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US inflation jumps to 31-year high amid global supply chain crisis

theguardian.com

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Re: US inflation jumps to 31-year high amid global supply chain crisis

#31

Post by silisili »

AnthonyMouse wrote: post #4

People need to decide whether they think this is because of supply chain issues and the demand spike following COVID or if it's because of the Fed.

"People", in this case mostly the media I think, seem to just pick something random.

I watch the stock market which is even worse for this. Every day you'd see "Stocks down as investors weigh COVID", followed by "Stocks up as investor COVID fears wane". Which may be true, but not alternating seemingly every single day for a while.

It's like someone sees something happen, wants to write an article, and the boss says "nope, put something catchy on the title."

Re: US inflation jumps to 31-year high amid global supply chain crisis

#32

Post by simonsarris »

crisdux wrote: post #22
simonsarris wrote: post #13

I've mentioned before [1] but these prices still don't seem that serious. Most prices have still not beat their highs made in 2008-2014 (crude oil, global energy price, eggs, milk, sugar, rice, chicken, pork chops). Ground beef is an outlier, however. And US price per kwh is back at its peak, though it declined in these October numbers to be below... 2014 numbers again. [2] So while the climb up is bad, the prices th…

I see significant errors in your thesis. You are using global commodity prices to make claims about US consumer prices and consumer inflation. We have comprehensive data from national food retail that shows strong price inflation. Your insistence in using global commodity prices to disprove consumer inflation concerns is incorrect.

No, I have used only US commodity prices, except crude and a global energy figure, which is why I also added US kwh prices. All food prices mentioned are US-only figures.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#33

Post by standardUser »

Inflation reduces the value of debt and an era of increased inflation stands to benefit a lot of households. Of course, it helps if wages go up alongside prices, and they have. But even without wage increases, the value of debt lost to inflation is likely worth more than the value of salary lost to inflation for many households.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#34

Post by ALittleLight »

wayoutthere wrote: post #18
seanmcdirmid wrote: post #17

Interest rates really should have went up a couple of years ago. Not just for the sake of stemming inflation, but what good is the tool of lower rates in bad times when they are already at bottom in good times? If something goes wrong (or more wrong) we will have no effective economic tools available because they are constantly running as if we are in crisis already.

Nobody wants to be the next Jimmy Carter who lets the fed raise interest rates to stem inflation because it invariably triggers a recession that gets said president and his party voted out of office. So rates will stay perpetually low.

It's very sad to consider young men dying for their country while old men are too afraid to risk four years off their political career for it.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#35

Post by acdha »

rsj_hn wrote: post #16
AlexandrB wrote: post #15

Earlier quoted context omitted.

> Aren't more products being bought than ever despite the supposed supply chain issue? If there is more stuff and still not enough then shouldn't we assume that there is too much money? This doesn't rule out a "demand spike following COVID" as mentioned by the parent. It's like a cartoon where someone (COVID) steps on the hose and a big bulge of water (demand + extra savings) forms. Now that bulge is working its way…

The snake swallowing an elephant theory of the price level would explain a one time increase in the price level, but not higher constant inflation, and certainly not an increasing rate of inflation.

Why not? It's not like there's a switch somewhere which instantly restored the entire global economy to 2019. Things like shipping or the semiconductor shortage have widespread impacts which are often not obvious if you aren't following a particular field enough to be aware of the dependency web and they can take months to resolve because that has to happen at each bottleneck and things like contractual agreements and labor shortages are not trivial to resolve.

That last part is a key one to remember: the pandemic isn't even close to over. Ignoring the people who are dead or suffering long-term health problems, there are a ton of people who either left the workforce for various reasons (childcare, health, etc.) or switched fields and/or locations. That directly increases costs to businesses which have to pay more in wages but it also will have ripple effects for years anywhere buyers are chasing a supply chain which is limited by worker shortages.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#36

Post by alphabettsy »

BitwiseFool wrote: post #19
argentinian wrote: post #10

Earlier quoted context omitted.

It's incredible. It's the same strategy that some politicians use in Argentina: they find any kind of thing to blame for inflation, except for monetary policy. Americans, please don't imitate Argentina, keep a healthy economy.

I know that if Red Team had won the election Blue Team would be running news stories every day about the dangers of inflation and how it is hurting the middle class. Instead, we are seeing pundits downplay inflation as either something 'transitory' or something beneficial: "Why the inflation we're seeing now is a good thing" -MSNBC tweet that got deleted. Edit: "Yes, inflation is back, and you should probably be reli…

I'm told that NYT, WaPost and others are all solidly Blue Team and yet they seem to be running stories about inflation and how much it's risen daily.

It's not a good thing in my opinion, but who's to say it's not transitory?

Re: US inflation jumps to 31-year high amid global supply chain crisis

#37

Post by lazide »

seanmcdirmid wrote: post #30
wayoutthere wrote: post #18

Earlier quoted context omitted.

Nobody wants to be the next Jimmy Carter who lets the fed raise interest rates to stem inflation because it invariably triggers a recession that gets said president and his party voted out of office. So rates will stay perpetually low.

Eh, we had high interest rates in the 90s and it worked out. Also, involving politicians is a huge mistake, the Fed needs to recapture its independence so it can make tough decisions. As for the rest, we as a society have become too petulant, expecting a forever boom and doing hardly anything to mellow out the boom bust cycle. And it’s not just the USA either.

If you never stop drinking, you never get a hangover?

If we get hyperinflation, maybe housing will be affordable again?

Tough time for retirees and folks who put money in the bank already (and not the stock market), but what else is new.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#38

Post by u320 »

simonsarris wrote: post #13

I've mentioned before [1] but these prices still don't seem that serious. Most prices have still not beat their highs made in 2008-2014 (crude oil, global energy price, eggs, milk, sugar, rice, chicken, pork chops). Ground beef is an outlier, however. And US price per kwh is back at its peak, though it declined in these October numbers to be below... 2014 numbers again. [2] So while the climb up is bad, the prices th…

I'm not sure where you are getting your numbers. Food prices are 30% above where they were in 2010 in the CPI for example.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#39

Post by eropple »

rsj_hn wrote: post #16
AlexandrB wrote: post #15

Earlier quoted context omitted.

> Aren't more products being bought than ever despite the supposed supply chain issue? If there is more stuff and still not enough then shouldn't we assume that there is too much money? This doesn't rule out a "demand spike following COVID" as mentioned by the parent. It's like a cartoon where someone (COVID) steps on the hose and a big bulge of water (demand + extra savings) forms. Now that bulge is working its way…

The snake swallowing an elephant theory of the price level would explain a one time increase in the price level, but not higher constant inflation, and certainly not an increasing rate of inflation.

To the best of my knowledge, it's unclear whether we're looking at "higher constant inflation" at all. And we probably won't know, except in hindsight and some years hence.

Re: US inflation jumps to 31-year high amid global supply chain crisis

#40

Post by kerng »

boringg wrote: post #27

Hey everyone - we need to chill out for a second. Stop buying the knee jerk reaction of the media trying to freak everyone out and get some good advertising dollars. This is going to take until after the new year maybe Q1-Q3 timeframe to see if it is transitory. Reminder: we had an unprecedented global supply collapse followed by shutdowns and border closures for more than a year combined with historic levels of fast…

You miss the key point on why this is happening and will continue to get significantly worse.

What happens when the number of dollars approximately doubles in 2 years as it happened?

Do you think prices stay the same and everything is just 50% off?

Reality is that the current number is off by reality quite a bit, real number has to be much higher. It's just math and the worst part... it can't be just reversed.

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