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US inflation means families are spending $709 more per month than two years ago

cnn.com

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Re: US inflation means families are spending $709 more per month than two years ago

#81

Post by grardb »

kec wrote: post #45
bko wrote: post #17

What I don't understand is this 2% price target. Prices could go up 10% one year, and well call it a success if next year we "tame inflation" by only having our prices go up 2%. Why can't we target to get prices back down? For those on a fixed income, this is money we lost forever. We expect (and see) some prices go down every year (mainly electronics) and it works fine. But god forbid the price of milk goes down a b…

Deflation means a dollar tomorrow is always worth more than a dollar today meaning a rational person should strive to spend as little money today as possible. This eventually locks the entire economy up into a death spiral.

I'm curious to know if this is a real phenomenon that has been observed. Would you be able to point me in the direction of resources to learn more about this?

The reason for my skepticism is that even without deflation, a dollar tomorrow is usually worth more than a dollar today, yet tons of people* don't save or invest much/any of their money, even if they're able to.

* I'm speaking from the perspective of an American FWIW.

Re: US inflation means families are spending $709 more per month than two years ago

#82

Post by 01100011 »

itake wrote: post #15
01100011 wrote: post #7

Earlier quoted context omitted.

I don't know how most people are doing it. For me it's because the asset bubble has inflated my stock income. I suspect a lot of folks who owned homes, stocks and other assets are feeling the wealth effect. For the rest of society, I don't know why they're not in the streets with pitchforks.

> my stock income My investment portfolio profits (or RSU vests or bonuses) never make their way to my checking account. Are people really dipping into their investment accounts to cover living costs? Maybe for home or car purchases?

My paycheck is quite small due to the massive tax withholding I need to pay the taxes on my RSUs. I don't currently spend more than a fraction of my shares but I certainly use some of the proceeds to pay monthly expenses. I also sell company stock as soon as I get it and diversify(currently just buying T-Bills) because keeping all your eggs in one basket(i.e. keeping your wealth in the stock of the company that pays your salary) is bad risk management.

Re: US inflation means families are spending $709 more per month than two years ago

#83

Post by judge2020 »

qbasic_forever wrote: post #16
candiddevmike wrote: post #4

As a parent with kids, I really don't know how folks are getting by with the prices of everything. I know folks who keep eating out, buying new vehicles, and even building new houses and I'm left scratching my head wondering how they afford all of this. I'm not saving nearly as much as I was years ago and I think my "lifestyle" has decreased post COVID (few vacations, eating out is a treat, gifts are for birthdays/ho…

There is a _LOT_ of debt being added, household debt is up to something like 17 trillion dollars from like under 10 trillion pre pandemic. IMHO vehicles are huge drivers of debt. There are almost no cars under $30k now, and the average sale price of new cars is pushing up near $50k. This is for bog standard stuff like Hondas and Fords, not luxury cars. Used cars are incredibly expensive too. People are financing cars…

Credit card debt in the U.S. alone hit 1 Trillion https://www.cnet.com/personal-finance/credit-cards/credit-ca...

Re: US inflation means families are spending $709 more per month than two years ago

#84

Post by candiddevmike »

throwaway2203 wrote: post #5
candiddevmike wrote: post #4

As a parent with kids, I really don't know how folks are getting by with the prices of everything. I know folks who keep eating out, buying new vehicles, and even building new houses and I'm left scratching my head wondering how they afford all of this. I'm not saving nearly as much as I was years ago and I think my "lifestyle" has decreased post COVID (few vacations, eating out is a treat, gifts are for birthdays/ho…

yup, with daycare costs we're technically top 10% and still kinda hand to mouth in a MCOL area.

I think the concept of cost of living areas is out the window. Mortgage and rent may be relatively COL dependent (kinda, but everyone is incentived to even it out nationwide), but for everything else I actually think the competition within big cities/"HCOL areas" drives down prices. In my "LCOL" flyover area I'm seeing $30+ pizza and $18 burgers, along with $10 beers at bars. It's insane.

Re: US inflation means families are spending $709 more per month than two years ago

#85

Post by nine_zeros »

supernova87a wrote: post #28

I think a big problem, especially with companies, is that as soon as any cost of some input touches a new price level, that price now starts to get baked into the planning. Even if it was only for a very short blip, and even if the actual average costs later go down. It gets very sticky, but only in the up direction. Have you talked to any kind of building work contractor, insurance company, etc. lately? They've all…

This is accurate. Once the unit price is calculated with the temporarily higher input price, they are not going to reduce the unit price for as long as possible, even if input prices go down.

