US economy thread (15 Viewers)

[the moops]

but there are some people posting on Nextdoor about their payments going up $300 to $500 a month and they are scrambling as to what to do.

Nextdoor is just a bunch of people complaining about anything and everything.

I am always skeptical when someone claims their property tax goes up 6000 dollars a year. We have people in this part of the country on Nextdoor bitching about that too. And I call

 

[massraider]

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.

 

[IvanKaramazov]

The state of Florida is special. Particularly when it comes to Homeowners insurance. The state govt interferes to such a degree that it makes China seem capitalistic by comparison. In addition, while hurricanes aren’t new to FL the latest one was a gigantic shock to the system. FL is just a giant mess. I could write pages worth of explanation, maybe later this weekend.

I feel like I understand the part about homeowners insurance. When a hurricane hits (or a fire or earthquake if we're talking CA), insurers get hit with a ton of claims at once, so they lose out on the predictability of the law of large numbers and take on too much risk. Add in rapidly rising home prices, and I can see why insurers and reinsurers feel like they're playing with fire.

But what's the problem with auto insurance? Car accidents are still one-offs that ought to be pretty predictable and stable, unlike claims caused by natural disasters. Can you elaborate a little on that one?

 

[Stoneworker]

• 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.

These are just random factoids and have zero ability to demonstrate the health and direction of the overall economy. Take a look at the graph of leading economic indicators in the link below, which track almost perfectly to recessions, and try to make a case that the economy is headed in a positive direction.

The Conference Board Leading Economic Index® (LEI) for the United States has long been lauded as a reliable leading indicator of recessions, and recent data suggest that the LEI is signaling an approaching recession.​

The LEI is comprised of 10 indicators that cover a wide range of economic activity, including job growth, housing construction, and stock prices. The index is designed to provide a broad-based look at the health of the economy and can be used to predict turning points in the business cycle.​

The LEI for the US declined for the thirteenth consecutive month in April, signaling a worsening economic outlook...​

US Leading Indicators

The Conference Board Leading Economic Index® (LEI) for the United States

www.conference-board.org

 

[Nathan R. Jessep]

The state of Florida is special. Particularly when it comes to Homeowners insurance. The state govt interferes to such a degree that it makes China seem capitalistic by comparison. In addition, while hurricanes aren’t new to FL the latest one was a gigantic shock to the system. FL is just a giant mess. I could write pages worth of explanation, maybe later this weekend.

I feel like I understand the part about homeowners insurance. When a hurricane hits (or a fire or earthquake if we're talking CA), insurers get hit with a ton of claims at once, so they lose out on the predictability of the law of large numbers and take on too much risk. Add in rapidly rising home prices, and I can see why insurers and reinsurers feel like they're playing with fire.

But what's the problem with auto insurance? Car accidents are still one-offs that ought to be pretty predictable and stable, unlike claims caused by natural disasters. Can you elaborate a little on that one?

I posed this question to my insurance buddy and he said that for auto, it was likely being affected by lawsuits (small nuisance claim settlements, etc.) and also the increased cost of car parts for repairs. Also reinsurance costs have skyrocketed so they are passing along that cost as well.

 

[dkp993]

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.

 

[SoBeDad]

Nextdoor is just a bunch of people complaining about anything and everything.

I am always skeptical when someone claims their property tax goes up 6000 dollars a year. We have people in this part of the country on Nextdoor bitching about that too. And I call

In the Miami Beach area, people on Next-door post alot about thefts, such as Amazon packages, and many back it up with photos or videos. Several complain about airbnbs making noise. The biggest complaints last year were about rents increasing dramatically, which is real, and forced many people to reduce other expenses or move. Affordable housing for renters is a huge problem. Some of the increase is related to increased landlord expenses such as insurance and taxes, but much is because of the migration of higher wealth people from the north east. Some immigrants from those regions now say Miami is expensive, but at least the weather is better (most of the year). I think Nextdoor is a good barometer for the economy, but there is some bs, and more scams than before, which people tend to call out. In Florida, homesteaded property has limits on propert tax increases, which is good reason not to move.

 

[The Z Machine]

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.

I certainly don't think that way. I don't look at my retirement portfolio but maybe every quarter. Just keep maxing the 401k and 403b and put any extra in a high yield savings account or into the kids' 529. Investments and movements in the markets don't really do much for me.

