US economy thread (2 Viewers)

[massraider]

And people still have to have whatever it is.

Many of these things do NOT fall into this category.

Not the place for this discussion, but the best way to beat this inflation game is to NOT play it unless you HAVE to.

 

[Stoneworker]

The rate of inflation may be falling. But prices are not. In fact, history suggests they'll never fall. This is our new normal. And I find that really #+_-&#&#( upsetting.

There's nothing wrong with prices rising a little every year. It's been that way forever. We don't want 8%+ inflation all the time, but 4% inflation is totally normal/fine.

4% inflation is not "totally normal/fine."

If inflation remains at a sustained level of 4%, then interest rates will need to remain at the 4-5% level to keep it under control.

And if interest rates remain elevated, then interest payments on the $32 trillion national debt will absolutely skyrocket. On the current path, CBO already estimates national debt of $44 trillion by 2033 and interest payments to exceed U.S. military budget by 2027. And that is assuming inflation/interest rates fall to ~2% by 2025.

Debt/GDP will be at its highest level in history, and stagflation (slow growth + stubborn inflation) will ensue. As well as political fights over debt ceiling resulting in annual potential fiscal crises. This year was nothing compared to potential future disruptions.

(Note: this is not a political post).

Here's monthly data on US inflation going back to 1914. We've had this kind of inflation basically since the great depression with no negative consequences. Inflation was a genuine problem last year, but the Fed did a good job getting it back down to normal levels.

Believe what you want but the U.S. hasn't had what you dismissively call "normal levels" in over 30 years. The average inflation rate from 1990 to 2019 has been 1.9%. And no country on the planet has had sustained inflation coinciding with extremely high and sustained debt/GDP ratio without significant currency devaluation (i.e. lower purchasing power).

And the historical averages are skewed by extremely high inflation in the WWI, WW2 and 1970-1990 periods. Good luck if you want to go back to those periods of "no negative consequences."

 

[beer 30]

Our cost on air conditioners has DOUBLED in two years. It's ridiculous and stupid.

Any idea why? Shipping costs is my assumption.

Trickle-down greed. Everyone has doubled their prices. Because everyone else has. And they have to. Or simply want to. And can.

A more rational explanation...

The new SEER2 regulations implemented by the U.S. Department of Energy intend to lower energy use but will inevitably drive price hikes and parts shortages within the HVAC industry.

HVAC industry alerts are now warning of significant price increases for 2023. There are four reasons for this increase:

1. The cooling equipment components will perform higher to achieve a high-efficiency rating. This is a good thing as these components generally have higher quality and will last longer.
2. The physical size of the indoor cooling and outdoor air conditioner coil will increase to gain efficiency. This equates to more copper, aluminum, and steel and hence more cost.
3. With the physically larger units comes more labor in handling the equipment, and fewer units will fit in a rail car or tractor-trailer. Both handling and shipping costs will be increased.
4. Fans and the top that covers fans in air conditioners will be a different design to achieve a higher efficiency rating. The cost of the design is more with the larger units.

They doubled before these factors.

As most have speculated, it's more corporate profit taking than anything else. COVID crushed a lot of these industries, when we came out of COVID protocols like gangbusters, the smart companies raised pricing because nobody really cared. We were free to do what we wanted to again so lets build stuff! Damn the cost, just build!!! Now that folks are getting back to normal, we're looking at cost of goods and wondering how did we absorb a 30, 40, 50% increase without really noticing and how come our business is drying up?

The new regulations regarding HVAC will drive the cost further (think another 30-50%) for the sake of efficiency which is ********. The new refrigerant we're being forced to migrate to is flammable. Not like if you smoke around the AC it's going to blow up but it will still require a flammable decal on the side of the unit. It's hard to understand where we are heading for the sake of efficiency & climate change with these new regs. They are going to cripple the industry.

 

[DA RAIDERS]

And people still have to have whatever it is.

Many of these things do NOT fall into this category.

Not the place for this discussion, but the best way to beat this inflation game is to NOT play it unless you HAVE to.

Agree 100%. Drove by a dude yesterday living in his truck, scrolling on his iPhone.

When I went to talladega, the locals joke was that a lot of the fans can’t make the payment on their trailer, but by god they’re not missing talladega.

 

[The Duff Man]

Our cost on air conditioners has DOUBLED in two years. It's ridiculous and stupid.

Any idea why? Shipping costs is my assumption.

Nope. Most of the inflation is due to corporate profits. Costs have went up a little to the manufacturers- but they in turn used that as a foundation to raise their prices moderately to significantly. This short clip really helps explain the math.

- YouTube

Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube.

m.youtube.com

So corporate greed explains why earnings for the S&P 500 dropped 18% from $216 to $177 from 2021 to 2022?

Earnings increased 18% in 2018 to a record high. Four of the last five years have been the highest on record with only 2020 being down.

