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Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

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Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#321

Post by Majromax »

TeMPOraL wrote: post #269
woodruffw wrote: post #39

Earlier quoted context omitted.

> Remember in 1963 only the man was working, and typically supported 4 kids, a wife and often parents in the home. This is a ridiculous exaggeration: the average US household was 3.7 people in the 1960s, not over 6[1]. There are good reasons to hold politicians to task for recent abnormally high inflation. But this comment is more of an atavistic fever dream of the past than an expression of those reasons. Edit: anot…

That's missing forest for the trees. The more important part is that average 3.7 people household was a single-income one . I would rather disagree with GP's: > My point is that inflation isn’t abstract and it isn’t a law of nature. It’s a deliberate approach to stealing your prosperity while you cheer it on. A lot of the inflation, including how suddenly a single-income household isn't a viable option for most peopl…

> That's missing forest for the trees. The more important part is that average 3.7 people household was a single-income one.

That's not necessarily true. Per FRED (https://fred.stlouisfed.org/series/LRAC25FEUSM156S), in 1963 about 44% of women aged 25-55 were in the workforce. That's obviously much lower than the ≈96% rate for men, but it implies that the average couple had closer to 1.4 incomes. The comparable rate based on today's labour force participation rates would be about 1.66 incomes.

The single-income family may have been the norm, but it was far from a rule. I think that our popular perception of life in the 60s has been filtered through media portrayals, which all tend to reinforce ideals as commonplace norms.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#322

Post by Majromax »

Amorymeltzer wrote: post #320
tonymet wrote: post #16

I recommend people use many different indicators to get a mental model of inflation, and you will notice that CPI does not represent inflation well. The memes of Arby’s 5 for $5 becoming 4 for $10 are more informative than the CPI numbers. Don’t let the shock at the grocery store wear off – it’s real and painful despite what the news tells you. True inflation would measure the amount of prosperity achieved per hour w…

>Remember in 1963 only the man was working Others have pointed out the flaws in the rest of this, but the labor force participation rate of Women[1] was around 33% in 1950, 38% in 1963, and 60% in 2000; it's 57% now. That's a huge change, but 1963 is a far cry from 0%. See also men[2]. As noted elsewhere, this ignores race. Compare white women under 20 https://fred.stlouisfed.org/series/LNS11300029 > to black women u…

Also look at the prime-age participation rates (https://fred.stlouisfed.org/graph/?g=1k7Vy), which help control for demographic changes over the decades. The 1963 prime-age LFPRs were 44/99% for women/men respectively, and today those figures are 77/89%.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#323

Post by ethanbond »

tonymet wrote: post #16

I recommend people use many different indicators to get a mental model of inflation, and you will notice that CPI does not represent inflation well. The memes of Arby’s 5 for $5 becoming 4 for $10 are more informative than the CPI numbers. Don’t let the shock at the grocery store wear off – it’s real and painful despite what the news tells you. True inflation would measure the amount of prosperity achieved per hour w…

This is easy: how much did an acre of land in Palo Alto cost then, and how much does it cost now? Why? Why does the price of land “need” to go up? It pays no wages, no rent, no suppliers, no anything. It’s just there being land, no matter what price it is. So why has its price gone up and who benefits from that?

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#324

Post by wakawaka28 »

Dylan16807 wrote: post #276
ein0p wrote: post #273

Earlier quoted context omitted.

Yeah, bro, very funny that the money I worked so hard to earn now buys 30% less in just 3 years. Absolutely hilarious.

I think I misread something before I made that comment. Ignore the laughter. But even with that mistake, I don't know why you think I was calling inflation itself funny. - Though, you say the "money you worked so hard to earn"... I could interpret that as either wages or savings. If it means your wages buy 30% less, and inflation is 30%, then your nominal income hasn't increased. If so, something has gone very wrong,…

>If it means your wages buy 30% less, and inflation is 30%, then your nominal income hasn't increased. If so, something has gone very wrong, and it sounds like your employer is screwing you over.

Employers use the fake numbers to determine adjustments. It's not like they are necessarily screwing you over if they don't give you a 30% raise due to inflation either lol. They have to come up with extra cash because of inflation too.

>But if you had a meaningful amount of savings, were none of the savings in stocks? Stocks have gone up tremendously since the peak in early 2020.

That's not a profit dude. It's the simple phenomenon of everything costing more. Since most businesses are hurt by inflation, stocks do not keep up with rapid inflation.

>And if you had a mortgage, it would have effectively shrunk by whatever amount your nominal income increased.

It is true that inflation makes debts easier to pay, up to a point. But that means the lender gets screwed. It is a dysfunctional situation.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#325

Post by ethanbond »

bjornsing wrote: post #281
tonymet wrote: post #16

I recommend people use many different indicators to get a mental model of inflation, and you will notice that CPI does not represent inflation well. The memes of Arby’s 5 for $5 becoming 4 for $10 are more informative than the CPI numbers. Don’t let the shock at the grocery store wear off – it’s real and painful despite what the news tells you. True inflation would measure the amount of prosperity achieved per hour w…

> Today you have 2 people working 100 hours a week to support 1-2 additional people , while living in an apartment and living in a run down and crime infested neighborhood. Is that really true, or is it more a feeling many Americans have? As a Swede it’s a bit hard to relate to.