I think about the economy much more broadly. What is wage growth doing? What about the affordability of higher education, housing, etc doing? What about trade and the competitiveness of US based companies around the world? What are other economies doing? Is there massive inflation in other places? Is there economic growth? "The Economy" is multi-faceted.

 

[Alex P Keaton]

The state of Florida is special. Particularly when it comes to Homeowners insurance. The state govt interferes to such a degree that it makes China seem capitalistic by comparison. In addition, while hurricanes aren’t new to FL the latest one was a gigantic shock to the system. FL is just a giant mess. I could write pages worth of explanation, maybe later this weekend.

I feel like I understand the part about homeowners insurance. When a hurricane hits (or a fire or earthquake if we're talking CA), insurers get hit with a ton of claims at once, so they lose out on the predictability of the law of large numbers and take on too much risk. Add in rapidly rising home prices, and I can see why insurers and reinsurers feel like they're playing with fire.

But what's the problem with auto insurance? Car accidents are still one-offs that ought to be pretty predictable and stable, unlike claims caused by natural disasters. Can you elaborate a little on that one?

Short answer while I sit waiting for my wife to teach our daughter how to drive the car around the block (can’t miss this comedy gold!!!):

Covid really did throw off a lot of the very boring, predictable auto insurance loss and pricing trends. When paired with heavy handed price regulation, it’s been tricky.

People stopped driving. Claims dropped. Insurer profits went up. Regulators made companies cut their prices.

Then all of a sudden driving started to ramp up again. Regulators only recognize the need for price increases after seeing data that proves prices need to go up (due to insurers losing money).

So the whole system suffers from lags between info and action — in normal times, it functions decently well, at least for auto insurance. But Covid was a big shock to the system.

That’s my short answer. It really has very little to do with car theft increases (as mentioned by others), although I’m sure that contributes a bit.

 

[Alex P Keaton]

but there are some people posting on Nextdoor about their payments going up $300 to $500 a month and they are scrambling as to what to do.

Nextdoor is just a bunch of people complaining about anything and everything.

I am always skeptical when someone claims their property tax goes up 6000 dollars a year. We have people in this part of the country on Nextdoor bitching about that too. And I call

My property taxes went up $5800. Not complaining - we chose to live where we live. But yeah, it’s insane. Of course, the state of IL had a BS “appeal process” where you pay a firm to appeal for you, and they keep a big chunk of the “savings.” And who owns most of these specialist firms? Oh yeah, buddies of the IL state attorney general. I hate this corrupt state so much. Can’t wait to leave in 3 years when my kids are out of high school.

 

[massraider]

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.

I certainly don't think that way. I don't look at my retirement portfolio but maybe every quarter. Just keep maxing the 401k and 403b and put any extra in a high yield savings account or into the kids' 529. Investments and movements in the markets don't really do much for me.

I think about the economy much more broadly. What is wage growth doing? What about the affordability of higher education, housing, etc doing? What about trade and the competitiveness of US based companies around the world? What are other economies doing? Is there massive inflation in other places? Is there economic growth? "The Economy" is multi-faceted.

I agree with you, but if the market is crushing it, but college and housing for young couple is still a nightmare, is the financial news talk going to be positive or negative? It's going to be positive.

 

[DA RAIDERS]

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.

 

[dkp993]

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.

 

[SoBeDad]

The economy is mostly a local and family/person specific entity. The economy is looking bad for these people, many are retirees on fixed income. The root causes are related to high insurance, perhaps maintenance, and land grab opportunities by developers. These are small efficiencies on the bay in a 3 story building. Its a co-op which is not so common in Florida. I considered buying there a few years ago. After the collapse of Champlain towers, HOA fees have increased, as has engineering review. There have been cases of over-reacting and shutting down buildings unnecessarily, in some cases its a developer land grab.

>>Why do you want to throw an old woman out of her home?” wrote Marta Alvarez, 92, a widow who has lived in the building for more than three decades. “Who will help me if I move to a strange place?”<<

MIAMI BEACH A Miami Beach landlord is threatening to evict everyone from this 102-unit building

 

[SoBeDad]

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.

That's how it works in Florida when property is sold. The new owner is taxed at the new assessed value, I think in year 1. In subsequent years, there is a annual cap of 3% courtesy of Save Our Homes.