Framing 2022 as a “down year” when it was the second best year ever and 31% above 2018 (which was the best year to date at the time) is incredibly misleading.

 

[Stoneworker]

Our cost on air conditioners has DOUBLED in two years. It's ridiculous and stupid.

Any idea why? Shipping costs is my assumption.

Nope. Most of the inflation is due to corporate profits. Costs have went up a little to the manufacturers- but they in turn used that as a foundation to raise their prices moderately to significantly. This short clip really helps explain the math.

- YouTube

Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube.

m.youtube.com

So corporate greed explains why earnings for the S&P 500 dropped 18% from $216 to $177 from 2021 to 2022?

Earnings increased 18% in 2018 to a record high. Four of the last five years have been the highest on record with only 2020 being down.

Framing 2022 as a “down year” when it was the second best year ever and 31% above 2018 (which was the best year to date at the time) is incredibly misleading.

No. Not in the least. Not when others are citing corporate profits as the primary reason for elevated inflation which has only been around since 2021. That's why the 2021-2022 comparison was chosen.

And it's equally incredibly misleading to choose 2018 as some type of benchmark comparison year. Why not 2013 for a full decade of data?

2013 earnings = 131
2022 earnings = 177
10-yr CAGR = 3.1%
Inflation since 2013 = 2.2%

So corporate earnings have been only 0.9% above inflation for the last ten years.

And of course earnings are expected to reach "record highs" each year. That's called growth.

It's hardly "corporate greed" or excessive corporate profits that's driving recent elevated inflation

 

[jvdesigns2002]

Our cost on air conditioners has DOUBLED in two years. It's ridiculous and stupid.

Any idea why? Shipping costs is my assumption.

Nope. Most of the inflation is due to corporate profits. Costs have went up a little to the manufacturers- but they in turn used that as a foundation to raise their prices moderately to significantly. This short clip really helps explain the math.

- YouTube

Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube.

m.youtube.com

So corporate greed explains why earnings for the S&P 500 dropped 18% from $216 to $177 from 2021 to 2022?

The country effectively opened back up in 2021 after a lot of people were stuck at home for a year or more. They were not able to spend money on services for an entire year and that pent up liquidity led to 2021 being an insane year that really brought companies more than a typical years worth of business. The drop off from 2021 to 2022 was eminent—-and 2022 was still a blockbuster year for them. Let’s not act like the dropoff from 2021-2022 is a situation where things went from good to bad for the corporations. It was a situation where things went from being insanely great to really great. The dropoff from 2021 to 2022 had nothing or nominally to do with them reducing costs to the consumers.

 

[Stoneworker]

Our cost on air conditioners has DOUBLED in two years. It's ridiculous and stupid.

Any idea why? Shipping costs is my assumption.

Nope. Most of the inflation is due to corporate profits. Costs have went up a little to the manufacturers- but they in turn used that as a foundation to raise their prices moderately to significantly. This short clip really helps explain the math.

- YouTube

Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube.

m.youtube.com

So corporate greed explains why earnings for the S&P 500 dropped 18% from $216 to $177 from 2021 to 2022?

The country effectively opened back up in 2021 after a lot of people were stuck at home for a year or more. They were not able to spend money on services for an entire year and that pent up liquidity led to 2021 being an insane year that really brought companies more than a typical years worth of business. The drop off from 2021 to 2022 was eminent—-and 2022 was still a blockbuster year for them. Let’s not act like the dropoff from 2021-2022 is a situation where things went from good to bad for the corporations. It was a situation where things went from being insanely great to really great. The dropoff from 2021 to 2022 had nothing or nominally to do with them reducing costs to the consumers.

Earnings in each of 2020, 2021 and 2022 were volatile for all the obvious reasons.

However, the average during that 3-yr period was $168 (110, 216, 177). Earnings for 2019 were $165.

So S&P 500 corporate earnings grew by a CAGR of 1.8% in three years from 2019 to 2022.

Big whoop

 

[jvdesigns2002]

Our cost on air conditioners has DOUBLED in two years. It's ridiculous and stupid.

Any idea why? Shipping costs is my assumption.

Nope. Most of the inflation is due to corporate profits. Costs have went up a little to the manufacturers- but they in turn used that as a foundation to raise their prices moderately to significantly. This short clip really helps explain the math.

- YouTube

Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube.

m.youtube.com

So corporate greed explains why earnings for the S&P 500 dropped 18% from $216 to $177 from 2021 to 2022?

The country effectively opened back up in 2021 after a lot of people were stuck at home for a year or more. They were not able to spend money on services for an entire year and that pent up liquidity led to 2021 being an insane year that really brought companies more than a typical years worth of business. The drop off from 2021 to 2022 was eminent—-and 2022 was still a blockbuster year for them. Let’s not act like the dropoff from 2021-2022 is a situation where things went from good to bad for the corporations. It was a situation where things went from being insanely great to really great. The dropoff from 2021 to 2022 had nothing or nominally to do with them reducing costs to the consumers.