And what's worse? The FED does not want negative CPI. They want slowly rising CPI. A negative CPI is deflation, something they want to absolutely avoid. They don't want prices to go down. They only want them to rise up slower.

Which leads to us humans always stuck on the hedonic treadmill. If one is relying on wages, one is absolutely fcuked in this system. The only way to keep up is to keep switching jobs to a higher pay.

Re: US inflation means families are spending $709 more per month than two years ago

#86

Post by Auracle »

ModernMech wrote: post #14

Every year for the past 5 years I’ve gotten a “merit raise” which hasn’t met inflation, so I’m effectively making less than I was when I started at my job despite having 5 years more experience. My organization puts a negative value on experience, and the only way I can get an actual raise is to jump ship. The story of my generation. Meanwhile they complain about a hiring and retention problem. Gee, I wonder why?

I get a kick out of our local A&W that's had the usual "please be patient we don't have enough workers" sign up for at least a year, with another sign under it saying they're hiring starting at $10 an hour.

I wonder why they don't have enough workers when almost every other retail business around pays 50% or more than that, and it's not like their employees would have to go through a grueling tech hiring process to jump ship.

Re: US inflation means families are spending $709 more per month than two years ago

#87

Post by naijaboiler »

slaymaker1907 wrote: post #57
bko wrote: post #17

What I don't understand is this 2% price target. Prices could go up 10% one year, and well call it a success if next year we "tame inflation" by only having our prices go up 2%. Why can't we target to get prices back down? For those on a fixed income, this is money we lost forever. We expect (and see) some prices go down every year (mainly electronics) and it works fine. But god forbid the price of milk goes down a b…

It’s because that’s called deflation and mainstream economics predicts that it is absolutely catastrophic to the economy, at least if it is seen generally across the whole economy. Obviously, individual goods can decrease in nominal price, but general deflation is thought to lead almost immediately to depressions and recessions.

Correct

Re: US inflation means families are spending $709 more per month than two years ago

#88

Post by qbasic_forever »

gruez wrote: post #65
qbasic_forever wrote: post #38

Earlier quoted context omitted.

Goooooooood luck driving off a dealer lot with a $22k Toyota! Seriously, if you can do it then good on you! But back in the real world the on the lot availability of cars is abysmal and most makes are sold out for months of backlog. Like if you want a Toyota minivan it's something like a 2 year wait--unless you are willing to buy one on the lot with a $10k dealer markup.

In other words, it's actually available for $22k. You just get it right now . That seems... fine? I guess it sucks for the people who need a new car in the past 2 years, but given that the average age of cars on the road is around 12 years, that's a small fraction of people. It certainly doesn't support the original claim that $30k cars are the reason why people getting in debt.

I don't think you understand how new cars are sold in the US. You can't click buttons and order the car from the website, you have to work with a dealer and convince them it's worth their time to order a car for you.

I got some bad news, there is no dealership that thinks a $22k Corolla is worth their time when dozens of other buyers are willing to spend $30-40k or more for other models. The higher the price out the door generally the more money the dealership is making.

Re: US inflation means families are spending $709 more per month than two years ago

#89

Post by bryanlarsen »

CrazyPyroLinux wrote: post #63
newhotelowner wrote: post #36

Earlier quoted context omitted.

One of the biggest opponent of minimum wage increase are the one who's in that category. 43% of Ohio voters voted against their own interest last week. Majority of them are in lower side of the income.

"lower side of income" != minimum wage

"lower side of income" means they are roughly linked to minimum wage. For instance, when I worked at a gas station as a kid, I explicitly got a wage $1 more per hour than minimum wage. Even if it's not so explicitly linked, the implicit link is there on all low end hourly jobs. If a wage goes from significantly above minimum wage to just barely above minimum wage due to a minimum wage change and the employer doesn't raise to match, they are going to have retention and recruitment troubles.

Re: US inflation means families are spending $709 more per month than two years ago

#90

Post by [deleted] »

gruez wrote: post #65
qbasic_forever wrote: post #38

Earlier quoted context omitted.

Goooooooood luck driving off a dealer lot with a $22k Toyota! Seriously, if you can do it then good on you! But back in the real world the on the lot availability of cars is abysmal and most makes are sold out for months of backlog. Like if you want a Toyota minivan it's something like a 2 year wait--unless you are willing to buy one on the lot with a $10k dealer markup.

In other words, it's actually available for $22k. You just get it right now . That seems... fine? I guess it sucks for the people who need a new car in the past 2 years, but given that the average age of cars on the road is around 12 years, that's a small fraction of people. It certainly doesn't support the original claim that $30k cars are the reason why people getting in debt.

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