 

[humpback]

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.

I think it was one poster who was super high on the economy, and the stock market was the 4th out of 5 reasons he gave for his opinion. Besides, the stock market is still down a decent amount from the peak a year and a half ago, so while those in the market now are happier than they were 6 months ago it's not like they're out dancing in the streets. Most people are still a bit uneasy and expect at least a mild recession in the near future.

Your last sentence is rubbish but probably explains your misguided view that people only care about the stock market.

 

[massraider]

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.

I think it was one poster who was super high on the economy, and the stock market was the 4th out of 5 reasons he gave for his opinion. Besides, the stock market is still down a decent amount from the peak a year and a half ago, so while those in the market now are happier than they were 6 months ago it's not like they're out dancing in the streets. Most people are still a bit uneasy and expect at least a mild recession in the near future.

Your last sentence is rubbish but probably explains your misguided view that people only care about the stock market.

Only that sentence was rubbish?!?

Nice…..things are coming along well for me.

 

[Dinsy Ejotuz]

The LEI for the US declined for the thirteenth consecutive month in April, signaling a worsening economic outlook...

I agree it's something of a miracle given that the Fed has raised interest rates like 5% in a year+ (which might have something to do with all the indicators dropping as well), and that if they keep raising a recession is inevitable, but so far the recession calls that have been touted for the last 18 months have been just plain wrong. We're into stopped clock territory.

 

[Desert_Power]

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.

 

[Stoneworker]

The LEI for the US declined for the thirteenth consecutive month in April, signaling a worsening economic outlook...

I agree it's something of a miracle given that the Fed has raised interest rates like 5% in a year+ (which might have something to do with all the indicators dropping as well), and that if they keep raising a recession is inevitable, but so far the recession calls that have been touted for the last 18 months have been just plain wrong. We're into stopped clock territory.

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.

In fact, the vast majority of recessions don't occur until after the Fed pauses and/or cuts interest rates following the tightening cycle.

See below from the Fed's own database. We're still early relative to historical financial/business cycles.

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

 

[Stoneworker]

Ditto for yield curve inversions.

The last four U.S. recessions have not occurred until a significant time after the 2-10 yield curve becomes un-inverted.

It is still inverted by nearly 100bps.

 

[Nathan R. Jessep]

The LEI for the US declined for the thirteenth consecutive month in April, signaling a worsening economic outlook...

I agree it's something of a miracle given that the Fed has raised interest rates like 5% in a year+ (which might have something to do with all the indicators dropping as well), and that if they keep raising a recession is inevitable, but so far the recession calls that have been touted for the last 18 months have been just plain wrong. We're into stopped clock territory.

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.

In fact, the vast majority of recessions don't occur until after the Fed pauses and/or cuts interest rates following the tightening cycle.

See below from the Fed's own database. We're still early relative to historical financial/business cycles.

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

Right and if what I've read is correct, 5.6 is the target rate (i.e. there are more hikes to come)

 

[Stoneworker]

The LEI for the US declined for the thirteenth consecutive month in April, signaling a worsening economic outlook...

I agree it's something of a miracle given that the Fed has raised interest rates like 5% in a year+ (which might have something to do with all the indicators dropping as well), and that if they keep raising a recession is inevitable, but so far the recession calls that have been touted for the last 18 months have been just plain wrong. We're into stopped clock territory.

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.

In fact, the vast majority of recessions don't occur until after the Fed pauses and/or cuts interest rates following the tightening cycle.

See below from the Fed's own database. We're still early relative to historical financial/business cycles.

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

Right and if what I've read is correct, 5.6 is the target rate (i.e. there are more hikes to come)

Exactly. That's up from 5.1 in March, so they changed their tune to be 50 bps more hawkish in a 2-mo period.

July's mtg should be very interesting indeed.

 

[Alex P Keaton]

The LEI for the US declined for the thirteenth consecutive month in April, signaling a worsening economic outlook...

I agree it's something of a miracle given that the Fed has raised interest rates like 5% in a year+ (which might have something to do with all the indicators dropping as well), and that if they keep raising a recession is inevitable, but so far the recession calls that have been touted for the last 18 months have been just plain wrong. We're into stopped clock territory.

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.