Earnings in each of 2020, 2021 and 2022 were volatile for all the obvious reasons.

However, the average during that 3-yr period was $168 (110, 216, 177). Earnings for 2019 were $165.

So S&P 500 corporate earnings grew by a CAGR of 1.8% in three years from 2019 to 2022.

Big whoop

They grew that much with most of those businesses not operating, or operating on a very limited basis for a good portion of that time frame. It’s funny how that doesn’t factor into your analysis at all. Most peoples earnings drop drastically when their ability to work becomes restricted. Yet—you seem to think that it’s totally normal for companies to somehow grow organically even when they are not able to operate.

 

[Stoneworker]

They grew that much with most of those businesses not operating, or operating on a very limited basis for a good portion of that time frame. It’s funny how that doesn’t factor into your analysis at all. Most peoples earnings drop drastically when their ability to work becomes restricted. Yet—you seem to think that it’s totally normal for companies to somehow grow organically even when they are not able to operate.

Factor this into the (fictional) story that corporate profit margins increasing is the reason for inflation.

The (blended) net profit margin for the S&P 500 for Q4 2022 is 11.4%, which is below the previous quarter’s net profit margin of 11.9% and below the year-ago net profit margin of 12.4%. However, it is equal to the 5-year average net profit margin (11.4%).

Q4 2022 will mark the sixth straight quarter in which the net profit margin for the index has declined quarter-over-quarter. It will also mark the lowest net profit margin reported by the index since Q4 2020 (10.9%).

Four sectors are reporting net profit margins in Q4 2022 that are above their 5-year averages, led by the Energy sector (13.4% vs. 7.4%). On the other hand, seven sectors are reporting net profit margins in Q4 2022 that are below their 5-year averages, led by the Communication Services sector (9.6% vs. 11.7%).

Source: FactSet

S&P 500 Reporting A Lower Net Profit Margin For 6th Straight Quarter

The market continues to be concerned about higher inflation. Consumer prices increased by 6.5% in December. Although the number has been falling in recent months, it still marked the 15th consecutive month in which the percentage exceeded 6% (year-over-year). Given these concerns, what is the...

insight.factset.com

 

[massraider]

https://www.hoodedutilitarian.com/wp-content/uploads/2014/02/af3237e05db8012ee3bf00163e41dd5b.gif

I remembered a Bloom County where this kid's nightmare was two economists in the same room.

Just throwing it out there.

 

[FreeBaGeL]

Speaking of the stock market, looks like the S&P is up about 6% since this thread is posted. Not to dunk on Jayrod or anything, this has been a good thread. Just was looking it up earlier.

Yeah, my original post had nothing to do with the stock market directly, but seeing some possible indicators of a major cool down between small business activity and freight hauling being at their lowest activity levels in a decade.

A couple months ago I had a guy that works for Bass Pro (HQ is here) tell me they stopped a lot of inbound shipments because they had excess inventory already. There were literally boats out to sea in the Pacific with loads they have now refused (guessing they hadn't paid for it yet or had a restock fee they could swallow).

I honestly don't know what it all means, but we have a lot of confusing indicators I've never seen in 20 years of corporate accounting. It is a very bizarre time and I know some business people who are still uneasy right now.

It may be much ado about nothing and I don't see anyone going out of business right now, but I also don't see anyone expanding either.

Great post, thx for sharing the anecdote about Bass Pro Shop. That sort of bottom-up info is helpful to decipher what is really going on.

Part of the challenge with confusing indicators is that our economy is so complex now — and economists have messed around with traditional indicators (like inflation) — that it can be misleading to use the normal indicators.

I just read a really good newsletter (John Mauldin for anyone who is interested — it’s free) that had some analysis on inflation. It laid out the mechanics of how changes in housing prices actually flow through to inflation statistics. The main takeaway was that inflation has already fallen much more than we realize, but that reality is partially obscured by the lagged mechanics used to calculate inflation.

But……if you just look at the headline inflation number, you wouldn’t know that……

The rate of inflation may be falling. But prices are not. In fact, history suggests they'll never fall. This is our new normal. And I find that really #+_-&#&#( upsetting.

There's nothing wrong with prices rising a little every year. It's been that way forever. We don't want 8%+ inflation all the time, but 4% inflation is totally normal/fine.

I don't think our current inflation rate is good. I think it's hot garbage, personally. A smaller visible number has lured people into thinking just decreasing the inflation rate somehow means everything is fine. Of course the inflation rate is coming down from stupidly high outlier numbers. That's not really some big accomplishment.

Even worse, the actual rate of price increases doesn't appear to have slowed nearly as much as the CPI number implies, it's just that now we're far enough along that CPI is measured against already inflated numbers, so it makes it look slower even if prices are still rising fast.

