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US Consumer Price Index up 4.2%

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Re: US Consumer Price Index up 4.2%

#291

Post by recursivecaveat »

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…

The dollars going into your account are worth less than before. The ultimate destiny of all money is to be spent on goods/services eventually, and the amount of goods/services your salary can purchase is net (5-3)% less than the year before. Invested, spent, willed, donated, it doesn't matter, the money is already worth 2% less when it enters your hands. (Worth noting that CoL increase is not exactly equal to inflation, you could experience a local CoL increase without inflation if say your town becomes a popular destination which raises rents)

Re: US Consumer Price Index up 4.2%

#292

Post by recursivecaveat »

embedding-shape wrote: post #95
hadlock wrote: post #82

Earlier quoted context omitted.

2% is good, anything over 3% is not good, anything over 4% is bad, 5% and higher is really bad. Hope that clears things up for you.

Can you really say that based only on the inflation? What if wages increased 6%, then 3% inflation wouldn't be as bad as if inflation raised 2% but wages only increased 0.1%? At least if you think about purchasing power I suppose. But won't claim to be an expert on this, happy to be educated by those who are :)

Part of it is just expectations btw. If the value of money is jumping up and down rapidly it is bad for business. Like if I'm going to sell you a 30 year fixed rate mortgage we require an accurate expectation of future inflation for one of us not to effectively lose their shirt on the deal. Imagine shops shuffling their prices up and down constantly, unions renegotiating contracts all the time, you sign up for 12 months of netflix but the price implicitly assumes that money will be worth N% less by month 12, etc. (imo a lot of these things should already be pegged, but people don't like doing that) It's basically just much more annoying to transact using a currency whose future value is unpredictable. So given that 2% is the stated target, which expectations are presumably largely built around, significant deviation is a failure to manage that process.

Re: US Consumer Price Index up 4.2%

#293

Post by furyofantares »

dag100 wrote: post #288
furyofantares wrote: post #125

Earlier quoted context omitted.

Consumer price index is about consumer goods. This is why tarrifs and such are considered regressive - they hit people harder the less money they have because a larger percentage of their spending is consumer goods. If I invest half my income and spend half my income, and the prices of goods goes up 4.2% and my income goes up 4.2%, then I've made progress; I'm now investing more than half my income, because the half…

> If I invest half my income and spend half my income, and the prices of goods goes up 4.2% and my income goes up 4.2%, then I've made progress; I'm now investing more than half my income, because the half of my income I was spending has stayed even and the half I was investing has increased. Let's say your income is $100. You spend $50 and invest $50. The prices of goods goes up 4.2%, so to keep your current living…

Oh yeah, oops, thank you. (Btw 52.10 not 51.20, but yes, half of 104.20).

Re: US Consumer Price Index up 4.2%

#294

Post by frm88 »

JumpCrisscross wrote: post #154
ashgf1 wrote: post #142

Earlier quoted context omitted.

The National Energy Dominance Council primarily cites national security interests: https://www.eenews.net/articles/white-house-launches-energy-... It works towards increasing US energy production at all costs even though the US is already a net exporter. What is not mentioned of course is that increased US dependencies of countries like Japan are a feature: https://energytracker.asia/japan-to-buy-record-amounts-of-ln…

> with the Iran conflict, Qatar is shut off and Japan can be pressured even more I see your argument. It’s still short term. A fifth of Japanese electricity comes from renewables [1]. Meanwhile, Japan is diversifying its LNG suppliers [2]. [1] https://www.iea.org/countries/japan/renewables [2] https://www.asahi.com/sp/ajw/articles/16464707

Switzerland imports 70% of its energy. All Oil comes from the U. S. https://www.swissinfo.ch/eng/energy-transition/where-switzer...

The EU relies heavily on U. S. oil imports https://www.consilium.europa.eu/en/infographics/where-does-t...

Re: US Consumer Price Index up 4.2%

#295

Post by vkou »

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…

> 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?

I mean, a horse buggy ride has significantly increased in price relative to the 19th century, but if it were tracked as part of a basket of goods, it absolutely makes sense to replace it with the equivalent automobile taxi.

Re: US Consumer Price Index up 4.2%

#296

Post by throwwwll »

JumpCrisscross wrote: post #216
jhallenworld wrote: post #96

Earlier quoted context omitted.

No it's cooked. For high tech items, they assume that improved technology means you are getting more for your money even if the price goes up, so they discount it. It's true that you get more for your money, but it ignores threshold effects, like you just can't buy an equivalent phone for $10 even if todays phone's are 200x better. Then there's the "owner's equivalent rent" BS and this is 25% of CPI. It answers the q…

> it assumes rental price and housing costs are somehow linked when in reality asset prices have far outstripped rent It's pricing the cost of shelter. Renting a home is buying shelther. Buying a home is buying shelter and buying a financial asset. OER is the way you separate the last two components. Otherwise, you'd have to only look at rents to determine housing prices, which would be rubbish in a country where mos…

>Renting is buying

American education.

Re: US Consumer Price Index up 4.2%

#297

Post by throwwwll »

aidenn0 wrote: post #200
DennisP wrote: post #130

Earlier quoted context omitted.

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.

They did double and quadruple before, if you know what I mean.

Re: US Consumer Price Index up 4.2%

#298

Post by Blackstrat »

This is not inflation. The is a supply and demand issue. There are two factors: increasing energy costs due to the season and the rising costs of AI data centers (a big impact in my area). And secondly, the disruption of the oil supply during the continued Middle East conflict. These two issues have caused an energy price spike. Yes, it will eventually result in wide spread costs. But, as the components in the above report indicate, it is not yet spread widely. We are all sensitive to gas price fluctuations. We'd all be better off if we admitted that alternative fuels, other than nuclear, will never provide the requisite energy required to advance civilization. It's time to quit pretending that it will and start building nuclear power plants. Wind and solar farms are not the answer. And end the Iraq war aggressively. It's been nearly 50 years and it's clear that Iraq will never negotiate honestly. So Trump and his allies need to stop pretending and end it. And the same applies to the Ukraine-Russia conflict - no more US tax dollars to the Ukrainian dictator.

Re: US Consumer Price Index up 4.2%

#299

Post by senordevnyc »

mjamesaustin wrote: post #50

Prices have doubled since 1999!? Restaurant prices near me have doubled since 2015, easily. And that's not counting delivery going from free to 25% of the meal cost.

Restaurant prices near me have doubled since 2015, easily.

They track that too: https://fred.stlouisfed.org/series/CUSR0000SEFV

Looks like it's up about 55% in the last 11 years.

Re: US Consumer Price Index up 4.2%

#300

Post by senordevnyc »

autoexec wrote: post #245
fluoridation wrote: post #221

Earlier quoted context omitted.

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.

"Feeling ripped off" is the immediate reaction to sticker shock. It takes active messaging from companies to get ahead of that reaction and plant in the mind of the consumer a justification that they'll think is fair. Companies have gotten very good about pushing their narrative to the public via social media, news, and even retail signage. Some companies have just outright lied about the reasons behind their price h…

When prices increase too much or too quickly however that's when people get upset and assume greed unless they are primed to accept it with some excuse.

Yeah, and then what do they do? I assume they don't stop buying groceries because they're pissed about the assumed greed. Do you really think people are switching grocery stores because they think Kroger is being greedy, but Safeway is altruistic and just raising their prices because of inflation?

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