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US Consumer Price Index up 4.2%

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Re: US Consumer Price Index up 4.2%

#221

Post by fluoridation »

autoexec wrote: post #124
arjie wrote: post #85

Earlier quoted context omitted.

Is this of any significance? I would imagine most people are like me: we shop based on quality and price and where we want something on that curve. Whether someone raises the price on me “because of inflation” or “because we want to make more money” is indistinguishable. A rationale for the price rarely affects my choice. If I don’t want to buy something for a price, explaining that the guy won’t be able to survive w…

> A rationale for the price rarely affects my choice. This would make you the exception. Companies are constantly increasing prices to see how much they can charge consumers before they feel cheated and stop buying and/or enough customers get priced out to hurt profits. Consumers tend to feel ripped off if they think a price increase was due to greed but are way more forgiving if they think the price increase was nee…

You're treating what the consumer believes and what is the case as if they were synonymous. How able is a consumer on the street to judge whether a price increase is legitimate or arbitrary? "Feeling ripped off" sounds more like a post hoc rationalization that's applied when a price is pushed just past the threshold.

Re: US Consumer Price Index up 4.2%

#222

Post by jfengel »

nonethewiser wrote: post #191
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. Wh…

That doesn't strike me as a problem. It models what consumers actually do. The consumers are still being fed and they're suffering only a minor loss in their preference.

They don't keep any kind of hedonic measure, which might be interesting. If a consumer would rather have steak, but switches to chicken when it's over $10/pound, and then switches to tofu when chicken hits $10/pound, they're considerably less happy even if they're reasonably well fed.

You could probably use that to calculate some kind of hedonic metric: "I was originally willing to pay only $1/lb for tofu because it brought me 20% of the pleasure that a $5 steak would have." But you're not 80% less happy overall, since food is only part of your total happiness, so you'd need a "basket" of happiness.

Re: US Consumer Price Index up 4.2%

#223

Post by [deleted] »

bluecalm wrote: post #176
Salgat wrote: post #153

Earlier quoted context omitted.

You're still cutting your annual income in half though. That's pretty big no?

The thing is at some point there is very little to gain. Once you have a nice place to live and don't need to sweat over daily expenses there isn't much that significantly improves life quality other than just having more time (that is working less) for yourself and your family. Add high taxes to this and working is even less attractive when they take 50% from you. No wonder many highly qualified people decide to pas…

[deleted]

Re: US Consumer Price Index up 4.2%

#224

Post by wat10000 »

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.

Stock market returns will tend to exceed inflation. Salary may not. It's quite possible for inflation to make your salary shrink in real terms, making it no longer worth working if you can afford to retire.

Re: US Consumer Price Index up 4.2%

#225

Post by mrtksn »

foobarian wrote: post #195
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.

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.

Small independent shops are often having trouble with keeping up with the prices, so checking out those shops sometimes yields great deals.

Re: US Consumer Price Index up 4.2%

#226

Post by twoodfin »

sokoloff wrote: post #90
twoodfin wrote: post #72

Earlier quoted context omitted.

What advantages does that have over taking your paycheck 100% in cash and investing in index funds?

In most cases, you are granted a notional dollar amount that is immediately turned into a concrete and fixed number of shares that then vest over the next 4 years. Then, any share price appreciation on the shares is captured by you at vesting, rather than being paid in cash (the value of which has been inflated away) and then purchasing shares/index that has risen in the last 1-4 years. If you are paid in cash, you w…

Right, but cash compensation could be structured the same way, minus whatever would be settled on for the retention value to the employer of the vesting schedule.

I get your point. The value of stock isn’t that it’s stock per se, but rather that it’s inflation-resistant even when illiquid.

Re: US Consumer Price Index up 4.2%

#227

Post by wahnfrieden »

gf263 wrote: post #33
jschveibinz wrote: post #28

Earlier quoted context omitted.

For your interpretation: All items: +0.5% monthly; +4.2% year-over-year. Energy: +3.9% monthly; +23.5% year-over-year. Gasoline: +7.0% monthly; +40.5% year-over-year. Fuel oil: +58.9% year-over-year. Electricity: +0.6% monthly; +5.9% year-over-year. Utility natural gas: -0.5% monthly; +3.0% year-over-year. Food overall: +0.2% monthly; +3.1% year-over-year. Food at home / groceries: +0.1% monthly. Food away from home…

At least raw milk is getting cheaper

Raw milk is hazardous

Re: US Consumer Price Index up 4.2%

#228

Post by Bilal_io »

SirMaster wrote: post #219
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.

This never made sense to me. Doesn't this assume you are spending ALL your income though? If I make 100K and get a 3% increase, that's $3000 more. But if I only spend 30K to live, and my living expenses go up 5%, that's only a $1500 increase to my living expenses while I earned $3000 more that year. So how is that a pay cut if I actually have even more money left over that basically just goes into my investment accou…

It's about the worth of what I am receiving from my employer and nothing to do with spending it.

If John makes $100k and lives on $10k, then cost of living increases by 100%. I believe John should be paid $200k, and according to you his salary should go to $110k.

Re: US Consumer Price Index up 4.2%

#229

Post by jr3592 »

fluoridation wrote: post #194
jr3592 wrote: post #185

Earlier quoted context omitted.

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?

> Inflation does incentivize spending, yes.

All inflation incentivizes is finding an asset class that isn't devaluing. If that is what you mean by "spending" then we align. But does inflation incentivize spending money on depreciating assets? Only for fools.

Re: US Consumer Price Index up 4.2%

#230

Post by casey2 »

bachmeier wrote: post #213
jr3592 wrote: post #185

Earlier quoted context omitted.

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.

> This actually makes 0 sense. Like, do you even understand what you're saying? It makes perfect sense if the decision to work is based on real, after-tax income. Change the comment to say "the tax rate keeps climbing so I quit working" and it would not occur to anyone to challenge it. Once you have enough saved to generate income covering the very basics (probably somewhere around $30k/year in a LCOL area in the US)…

If you don't understand second-order effect that is. What happens when everyone stops working, either QoL falls or prices rise. Labor force rate is at 83.8% for prime age workers. (Most of the QoL add comes from immigrant labor while most of the QoL extraction comes from high tech. So this does complicate the math) The govenment then lacking revenue extracts more from prime age workers and raises the retirement age and early withdrawal penalties.
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