IE if a head of lettuce used to cost $1, and a year later it costs $2 that's 100% inflation. If in another year it costs $3, the prices are still rising stupidly fast, but that's "only" 50% higher than the already inflated number.

And I picked lettuce very specifically because it's one I've been tracking. $2.69 or something at my store, up from $0.89 at the start of all this. And still, even now, when things have "slowed" every time I go to the grocery store it is higher.

That's actually a fun exercise. Pick a few items at your grocery store and note the price. Then check them again in 2 months. They will be higher. More than 4% higher. A can of black olives is like $2.99 now! Items like these you used to be able to go to the store for years without seeing the price change. Now you can't make it a month.

Historically high inflation is not a good follow-up to historically record breaking inflation. Businesses have tricked consumers into accepting constantly rising prices and blaming "inflation". Just like airlines raise airline prices when fuel costs go up but don't drop them back down when fuel costs go down. Many supply chain issues have been resolved but things like food prices keep going up, while you can't drive past a farm out here in Utah or Colorado without seeing some giant new multi million dollar mega mansion going up for the farmer who's allegedly just been adjusting prices to keep up with inflation and supply chain issues.

We don't need "only" historically high rates of inflation right now. We need deflation. $3+ for a can of black olives for the rest of my life when it was 79 cents 2 years ago? Get outta here with that mess.

I've always been a mega hardcore bull on the economy. But I've never had a larger percentage of my holdings in cash than I've shifted to recently.

 

[The Z Machine]

but 4% inflation is totally normal/fine.

I'd prefer 2-3% personally.

 

[Psychopav]

Company I work at just had it's 2nd RIF in 2 months. Also planning to offshore/outsource our entire IT department. Resume updated.

The global company that I work for is in the process of a RIF with a goal of reducing HC by 5-10%. I have to cut 2 of my 5 team members and don’t know how work will get done moving forward.

What are are we talking here? Still P&C focus, ancillary group, medical, or what?

 

[culdeus]

I mean we got people chartering a sub for a million bucks for a selfie with the titanic. Just saying.

 

[Dinsy Ejotuz]

Agree that most have been way too early with their calls.

But IMO the "R" word is still inevitable due to many not understanding the lag effect of the tightening. Even if interest rates don't keep increasing.

We agree again, and obviously Recessions are always guaranteed.

But the thread here was about the idea that the economy was bad right now, and that's really what I was taking issue with. It'll be bad soon enough (whether months or years), we should probably try to enjoy what we have when times are good.

 

[IvanKaramazov]

but 4% inflation is totally normal/fine.

I'd prefer 2-3% personally.

Sure, but there's no reason for people to hyperventilate about 4%. It's very slightly, barely, above historical norms. But it's fine. The 8% that Biden inherited is highly unusual.

 

[The Z Machine]

but 4% inflation is totally normal/fine.

I'd prefer 2-3% personally.

Sure, but there's no reason for people to hyperventilate about 4%. It's very slightly, barely, above historical norms. But it's fine. The 8% that Biden inherited is highly unusual.

Yes, thankfully we've come down from that. Inflation is sticking around in the eurozone and UK, so let's not start ... each other's .... just yet. Taking a pause this month is fine, but the Fed shouldn't be afraid to keep the rates rising if that's warranted.

 

[Schmeabs]

Our cost on air conditioners has DOUBLED in two years. It's ridiculous and stupid.

Any idea why? Shipping costs is my assumption.

Nope. Most of the inflation is due to corporate profits. Costs have went up a little to the manufacturers- but they in turn used that as a foundation to raise their prices moderately to significantly. This short clip really helps explain the math.

- YouTube

Enjoy the videos and music you love, upload original content, and share it all with friends, family, and the world on YouTube.

m.youtube.com

So corporate greed explains why earnings for the S&P 500 dropped 18% from $216 to $177 from 2021 to 2022?

Not sure where you got those numbers but they are way off. S&P earnings were not below $200 in 2022.

 

[FreeBaGeL]

4% inflation is not "totally normal/fine."

If inflation remains at a sustained level of 4%, then interest rates will need to remain at the 4-5% level to keep it under control.

And if interest rates remain elevated, then interest payments on the $32 trillion national debt will absolutely skyrocket. On the current path, CBO already estimates national debt of $44 trillion by 2033 and interest payments to exceed U.S. military budget by 2027. And that is assuming inflation/interest rates fall to ~2% by 2025.

Debt/GDP will be at its highest level in history, and stagflation (slow growth + stubborn inflation) will ensue. As well as political fights over debt ceiling resulting in annual potential fiscal crises. This year was nothing compared to potential future disruptions.

(Note: this is not a political post).

Not to mention wages haven't kept up with the inflation. 4% inflation definitely isn't fine unless you are already hold a significant number of assets.

some stats

ETA - at 4% inflation, a $30,000 car becomes a $40,000 car in just 8 years.

And it gets even worse.

