Hacker News Board Hacker News, browsed like a classic message board
Live data from Hacker News

US Consumer Price Index up 4.2%

bls.gov

Post reply on HN
Print view View original

191–200 of 316 posts

Re: US Consumer Price Index up 4.2%

#191

Post by nonethewiser »

khriss wrote: post #186

The worst part is that the 4.2% number is a floor on the actual inflation numbers. The US CPI has been lagging retail inflation for quite some time now (see 'hedonic regressions' by the BLS).

Yeah it's been gamed for a long time. Did you know teh inflation metric can actually go down when staples it tracks goes up?

Yup.

If steak is tracked and it doubles in price, they can adjust the basket weights to reflect what they assume consumers will do: buy less beef and more chicken instead. So if Q1 steak=10 and Q2 steak=20 they might change the weights so that it's essential comparing Q1 steak to Q2 chicken. Which may be cheaper than Q1 steak, thus reducing inflation despite steak doubling in price.

Re: US Consumer Price Index up 4.2%

#192

Post by grassfedgeek »

paulddraper wrote: post #27
bluGill wrote: post #7

Remember this next time you get your yearly review/raise. 4.2% is what you need to stay even, anything less is a pay cut.

Also, any asset that isn’t appreciating at least 4.2% is losing value. Ah…inflation.

The solution is Treasury Inflation Protected Securities (TIPS). You do have to pay taxes on the inflation adjustment (OID income). As long as the interest (after taxes) is higher than taxes on inflation adjustment you're good.

Re: US Consumer Price Index up 4.2%

#193

Post by jrflo »

infecto wrote: post #129
compumike wrote: post #21

Here are some N-year rolling total inflation charts to put this datapoint in a longer-term perspective: https://totalrealreturns.com/inflation . Zooming out always smooths the noise.

Zooming out in what sense? Those rolling charts don’t mean much imo. Year over year change is a pretty good perspective and a tick up like this is not great.

Zooming out tells you this tick up to 4.2% is not nearly as bad as the post-covid inflation, and drastically better than the 70s. Not a good sign, but also not too far outside the historical mean and probably no need to panic in and of itself.

Re: US Consumer Price Index up 4.2%

#194

Post by fluoridation »

jr3592 wrote: post #185
dw_arthur wrote: post #93

Paradoxically, inflation has contributed to me taking a sabbatical. While I live in a LCOL area and made ~140k/year it just no longer felt worth it to work as I saw my retirement accounts start to match and exceed my salary in yearly gains. I do plan on going back to work in a part time manner, but inflation has killed any reason for me to work hard at a job for that level of salary. Furthermore, the feeling of "what…

This actually makes 0 sense. Like, do you even understand what you're saying? The value of your savings is decreasing at a faster rate than ever before, so its a good time to stop saving and spend it? The stock market increasing is not the same thing as inflation. What you're saying makes sense only if you are referring to stock market valuation... strictly retiring because inflation is high makes no sense.

>The value of your savings is decreasing at a faster rate than ever before, so its a good time to stop saving and spend it?

Inflation does incentivize spending, yes. Would you rather have 100 kilos of rice today, or wait and have 99 kilos of rice tomorrow for the same price?

Re: US Consumer Price Index up 4.2%

#195

Post by foobarian »

mrtksn wrote: post #35
bluGill wrote: post #7

Remember this next time you get your yearly review/raise. 4.2% is what you need to stay even, anything less is a pay cut.

It means you already had the paycut, you need to have at least %4.2 rise + reimbursement to make even. In high inflation countries you often get a revision every 2-3 months and you get a rise that is higher than the official inflation, as a result this solidifies the inflation and boosts the economy as everyone immediately buys whatever they can before it becomes more expensive. It's a vicious cycle.

Reminds me of stories from ex-Yu during high inflation periods (e.g. yearly doubling; not counting periods when there were runaway spikes of almost daily doubling) when people would go to remote areas where shops didn't yet get the updated prices from headquarters and basically walked away with a bunch of near free stuff.

Re: US Consumer Price Index up 4.2%

#196

Post by mrtksn »

NewJazz wrote: post #179
mrtksn wrote: post #35

Earlier quoted context omitted.

It means you already had the paycut, you need to have at least %4.2 rise + reimbursement to make even. In high inflation countries you often get a revision every 2-3 months and you get a rise that is higher than the official inflation, as a result this solidifies the inflation and boosts the economy as everyone immediately buys whatever they can before it becomes more expensive. It's a vicious cycle.

You and your employer should consider future expected inflation at the time of negotiation. You don't need a true up in that case to "break even!.

IRL most of the time there's no negotiation, you find out your updated salary when the money hits the bank.

Re: US Consumer Price Index up 4.2%

#198

Post by NewJazz »

mrtksn wrote: post #196
NewJazz wrote: post #179

Earlier quoted context omitted.

You and your employer should consider future expected inflation at the time of negotiation. You don't need a true up in that case to "break even!.

IRL most of the time there's no negotiation, you find out your updated salary when the money hits the bank.

At initial employment there is salary negotiation. Each COLA then automatically inherits whatever assumptions were baked into the starting number.

Re: US Consumer Price Index up 4.2%

#199

Post by somenameforme »

HDThoreaun wrote: post #113
tastyfreeze wrote: post #107

Earlier quoted context omitted.

The FED says that 2% is good. 2% is not good. Their target of 2% per year means we have 2% compounding annually devaluation of our currency.

Why is that not good? When inflation is close to 0 real interest rates increase which causes the economy to slow down. It seems clear to me that the optimal rate of inflation is always above 0.

The Fed did a study some time back estimating CPI levels since 1800. [1] They found that from 1800 to 1950 the CPI never shifted more than 25 points from the starting base of 51, so it always stayed within +/- ~50% of that baseline. That's through the Civil War, both World Wars, Spanish Flu, and much more. And obviously the US economy increased in sized quite exponentially from 1800 to 1950, with no persistent inflation whatsoever.

It's even more interesting to contrast this from 1971 onward. 1971 is when Bretton Woods ended and the government was given a free hand to start 'printing money' so to speak, and inflation became the new policy. Since then the CPI has increased by more than 800 points, 1600% more than our baseline. And it's only increasing faster now - to the point that these numbers I'm giving are already rather outdated.

[1] - https://www.minneapolisfed.org/about-us/monetary-policy/infl...

Re: US Consumer Price Index up 4.2%

#200

Post by aidenn0 »

DennisP wrote: post #130
tastyfreeze wrote: post #107

Earlier quoted context omitted.

The FED says that 2% is good. 2% is not good. Their target of 2% per year means we have 2% compounding annually devaluation of our currency.

It's fine as long as t-bill rates match or exceed inflation. Then you can avoid losing purchasing power by just putting your money in the world's safest investment. Over the past century, t-bill returns have slightly exceeded inflation on average, though there have been periods when they didn't. Stash paper cash in your safe and sure, you lose purchasing power. Use fiat money the way it's designed to be used, instead…

Us debt as a fraction of GDP has doubled this century and roughly quadrupled in my lifetime. It would seem to me that eventually t-bills will not be safe.
Post reply on HN