Crime is much much lower than it was decades ago almost everywhere in the US.

Also “run down” in reference to cities is just not true outside of a few failed areas like Detroit. NYC today is dramatically nicer than it was decades ago.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#326

Post by ethanbond »

seanmcdirmid wrote: post #261
thfuran wrote: post #246

Earlier quoted context omitted.

>In a sense, FAANG salaries aren't especially high by historical standards You can't be serious. >$135k in 1980, my dad made more than that contracting in building nuclear plants That's over six times the median household income in 1980. $135k today would still be nearly twice the median household income.

It wasn't that much back then, especially when the industry was feast or famine (and it did implode in 1986 or so). But really, my only point was "a guy who had an associates degree from a CC could earn that much." My buying power is essentially worse than my dad's, although I put in a lot more time in school for it, and supposedly made the right career choice, things just suck these days and techies are keeping thei…

It’s the land price. Gets baked into every single good and service and goes up in lockstep with productivity gains.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#327

Post by wakawaka28 »

Dylan16807 wrote: post #274
wakawaka28 wrote: post #238

Earlier quoted context omitted.

It's not funny dude, that is a serious problem. I have parents on Social Security and I have to pay for their budgetary shortfall. Social Security in particular is supposed to be adjusted for inflation, which is one of the reasons the numbers are deliberately wrong. >But seriously, there is a huge difference between "I think this metric is off by 3x or more" and "I think this metric is off by 1.4x" I think annual inf…

> I think annual inflation is actually 10% right now and probably got up to 20% during the pandemic. Then you're talking about a completely different situation than ein0p. You shouldn't have replied to me about it. But I do think I misread your comment earlier, or something. Ignore the ha ha. Is there any chance you edited it right away, or did I just utterly fail to read?

> Then you're talking about a completely different situation than ein0p. You shouldn't have replied to me about it.

I was respinding to the 1.4x vs 3x error thing.

I didn't edit the comment (I think). I'm not actually offended by the haha. I just think people may lose touch with the fact that these stats aren't just fun and games, and that some people get seriously screwed by inflation. If you thought houses were expensive before, that's probably just the beginning.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#328

Post by fvvybfbfbyg »

tossandthrow wrote: post #297
rayiner wrote: post #283

Earlier quoted context omitted.

> True fiscal conservatism would be all about social safety nets and free education to grow the economy Which is why Italy and France have such strong economies, right? What’s really standing in the way of economic growth is that the government isn’t paying for people to get free degrees in left wing studies.

or the Scandinavian countries that generally have higher spending power than the us. remember not to conflate a strong economy with an economy that is worth living in. you can possess minimum paid jobs in order to make profits for shareholders and never see a dime of that wealth yourself, but alas, you live in a strong economy.

> or the Scandinavian countries that generally have higher spending power than the us.

Do they? PPP they all have lower disposable income than the US and they are not even at the top in Europe (including social transfers). Germany, Switzerland, Austria and the Netherlands are above Norway and Sweden is even lower than France.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#329

Post by kasey_junk »

wakawaka28 wrote: post #221
randomdata wrote: post #41

Earlier quoted context omitted.

> In other words you had 1 man working 50 hours a week afford a house... With inflation, we want to know about the change in value of the dollar only . We don't want to factor in the change in value of houses, food, etc. There is a place for understanding that too, but inflation is not it. Something like a cost of living index is more suitable to that kind of information. On that note, houses are unquestionably more…

>On that note, houses are unquestionably more valuable today. For one, they are twice the size they were 60 years ago. We can all agree that a bigger house has more value than a small house, at least within reason. You can fit more in it, it is more comfortable, etc. and that is valuable. They are also a lot safer. That too is more valuable. Keep in mind, demand was higher with the baby boom than it is today. Houses…

That is mostly survivor bias and cost of materials difference. We’ve used up most of the stores of large timber causing the price of it to go way up. At the same time the price of construction grade metal has come way down. Thus large beam construction has become a luxury.

As for housing quality, post war tract homes were wildly worse. My wifes family still owns the tract home they lived in growing up. It was exposed concrete, exposed roof and no ductwork until a HUD funded remodel in the 70s. It’s also 750 sq feet. A modern double wide trailer is higher quality.

Re: Summers: Inflation Reached 18% in 2022 Using the Government's Previous Formula

#330

Post by stormfather »

vineyardmike wrote: post #177
randomdata wrote: post #41

Earlier quoted context omitted.

> In other words you had 1 man working 50 hours a week afford a house... With inflation, we want to know about the change in value of the dollar only . We don't want to factor in the change in value of houses, food, etc. There is a place for understanding that too, but inflation is not it. Something like a cost of living index is more suitable to that kind of information. On that note, houses are unquestionably more…

> houses are unquestionably more valuable today… They also have better insulation and construction, they’re all wired for electricity and plumbing, they all have advanced HVAC. Fancier kitchens with more plumbing, appliances and nicer materials. People have access to more furniture and fixtures and appliances to fill more home - no one needed laundry rooms before a washer/drier was invented. Few had garages. Don’t le…

Show me a company that can sell a less advanced 1960s style house for the average worker's median income and I'll show you the next 100-billion dollar company.
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