 

[rockaction]

I remembered a Bloom County where this kid's nightmare was two economists in the same room.

MIlo or Binkley. Pretty sure it was Binkley, whose dream (to the chagrin of his beer-swilling football father) was to dance the lead in Swan Lake.

Here we go

We generally have different political ends, but no need on my end in an apolitical forum to not acknowledge a great reference and character. Consider it my generous spirit.

 

[massraider]

MIlo or Binkley

Milo had no bad dreams. Milo was the star of others bad dreams.

 

[rockaction]

Milo had no bad dreams. Milo was the star of others bad dreams.

The Bloom Picayune was a fearsome force for change with Milo at the helm.

 

[beer 30]

I mean we got people chartering a sub for a million bucks for a selfie with the titanic. Just saying.

In retrospect, probably not the most efficient use of their money.

 

[Stoneworker]

So corporate greed explains why earnings for the S&P 500 dropped 18% from $216 to $177 from 2021 to 2022?

Not sure where you got those numbers but they are way off. S&P earnings were not below $200 in 2022.

Inflation adjusted, May 2023 constant dollars. They are spot on.

To accurately compare income over time, users should adjust the summary measures (medians, means, etc.) for changes in cost of living (prices). The Census Bureau uses the Bureau of Labor Statistics' (BLS) Consumer Price Index Research Series (CPI-U-RS) to adjust for changes in the cost of living.

https://www.multpl.com/s-p-500-earnings

 

[BeTheMatch]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

 

[Stoneworker]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

 

[Captain Cranks]

We shouldn't get trapped in the "inflation is only xyz as the government reports" narrative. Inflation rates are different for everyone, so pinning it to the cherry-picked, ever changing basket of goods the government sells us only works if we have no aspirations to buy assets, go on vacation, or build wealth.

 

[Stoneworker]

We shouldn't get trapped in the "inflation is only xyz as the government reports" narrative. Inflation rates are different for everyone, so pinning it to the cherry-picked, ever changing basket of goods the government sells only works if we have no aspirations to buy assets, go on vacation, or build wealth.

This is a good point.

The Wall Street Journal has a very useful inflation tracker tool (apologies but may be subs only) that enables users to quickly customize their own basket of goods and services in over 300 categories (e.g. uncooked ground beef, men's clothes, food at elementary schools, public transportation, etc.)

It will then calculate how an individual's basket of goods compares to overall inflation. The variability based on individual's habits can be quite surprising.

WSJ Inflation Tracker - maybe subs only

 

[BeTheMatch]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

 

[dickey moe]

I'm still a little confused by your wording. Sorry about that. Prop 13 should limit the increase on your taxes to 2% maximum regardless of any reassessment of the value of the property. Is your tax increase more than 2%

no worries. My understanding is that the increase is due to the value change not an increase in my tax rate. There could be a rate increase included into that too but I didn’t look and assume prop 13 was followed and accounted for.

where it’s frustrating to me is that should have been factored into my escrow (as I impound my taxes)

I still think the question (which I also have) is did the property assessment go up $5K or did the yearly tax bill go up $5K?

If it’s the former, then I doubt the taxes will go up all that much. If it’s the latter, then yeah that would suck.

My assessment went up enough to drive a 5k tax increase. I got hit with a 5k tax bill even though I impound my taxes (ie pay them) via my monthly mortgage payment.

I believe you. But something doesn’t add up. I’m in CA as well. Remember that bill from the tax office that you get in the mail is just a statement if you impound your taxes. I’m stating the obvious here. But I’d make sure everything is how you want it.

Thanks fellas. Just did some research this morning and it’s a one time “supplemental tax“ bill, tied to prop 13, that triggers upon the purchase of a home. They have 4 years to assess this extra tax (which is why it took 2 1/2 years). It’s not tied to the property tax and is a stand alone tax that is based on the value increase at the time of sell. So in other words it’s the BS loophole to the capping of 2% max increase.

Yeah I got dinged with that earlier this year. Had to make two $1,500 payments within 3 months. Not fun.

 

[Stoneworker]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

Which one, buying a different detergent or choosing a different store?

 

[BeTheMatch]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

Which one, buying a different detergent or choosing a different store?

Right, because that was the point.

 

[Stoneworker]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

Which one, buying a different detergent or choosing a different store?

Right, because that was the point.

Hey man, there's no doubt that businesses the world over are attempting to pass higher costs on to consumers in whatever way they can. And it's also highly likely that some might take advantage of the confusion caused by change and attempting to be sneaky about juicing a little extra where they can. That's the way it's been for ages.

But it's already been proven that, in aggregate, corporate net profit margins are no different now than pre-pandemic. That's a fact.

So the whole Rage against the Machine thing is getting a bit old.

 

[Alex P Keaton]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

Wow!! So inflation is over 100% every two weeks now — that truly is hyperinflation.