In fact, the vast majority of recessions don't occur until after the Fed pauses and/or cuts interest rates following the tightening cycle.

See below from the Fed's own database. We're still early relative to historical financial/business cycles.

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

Thank you for these posts Stoneworker. Both are excellent. We are almost certainly in store for a recession this fall or early winter.

 

[Stoneworker]

The LEI for the US declined for the thirteenth consecutive month in April, signaling a worsening economic outlook...

I agree it's something of a miracle given that the Fed has raised interest rates like 5% in a year+ (which might have something to do with all the indicators dropping as well), and that if they keep raising a recession is inevitable, but so far the recession calls that have been touted for the last 18 months have been just plain wrong. We're into stopped clock territory.

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.

In fact, the vast majority of recessions don't occur until after the Fed pauses and/or cuts interest rates following the tightening cycle.

See below from the Fed's own database. We're still early relative to historical financial/business cycles.

Federal Funds Effective Rate

View data of the Effective Federal Funds Rate, or the interest rate depository institutions charge each other for overnight loans of funds.

fred.stlouisfed.org

Thank you for these posts Stoneworker. Both are excellent. We are almost certainly in store for a recession this fall or early winter.

No worries, APK. Below is the 2/10 yield inversion charted against recessions for happy viewing during U.S. Open commercials (note: need to toggle scroll bar under dates to left to view historicals).

10-Year Treasury Constant Maturity Minus 2-Year Treasury Constant Maturity

The 10-year minus 2-year Treasury (constant maturity) yields: Positive values may imply future growth, negative values may imply economic downturns.

fred.stlouisfed.org

 

[John123]

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.

I just did a little quick research. It sounds like the one time supplemental tax is due to the delay it may take for a new assessment of value of the property after it changes hands. A little history of Prop 13 may come in handy here. It was passed back in the 70's. One of the main drivers was that seniors on fixed incomes were being driven from their homes because they couldn't afford the significant increases in property taxes they were being hit with. So, as a fair compromise, Prop 13 says your property tax can't be more than 1% of the value of the property AND that it can't increase more than 2% per year. That applies to the CURRENT homeowner. So, your property tax can't increase more than 2% per year. Of course, the value of your property might increase more than 2% per year. When you sell it, the assumption is that the new owner WILL be able to afford a property tax based on the value of the property at the time of sale. So, the "base" value is reset at that point to the current assessed value of the property. As a result, you may find people on your block who pay significantly less property tax than you do if they've lived there for a long time. I know my Mom was paying way less than others on her block. She bought our childhood home for like 50k in 1973 and lived there until her death 5 years ago. So, you may have been paying property tax based on the previous owner's tax rate the past couple of years, and this one time bill is to make you whole based upon the current assessed value of the property. I don't remember receiving a one time supplemental bill when I bought my house in LA, but that was almost 25 years ago.

Los Angeles County Office of the Assessor

Office of LA County Assessor Jeff Prang – Committed to establishing accurate & fairly assessed property values. Info: 213-974-3211 | helpdesk@assessor.lacounty.gov

assessor.lacounty.gov

 

[Jayrod]

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.

 

[Runkle]

Oh I remember that happening to me in CA. Closed on a house one April, but my property taxes for my whole first year were based on the old assessed value from the property's last sale in like 1989. At some point in my second year, the county finally updated and my property taxes were based instead on the new sale price from when I bought. So somewhere in year 2/3 I got a bill for what I didn't pay in year 1 but should have.

 

[Alex P Keaton]

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……

 

[dkp993]

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.

I just did a little quick research. It sounds like the one time supplemental tax is due to the delay it may take for a new assessment of value of the property after it changes hands. A little history of Prop 13 may come in handy here. It was passed back in the 70's. One of the main drivers was that seniors on fixed incomes were being driven from their homes because they couldn't afford the significant increases in property taxes they were being hit with. So, as a fair compromise, Prop 13 says your property tax can't be more than 1% of the value of the property AND that it can't increase more than 2% per year. That applies to the CURRENT homeowner. So, your property tax can't increase more than 2% per year. Of course, the value of your property might increase more than 2% per year. When you sell it, the assumption is that the new owner WILL be able to afford a property tax based on the value of the property at the time of sale. So, the "base" value is reset at that point to the current assessed value of the property. As a result, you may find people on your block who pay significantly less property tax than you do if they've lived there for a long time. I know my Mom was paying way less than others on her block. She bought our childhood home for like 50k in 1973 and lived there until her death 5 years ago. So, you may have been paying property tax based on the previous owner's tax rate the past couple of years, and this one time bill is to make you whole based upon the current assessed value of the property. I don't remember receiving a one time supplemental bill when I bought my house in LA, but that was almost 25 years ago.

