a good that's almost always purchased on credit. You'd want to look at the monthly costs of housing (mortgage payment) as opposed to the sticker price, since the total cost that's affordable fluctuates based on…

1/3rd of Americans rent their homes. 2/3rd is not "almost always".

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#446

Post by plank_time »

Cthulhu_ wrote: post #157
european321 wrote: post #150

Earlier quoted context omitted.

Most shipping companies in the stock market have rocketed in the past 2-3 months, so that opportunity has passed I think.

Common stock advice: if you hear about an investment opportunity, you've probably already missed out. Ex: Bitcoin stocks (yes they're stocks / investment products) are only really reported on when they're at an all-time high. They may go up a little more if you're reading something fresh off the press, but it's not going to go up as much as it already has. I mean if you bought a year ago you could have had a 10x retu…

Also once Wall Street turns it into a structured product or an ETF, then stay far away.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#447

Post by pnutjam »

CodeMage wrote: post #441
pnutjam wrote: post #374

Earlier quoted context omitted.

You forgot the quotes around "economist". Economics is still not science, it's getting closer; but the whole field ignores stuff and deals with spherical cows to simplify complexities. This, of course, makes it wildly inaccurate.

You know you can be a "professional X" without X being a science, right? It simply means that X is your profession. Some examples of professions that are not sciences: racer, chef, journalist, writer, singer.

Yes, but those professions have agreed upon norms and standards that can be measured. Did you win, Does it taste good, is it accurate and easy to follow, etc... Economists are all over the place you an pick and choose different theories to support any Point of view.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#448

Post by rory »

xyzzyz wrote: post #439
rory wrote: post #430

Earlier quoted context omitted.

> Usually, if housing prices rise, so do rents, pretty much in accord While this would theoretically make sense, it's not actually very true in the United States. There's a significant speculative aspect to housing in some markets that results in price increases far higher than rents would sustain (this effect is actually more prominent in other markets, e.g. Canada). Here: https://smartasset.com/mortgage/price-to-re…

I think it actually is very true in the United States, outliers like SF notwithstanding. US as a whole is significantly more like Plano than like SF. Sure, that does little to make Bay Area residents feel better about crazy housing prices they deal with, but theirs is by far not a typical American experience.

You're right that we should probably ignore San Francisco and a few others to portray the typical American experience.

But it's still not obvious why for example Atlanta (22.6x) has almost double the price-to-rent ratio of Milwaukee (12.4x) if not due to speculation. Those both seem like fairly "typical America" cities to me. Would you expect Rent in Atlanta to spike heavily in the coming years? Or is the distinction you're making more about urban vs. suburban? (Since my link is just a mediocre blog, it's not clear if those numbers refer to city or metro area.)

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#449

Post by plank_time »

gruez wrote: post #401
QuadmasterXLII wrote: post #254

Earlier quoted context omitted.

Its probably being cancelled out in the basket by healthcare and education prices skyrocketing. Oh wait.

>Its probably being cancelled out in the basket by healthcare and education prices skyrocketing. Oh wait. If you go to bls's site, you can easily tell what it's being canceled out by. From the looks of it, it's mostly being canceled out by low energy prices. https://www.bls.gov/cpi/tables/supplemental-files/home.htm

I live near San Fran and I paid over $4/gallon for regular gas. That’s the same price I paid when gas was at all time highs. I know that a lot of it is taxes but the BLS must be taking that into consideration, no?

Also electricity is at all time highs, depending on the tier and time of day I’m paying 0.50/kWh. During the pandemic this has been killing me. I can’t believe that energy prices are low at least around here.

Re: Food Prices Are Soaring Faster Than Inflation and Incomes

#450

Post by bingbong70 »

gruez wrote: post #394
CyberRabbi wrote: post #368

Earlier quoted context omitted.

> But if someone's "punishing savers" and "perpetuating consumerism", it's not the index, and it's not the people compiling the index, and it's not the people trying to make the index more accurate by adjusting for quality. I’ve seen this a lot around the net and I’m honestly and genuinely curious. What drives you to defend the CPI?

>What drives you to defend the CPI? What drives you to question the motives of the commenter rather than responding to his arguments directly?

He's right, defending the CPI calculation is almost criminal. Many people on fixed incomes that are adjusted based on the CPI are negatively affected. This bogus formula will be conveniently altered to stay under 2% if inflation creeps into the basket of goods being calculated.
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