Did you buy 4 bottles? I mean, clearly the price will be $36+ in a couple weeks.

 

[Alex P Keaton]

We shouldn't get trapped in the "inflation is only xyz as the government reports" narrative. Inflation rates are different for everyone, so pinning it to the cherry-picked, ever changing basket of goods the government sells only works if we have no aspirations to buy assets, go on vacation, or build wealth.

Or even that inflation is the same in every geography. It really isn’t.

(Great post btw)

 

[BeTheMatch]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

Wow!! So inflation is over 100% every two weeks now — that truly is hyperinflation.

Did you buy 4 bottles? I mean, clearly the price will be $36+ in a couple weeks.

Yes, that's definitely what I said. You really got me good there.

 

[IvanKaramazov]

but 4% inflation is totally normal/fine.

I'd prefer 2-3% personally.

Sure, but there's no reason for people to hyperventilate about 4%. It's very slightly, barely, above historical norms. But it's fine. The 8% that Biden inherited is highly unusual.

Yes, thankfully we've come down from that. Inflation is sticking around in the eurozone and UK, so let's not start ... each other's .... just yet. Taking a pause this month is fine, but the Fed shouldn't be afraid to keep the rates rising if that's warranted.

Fair enough, and I appreciate the Pulp Fiction reference.

 

[Stoneworker]

Sure, but there's no reason for people to hyperventilate about 4%. It's very slightly, barely, above historical norms. But it's fine. The 8% that Biden inherited is highly unusual.

Yes, thankfully we've come down from that. Inflation is sticking around in the eurozone and UK, so let's not start ... each other's .... just yet. Taking a pause this month is fine, but the Fed shouldn't be afraid to keep the rates rising if that's warranted.

Fair enough, and I appreciate the Pulp Fiction reference.

And purely for the sake of keeping the conversation fact-based, the annual inflation rate in February 2021 was 1.7%. Merely a fact.

Current US Inflation Rates: 2000-2024

The annual inflation rate for the United States was 3.2% for the 12 months ending February, compared to the previous rate of 3.1%, according to U.S. Labor Department data published on March 12, 2024. The next inflation update is scheduled for release on April 10 at 8:30 a.m. ET, providing...

www.usinflationcalculator.com

 

[ChiefD]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

Which one, buying a different detergent or choosing a different store?

Right, because that was the point.

Hey man, there's no doubt that businesses the world over are attempting to pass higher costs on to consumers in whatever way they can. And it's also highly likely that some might take advantage of the confusion caused by change and attempting to be sneaky about juicing a little extra where they can. That's the way it's been for ages.

But it's already been proven that, in aggregate, corporate net profit margins are no different now than pre-pandemic. That's a fact.

So the whole Rage against the Machine thing is getting a bit old.

You know what else is getting old? Your flippant remarks to people who are just posting facts about their current personal economies.

People out here are struggling for the basic things. I know for a FACT my food costs to feed my three kids is a lot more than it was a year ago. I know for a FACT that all of my costs to just basically keep a roof over our heads and all that goes with it has gone up a lot from a year or two ago.

So for those of us who can't build wealth right now because of our own personal economies - please stop with economic babble about indicators and economic science and blah blah blah....because that ain't the world I live in.

 

[Alex P Keaton]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

Wow!! So inflation is over 100% every two weeks now — that truly is hyperinflation.

Did you buy 4 bottles? I mean, clearly the price will be $36+ in a couple weeks.

Yes, that's definitely what I said. You really got me good there.

Clearly you are a smart individual. I’m just highlighting the uselessness of using a single example to prove a hypothesis on a topic as complex as price inflation.

In seriousness, what price do you expect to find in 2 weeks?

 

[Stoneworker]

You know what else is getting old? Your flippant remarks to people who are just posting facts about their current personal economies.

People out here are struggling for the basic things. I know for a FACT my food costs to feed my three kids is a lot more than it was a year ago. I know for a FACT that all of my costs to just basically keep a roof over our heads and all that goes with it has gone up a lot from a year or two ago.

So for those of us who can't build wealth right now because of our own personal economies - please stop with economic babble about indicators and economic science and blah blah blah....because that ain't the world I live in.

I'm sorry you're hurting, but I'm not the source of your struggles.

We all have our personal anecdotes of the current economic adversity (e.g. out-of-pocket assisted living costs for my elderly parents just went from $11K/mo. to $13K/mo in 2023 alone).

Does my single example prove corporate price gouging? No. When I investigated the increase did I find anything other than documented cost increases on the provider's end? No.

But if you can show that price gouging/corporate profiteering is a fact on a widespread basis in a manner other than through one-off, random personal anecdotes, then please do so.

 

[CletiusMaximus]

https://www.hoodedutilitarian.com/wp-content/uploads/2014/02/af3237e05db8012ee3bf00163e41dd5b.gif

I remembered a Bloom County where this kid's nightmare was two economists in the same room.

