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US annual inflation declines to 7.7% in October vs. 7.9% expected

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Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#531

Post by zhte415 »

soared wrote: post #130
throw0101a wrote: post #118

Earlier quoted context omitted.

> If milk is $4/gallon today and still $4/gallon 12 mos. from now, that's 0% YoY inflation. Conversely, if there was a one-time jump in a particular item, it will take a year before it gets 'removed' from the inflation numbers. Extremely contrived example: if gas/petrol was $1/L in December 2021 (and generally in all of 2021), but $1.20/L in January 2022, then there will be a 20% YoY jump in inflation for the January…

It’s not really skewing anything though, since the price is 20% yoy?

It isn't, yet it is.

The price is still 20% you, and still 0% mom. If reported as inflation still at 20%, does that affect perceptions of inflation, and if so, expectations of inflation? Because expectations of inflation often turn out to be self fulfilling drivers of inflation.

Reported as inflation stable even if it is 20%? Better? Not that 0% is a great target, but that's a separate issue.

Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#532

Post by shostack »

carom wrote: post #355
pmoriarty wrote: post #47

I was just reading "Ray Dalio on the Downturn: 'There's a Lot More to Come'" [1], which said: Inflation in the United States has risen 8.2 percent in the past 12 months. While the Federal Reserve’s long-term inflation target is 2 percent, Dalio predicted that the central bank will go for a more realistic target of around 4.5 to 5 percent. Based on those numbers, he believes the real interest rate could land in betwee…

Ray Dalio has been calling for a massive unwinding for a long time. It has gotten really tiresome.

The way he writes I can't help but think he has a large position that hinges on the US falling as a world power and the dollar losing reserve currency status.

Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#533

Post by dchornyi »

jklinger410 wrote: post #180
nivenkos wrote: post #26

The US has it easy, since the inflation was largely caused by lockdown stimulus, and also benefits from being the global reserve currency so it can leverage cheap imports as the interest rate rises increase the value of USD. I wouldn't be surprised if it's better in a few months, especially with the growing protectionism in the anti-inflation act, etc. and acts against Chinese competition, etc. keeping more industry…

> since the inflation was largely caused by lockdown stimulus This is a widely disproved myth.

Check this out: https://www.federalreserve.gov/econres/notes/feds-notes/exce...

Stimulus checks contributed $844 billion to the $1.7 trillion of excess savings we still had by mid-2022.

> We estimate that households in the lower half of the income distribution were still holding about $350 billion in excess savings as of mid-2022—mostly stemming from the boost to income induced by fiscal stimulus in 2020 and 2021.

Personal consumption expenditure went up especially for the bottom income quartile, driven by stimulus. As soon as the bottom of the income distribution had extra money, they drove up the prices of things that are in the CPI.

In contrast, when the top of the income distribution has excess savings, they drive the prices of Tesla stock, NFTs, and real estate. Since they are not in the CPI, nobody cared and money printing could continue. This is what we had in 2010–2020. Direct money transfers to the poor were the thing that broke the system.

Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#534

Post by lupire »

Dylan16807 wrote: post #447
dcow wrote: post #435

Earlier quoted context omitted.

Misleading implies the data has some agency. Data cannot be misleading. People can make whatever conclusions they want based on data at hand and it’s just bad analysis if it’s wrong. The data didn't mislead them.

That data was picked by someone out of all the data in the world. That's where the agency is.

A Federal agency: BLS.

Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#535

Post by lupire »

fleddr wrote: post #483
matwood wrote: post #80

Earlier quoted context omitted.

And to add to your explanation, because inflation jumped so quickly and then slowed we'll eventually hit a YoY number that plummets. If milk is $4/gallon today and still $4/gallon 12 mos. from now, that's 0% YoY inflation. This will inevitably lead to people saying the numbers are fake because milk used to be $2/gallon.

Honestly, I'm with those people. Your explanation is fully technically correct, but the subsequent messaging that inflation is zero is a matter of not reading the room. When an important item dramatically rises in price, this can have a massive impact on people. A dramatic drop in purchasing power or even businesses needing to close. It is impactful . When the price continues to be high, the impact remains. The pain…

That's a different issue. "High prices" are a problem, but that's not what "inflation" measures. There is no way to report inflation (derivative of prices) that correctly reports "price/wage ratio", which is what people really care about.

Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#536

Post by lupire »

smileysteve wrote: post #388
Green_man wrote: post #336

Earlier quoted context omitted.

I may be missing something, but if there is no competitive pressure/monopolistic market, why would these businesses need the excuse of inflation/cost increases to increase their prices? Wouldn't we expect prices to have gone up before inflation? Or is this a specific criticism of a regulatory blind spot for reigning in market power? Monopolies can get away with price increases now, but they wouldn't normally?

What is "before inflation"? Deflation is bad it means you should keep your dollars instead of investing them.

Do you buy less food when interest rates on your investments are higher?

Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#537

Post by lupire »

rzimmerman wrote: post #200
lunaru wrote: post #31

It bears repeating because this is a common mistake in inflation discussions: a decrease in inflation metrics means price increases are slowing down, it doesn’t mean that prices are going down （that would require a negative CPI print). Also, this number is year over year, so the decrease just means the price increases between Oct 21 and Oct 22 are not as steep as between Sept 21 to Sept 22, which is not hard to achie…

Yes the YoY number is useful for getting rid of seasonal variations. The monthly CPI is also noisy. But when there’s a big spike over a few months (like we had 8-16 months ago) YoY won’t go down meaningfully for at least a year. This is actually great (if noisy) news. 2 months of 0.4% CPI increase is equivalent to 5% yearly inflation. But the YoY is still high because it was much worse 8-12 months ago. I hadn’t even…

The seasonality aspect is a distraction when inflation is so volatile due to all the pandemic craziness.

Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#538

Post by concordDance »

dlp211 wrote: post #504
concordDance wrote: post #347

Earlier quoted context omitted.

You thinking inflated away or a default? Because those who have bought treasury bills are expecting that money in a few years.

THere is nothing that says that we ever have to pay off the debt. Debt can, and has continued to accrue to this nation since its founding. It is middle school thinking that debt incurred today must be "paid by our children". It's just not at all how the national debt works...like at all.

So when bond holders come by wanting their money do you not give it to them (defaulting) or do you just issue more (inflating)? Because those are your two options.

Note also that investors eventually get wise to inflation and start putting their money in gold or somesuch.

Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#539

Post by randomdata »

alooPotato wrote: post #475
lunaru wrote: post #31

It bears repeating because this is a common mistake in inflation discussions: a decrease in inflation metrics means price increases are slowing down, it doesn’t mean that prices are going down （that would require a negative CPI print). Also, this number is year over year, so the decrease just means the price increases between Oct 21 and Oct 22 are not as steep as between Sept 21 to Sept 22, which is not hard to achie…

Anyone else feel like this is such a dumb way for the general public to track inflation. Like, a simple line chart with the X axis being time and the Y axis being the price of a basket of goods would be so much clearer

Is inflation (meaning CPI figures) meant for the general public? It's a useful economic tool, but not very relevant to the average Joe. I would think expansion of cost of living is what the general public is interested in, and for that they have to track their spending, and can do so in any way they see fit.

Re: US annual inflation declines to 7.7% in October vs. 7.9% expected

#540

Post by thrownaway561 »

What's sad is that prices will never be where they were ever. I keep getting slammed by family members telling me to "make sure you vote" cause they feel that it's all a single party's fault that we are in this mess and only the other party can fix it, when sadly, it's the world we live in now. Houses will always be insanely priced now and making 100K is like make 50K.
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