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US annual inflation declines to 7.1% in November vs. 7.3% expected

bls.gov

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Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#131

Post by tnel77 »

gumby wrote: post #73
geye1234 wrote: post #37

Earlier quoted context omitted.

Perhaps for businesses this may be true. It's hard to imagine for a consumer. I'm not going to delay the purchase of groceries, a fridge, a new roof or (if I'm feeling rich) a new car just because they may be 3% cheaper next year. I'm not saying this conventional wisdom is wrong, but it's not obviously right.

Actually, consumers very much do delay purchases, especially of big ticket items like white goods, cars, and houses in deflationary regimes, just as in periods of hyperinflation they do the opposite. This is easy to look up as there are many examples through history (especially of the latter — Brazil is an excellent and frightening example). Groceries, sure, but then as a consumer you are still impacted because suppl…

It’s not the same situation, but most video games I will wait a year or two to purchase. $70 day one, or $20 on Black Friday a year from now with all the DLC included?

Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#132

Post by neuronexmachina »

josephcsible wrote: post #4

Remember that "declines" in this context just means that prices are going up slightly slower than they were before. It doesn't mean anything's getting any cheaper.

Quite a bit slower in this case:

> The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.1 percent in November on a seasonally adjusted basis, after increasing 0.4 percent in October, the U.S. Bureau of Labor Statistics reported today.

Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#133

Post by neuronexmachina »

cheaprentalyeti wrote: post #3

I suspect some of this is because the level of economic activity is dropping.

That would make sense, but the Atlanta Fed's GDPNow estimate for Q4 is still surprisingly high: https://www.atlantafed.org/cqer/research/gdpnow

> The GDPNow model estimate for real GDP growth (seasonally adjusted annual rate) in the fourth quarter of 2022 is 3.2 percent on December 9, down from 3.4 percent on December 6.

Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#134

Post by A4ET8a8uTh0 »

eberkund wrote: post #52
sprash wrote: post #28

Earlier quoted context omitted.

Why would that be bad?

It may not be bad, economics involves a lot of unfounded speculation IMO. It's true that deflation would encourage delaying certain types of spending but that is already the case with electronics and some other types of goods. But that has not led to the downfall of society. A deflationary economy would be a drastic change from the system we operate under now but I don't think it would be all bad. Maybe in a deflatio…

I think I agree. A lot of it is models that don't predict things ( but that is waved away by saying those are not complex enough to reflect real life ), psychology and opinions.

Personally, long term I am perfectly willing to accept that deflation is a bad thing for society, but at this time? We should welcome deflation with open arms. Things are way out of whack already and decent price correction is needed for just about everything.

Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#135

Post by neuronexmachina »

electrondood wrote: post #58
mikewarot wrote: post #35

Reminder: Inflation is a vector, not a scalar. Ignore the abstraction at your own risk. Inflation is the rise in price of every single item for sale across a market, not just the "basket" of goods selected to be a good example, and subject to adjustment and correction over time. It is entirely possible that inflation that averages out to 10% for a year may double the cost of living for some people, and actually make…

Elaborate? The difference is direction. Are you just warning about deflation?

As an example, look at table A in the bls.gov release. Each column is a roughly 20-dimensional vector, with both positive and negative components. Positive components (those which had price increases in the past month) include food and shelter, while negative components include energy/gasoline, used cars, and medical care.

Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#136

Post by Izkata »

lamontcg wrote: post #122
runako wrote: post #27

Earlier quoted context omitted.

Similarly, I find myself laughing when people describe this as a high-rate environment. Or when they blame the relatively brief Covid ZIRP for wide ills. The ZIRP of the 2010s is still confusing people.

There are 35 year olds now that were only just graduating college in 2009 (I'd argue before then most people are largely oblivious to economics) and don't know anything other than ZIRP plus the pandemic.

Unrelated to this exactly, but on perception: There was some sort of tax break that was going to be repealed around 2014 or 2015 that had been in place for around 10 years, and I got into a conversation with someone who didn't understand why so many were against it. Honestly I thought it was pretty obvious: Roughly school to retirement is 40-50 years, so for around 20-25% of the workforce that repeal wasn't a return to normal, it was a straight tax increase. They were actually surprised and had never considered that viewpoint before.

Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#137

Post by nostrademons »

bryanlarsen wrote: post #109
nostrademons wrote: post #59

Earlier quoted context omitted.

The MoM numbers are important, but the breakdown is also important. The breakdown is worrisome - MoM declines were almost entirely driven by gas and other oil-related commodities, and we're still seeing very significant inflation in food (0.5% MoM) and shelter (0.6% MoM). Food and energy are transient (prices can go down as easily as they go up), but shelter and wages are sticky (they very rarely go down, and usually…

Shelter and wages are lagging indicators -- they go up months after the impetus for their increase. Oil prices doubled between 1975 and 1980 so it was still contributing.

That's the problem - aside from only being sampled every 6 months, shelter reflects what people are actually paying, which includes a large number of people who haven't renewed their rents or who paid a lot less for their home and have no idea what it'd rent for now. As these people renew their leases or seek new housing, they're going to have to pay market rents, which in many cases have gone up a lot more than the measured CPI component. That bakes in a large future increase in the CPI, simply from price increases that have already happened.

Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#138

Post by r00fus »

Wowfunhappy wrote: post #7
josephcsible wrote: post #4

Remember that "declines" in this context just means that prices are going up slightly slower than they were before. It doesn't mean anything's getting any cheaper.

Yes, if things were actually getting cheaper that would be "deflation" and it would probably be bad.

Reversion of price levels to standard increase slope is actually termed dis-inflation.

https://www.investopedia.com/ask/answers/032415/what-differe...

Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#139

Post by DontchaKnowit »

zppln wrote: post #41
runako wrote: post #24

Earlier quoted context omitted.

If the expectation is that everything will be cheaper next month than this month, that creates an incentive for everyone (and every business) to delay purchases as long as possible (because they will save money buying in the future). When everyone slows spending at once, it can lead to severe a recession or depression.

I'm not sure I buy (heh) into this. I usually buy things because I need them, or want them in the moment. I'm not gonna postpone buying a washing machine because it might be cheaper next month. I'm not gonna pass on getting wasted because drinks are cheaper next month. I'm not gonna starve myself because food might be cheaper next week.

Yeah but this is small potatoes. Imagine you're managing a $300 million family fortune. If your money is going to be worth more next month, why invest now?

Also think about how tricky itd be to manage a business. Your supply is getting less expensive in $ terms monthly, but also the value of your goods in the market is going down each month. Weird situation.

Re: US annual inflation declines to 7.1% in November vs. 7.3% expected

#140

Post by alexanderchr »

mdemare wrote: post #56
mikewarot wrote: post #35

Reminder: Inflation is a vector, not a scalar. Ignore the abstraction at your own risk. Inflation is the rise in price of every single item for sale across a market, not just the "basket" of goods selected to be a good example, and subject to adjustment and correction over time. It is entirely possible that inflation that averages out to 10% for a year may double the cost of living for some people, and actually make…

Please explain.

It’s another way of saying that inflation has many components and that the reported number is just a mean of those, with the additional benefit that it makes you look smart.
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