Just throwing it out there.

Assume a Can Opener (oldie/goodie, Reagan told it best)

 

[BeTheMatch]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

Wow!! So inflation is over 100% every two weeks now — that truly is hyperinflation.

Did you buy 4 bottles? I mean, clearly the price will be $36+ in a couple weeks.

Yes, that's definitely what I said. You really got me good there.

Clearly you are a smart individual. I’m just highlighting the uselessness of using a single example to prove a hypothesis on a topic as complex as price inflation.

In seriousness, what price do you expect to find in 2 weeks?

What's it going to be in 2 weeks? Who knows? And who cares? Whatever that number is, what would it prove? I don't even understand your point.

My examples are more useful than ignoring everything because "it's only one example" or "that's anecdotal." How many examples do you need? I've given more than one in this thread and others.

I could list hundreds or thousands of items and their increases if that was necessary, but it isn't.

It's far more useless to say "inflation is only 4%" when facts on the ground simply don't bear that out. Go to a store. Any store. Find me something that costs less now than it did a year ago. I would suggest you can't.

Every single thing I buy - everyday staples, bigger-ticket items, everything - is dramatically more expensive than it was six months ago or a year ago. It's just a matter of how much more expensive. And it ain't 4 percent.

I don't understand the point of trying to sit here and say that isn't the case. It is. Everyone knows it's true.

So why is that? Well, sure, it may be a complex answer for each different thing. But there's a general pattern of huge, huge price increases in every sector. And if you think corporate greed isn't playing a huge role in all this, well, then I'd say I think you're very naive.

It would be easier to cite examples of things that have only gone up slightly. I can think of a grand total of one thing that hasn't had huge price increases and/or package shrinking, and that's milk. And that's still gone up more than 4 percent.

Of course there are differences on certain items in certain areas. And I don't have access to that info. But I am sharing my info. And it's real. And it's fact.

So where does this 4 percent number come from? I don't know. But if that's what the grand formula is for determining inflation, it's all ********. It's made up. Common sense tells you that. Look around and open your eyes. There's a very obvious pattern, and it's a giant arrow pointed up on all prices.

 

[massraider]

I don't understand the point of trying to sit here and say that isn't the case. It is. Everyone knows it's true.

Right. If everyone is not using inflation to gouge customers, it doesn't mean many are not.

 

[Todem]

• Unemployment is at its lowest point in 50 years.
• Inflation has fallen to ~4%
• Labor has more wage-setting power than it has in decades. A trend that's likely to hold or increase given the lack of immigration and the continued retirement of the boomers.
• Stocks have rallied 25% in the last few months.
• Household debt remains lower than any year from 1985 to ~2012.

Hyperinflation has been just around the corner for 20 years now. Recession calls are old enough to be out of diapers at this point. Basically, doomcasting sells.

The S&P is being carried by about 10 stocks......that’s it. Most stocks are barely up, flat or negative.

Unless you picked the 10 best performers on average we are up 9-10% this year......which I will take every year.
Income producing portfolios are up maybe 5-6% this year.

The stock market indices are not the place to look at a broad based assumption that the market is good. You gotta look under the hood. We have not had a broad based rally at all in 2023.

The inflation number may have fallen.....but prices that jumped so much this past year are not......so the cost of living has gone way up.

 

[Todem]

While I agree, there are some bright spots in the economy, I don't share the rosy outlook on things. I am not an expert on economic issues like some on here, but it sure seems wages are still not keeping up with the cost of living. Credit card debt is continuing to rise. The unemployment number looks good only because the rate of labor participation is still incredibly low. The rate of car note delinquency for people in their 20's is soaring. I would guess this has to do with everyone having bought overpriced cars during Covid and now they are completely underwater on these vehicles. And as mentioned above, this is all without student loan payments coming due, which are just going to cripple people who didn't budget for them. We can celebrate the stock market, but for those amongst us that live paycheck to paycheck (60%) and can't afford milk, what Tesla is trading at, is not even something they can worry about. Just my take on things.

This.

A small number of people's stock portfolio can bounce back, but that doesn't mean the overall economy is healthy.

Maybe they need to redefine the "economy", But then again, the only people talking about the economy in the broad sense are only thinking about their portfolio. So maybe we just need a new word for the day to day business of all Americans.

There's still this rising tide lifts all ships, trickle down economics complete and total horsecrap that people believe in.

Most portfolios are not near their pre 2022 highs. Nope. Unless they are highly concentrated in 5-10 names that all went bonkers this year after being so beaten down in 2022.

The economy is on shaky ground.....I don’t think we get a hard landing.....but let’s not think it’s all great. It’s not.

 

[Todem]

The rate of inflation may be falling. But prices are not. In fact, history suggests they'll never fall. This is our new normal. And I find that really #+_-&#&#( upsetting.

There's nothing wrong with prices rising a little every year. It's been that way forever. We don't want 8%+ inflation all the time, but 4% inflation is totally normal/fine.