Los Angeles County Office of the Assessor

Office of LA County Assessor Jeff Prang – Committed to establishing accurate & fairly assessed property values. Info: 213-974-3211 | helpdesk@assessor.lacounty.gov

assessor.lacounty.gov

Great info. Thanks!

 

[BeTheMatch]

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.

 

[IvanKaramazov]

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.

 

[ChiefD]

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

 

[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).

 

[Captain Cranks]

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.

 

[massraider]

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

Any idea why? Shipping costs is my assumption.

 

[Stoneworker]

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.

Great to provide an example because it illustrates how the dreaded wage-price inflationary spiral could be triggered by totally rational thinking about the future.

 

[ChiefD]

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

Any idea why? Shipping costs is my assumption.

No idea. I don't think it's shipping costs. My brother works in a different industry that ships A LOT of product and we were talking last week. He said the shipping market is really soft right now

I think it's greed. We deal with Carrier and Lennox, and there is no way the components for those air conditioners are THAT much more expensive. I can buy replacement parts for those same machines for AC service, and while they have gone up some - they are nowhere near double what they were 2 years ago.

I think these companies are taking advantage of the "supply chain" and "inflation" hot topics for the last two years and just sucking money from people. It's disgusting.

 

[BeTheMatch]

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.

 

[Orange&Blue]

Our assessed value on our house went up another $90k last year, which resulted in a jump in our property taxes, which then resulted in our mortgage payment going up so our escrow account would be properly funded. My wife and I will be fine because we locked in a low interest rate years ago and make good money, but there are some people posting on Nextdoor about their payments going up $300 to $500 a month and they are scrambling as to what to do. The kicker here and the thing people are getting really upset about is when you look at comps for house sales, they are nowhere near what the houses are being assessed at. Great, you say my house is worth 550k but I can only sell it for 475k---that's not right.

Throw in the fact Colorado leads the nation in auto theft (why Colorado, I don't know) and insurance companies are jacking up insurance rates like crazy here We have been with State Farm for over three decades--we have had very few claims, zero tickets, but our insurance went up $70 a month last month because of the auto theft issue. I could understand if we drove vehicles that were high on the list of cars taken, but the car that jumped the most for us was our 2016 Chevy Cruze.

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.

because your car doesn't have modern theft protections, specialized keys, and because people are stealing cars to pay for their houses/drugs.


just guessing

 

[Stoneworker]

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.

 

[BeTheMatch]

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.

I stand by my assertion.

 

[ChiefD]

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.

 

[BeTheMatch]

Recent example:

We moved from MN to OR two years ago. It cost us $3,150 to get a POD from one place to the next in late June.

Now, this month, exactly two years later, we inquired about pricing for the exact same move in reverse. Same zip codes. Same time of year. Same size pod. Everything identical. The price this year? $6,285.

I asked for an explanation. And got mumbled at for a while. Said I wouldn't pay that price without explanation. The agent went and got a supervisor who trotted every single made-up BS excuse he could think of to see if I'd bite on one. Covid. Logistics. Inflation. Fuel prices. Demand. None of those make any sense whatsoever in this case.

They're raising prices because everyone else is and getting away with it. We're going with U-Haul U-pods instead, which are cheaper but not as nice of an option.

 

[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

 

[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?

 

[IvanKaramazov]

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.

 

[Alex P Keaton]

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.

Yep. And the reported inflation numbers are likely overstated due to structural shortcomings (lag effect) in how they estimate changes in housing costs.

 

[fantasy stud]

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.

Interesting chart. I always hear how bad things were under jimmy carter. Apparently, he inherited high inflation also. 1974 and 1975 were brutal similar to 79 and 80. Also, we had a few really great eras of low inflation. We were under 4% every month from 1992-2004 and then again 2009-2020.

 

[DA RAIDERS]

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.

I stand by my assertion.

You are correct in many many instances. It’s because they can. And people still have to have whatever it is.