4% inflation is not "totally normal/fine."

If inflation remains at a sustained level of 4%, then interest rates will need to remain at the 4-5% level to keep it under control.

And if interest rates remain elevated, then interest payments on the $32 trillion national debt will absolutely skyrocket. On the current path, CBO already estimates national debt of $44 trillion by 2033 and interest payments to exceed U.S. military budget by 2027. And that is assuming inflation/interest rates fall to ~2% by 2025.

Debt/GDP will be at its highest level in history, and stagflation (slow growth + stubborn inflation) will ensue. As well as political fights over debt ceiling resulting in annual potential fiscal crises. This year was nothing compared to potential future disruptions.

(Note: this is not a political post).

Here's monthly data on US inflation going back to 1914. We've had this kind of inflation basically since the great depression with no negative consequences. Inflation was a genuine problem last year, but the Fed did a good job getting it back down to normal levels.

It is stabilizing......that is true. But these prices are here to stay and slowly move northward at the traditional levels of inflation (2-3%). Meanwhile wage growth is not keeping up.....and many jobs are being eliminated.....and all this talk of “AI” is not good news for working class jobs. Lot’s of jobs are going to be replaced by AI......not good. There will be bigger burdens on taxpayers coming......I see some rough times ahead for many people living paycheck to paycheck.

 

[Stoneworker]

I don't understand the point of trying to sit here and say that isn't the case. It is. Everyone knows it's true.

Right. If everyone is not using inflation to gouge customers, it doesn't mean many are not.

Lol. Classic logical fallacy shifting burden of proof.

Even if no one's seen a unicorn, it doesn't mean they don't exist!

 

[Alex P Keaton]

Bought All liquid laundry detergent two weeks ago at my main grocery store. It was $8.99 for 88 oz. And wasn't on sale.

Just returned to the same store today and bought the exact same size and brand bottle.

Would anyone care to guess what it cost this time?

$18.99.

That's not a typo.

But, hey, there's definitely not price gouging going on. And inflation is only like 4%, so no big deal.

How scientific

It's not exactly rocket science, though, is it?

Wow!! So inflation is over 100% every two weeks now — that truly is hyperinflation.

Did you buy 4 bottles? I mean, clearly the price will be $36+ in a couple weeks.

Yes, that's definitely what I said. You really got me good there.

Clearly you are a smart individual. I’m just highlighting the uselessness of using a single example to prove a hypothesis on a topic as complex as price inflation.

In seriousness, what price do you expect to find in 2 weeks?

What's it going to be in 2 weeks? Who knows? And who cares? Whatever that number is, what would it prove? I don't even understand your point.

My examples are more useful than ignoring everything because "it's only one example" or "that's anecdotal." How many examples do you need? I've given more than one in this thread and others.

I could list hundreds or thousands of items and their increases if that was necessary, but it isn't.

It's far more useless to say "inflation is only 4%" when facts on the ground simply don't bear that out. Go to a store. Any store. Find me something that costs less now than it did a year ago. I would suggest you can't.

Every single thing I buy - everyday staples, bigger-ticket items, everything - is dramatically more expensive than it was six months ago or a year ago. It's just a matter of how much more expensive. And it ain't 4 percent.

I don't understand the point of trying to sit here and say that isn't the case. It is. Everyone knows it's true.

So why is that? Well, sure, it may be a complex answer for each different thing. But there's a general pattern of huge, huge price increases in every sector. And if you think corporate greed isn't playing a huge role in all this, well, then I'd say I think you're very naive.

It would be easier to cite examples of things that have only gone up slightly. I can think of a grand total of one thing that hasn't had huge price increases and/or package shrinking, and that's milk. And that's still gone up more than 4 percent.

Of course there are differences on certain items in certain areas. And I don't have access to that info. But I am sharing my info. And it's real. And it's fact.

So where does this 4 percent number come from? I don't know. But if that's what the grand formula is for determining inflation, it's all ********. It's made up. Common sense tells you that. Look around and open your eyes. There's a very obvious pattern, and it's a giant arrow pointed up on all prices.

Many of the things you wrote above aren’t even things I’ve opined on. Like the 4% inflation number. Really, I don’t get why most of your post is directed at me.

On the flip side, I do completely understand that a) inflation is real, b) prices increased massively over the past 18 months or so, c) if prices stay flat for the next year, that means prices are still hugely inflated vs a couple years ago, and that will cause tremendous pain to people.


Here’s a link to things that cost less now than a year ago:

U.S.’s annual inflation rate is 5%. But here are 10 things that are actually cheaper now than they were a year ago.

Although prices have largely increased in the last 12 months, money pros say there are still some areas unaffected by inflation.

www.marketwatch.com

I’m not sharing it to demonstrate that inflation is fake. Or that it has disappeared. Just asking a direct request you posed above.