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The cost of oil is not due to any "war on fossil fuels". There's a worldwide excess of demand vs supply, and OPEC plus Russia have refused to increase production.
Regulations punishing small businesses? Like what?
10 regulations that give small business owners the worst headaches
The federal tax code. ...
The Affordable Care Act. ...
Overtime rules. ...
Independent contractor test. ...
The evolving joint employer standard. ...
Reporting pay data by gender and race. ...
EPA's expansion of Clean Water Act jurisdiction....
10 regulations that give small business owners the worst headaches
The federal tax code. ...
The Affordable Care Act. ...
Overtime rules. ...
Independent contractor test. ...
The evolving joint employer standard. ...
Reporting pay data by gender and race. ...
EPA's expansion of Clean Water Act jurisdiction....
The tax code applies to everyone, and isn't that hard to understand.
ACA applies to everyone, not just small businesses.
Overtime rules? Ha, if a small business doesn't like them, it's because the business wants to cheat employees out of their pay.
Small businesses, and large, want to treat employees as contractors so the business makes more money at the expense of the employee.
So, most of what you call onerous regulation is just whining by business owners who don't want to pay employees fairly.
So, you don't believe that the disruption to the supply chain caused by Covid 19 has anything to do with this?
Come on, we've been running high deficits for years under both republican and democratic presidential administrations. Inflation has been low until the problems with Covid 19 began. It makes a difference when sectors of the economy shut down, when people stop coming to work, when ships cannot offload cargoes at American ports etc. BTW, all the countries in this world are experiencing the very same thing right now.
The inflation rate is between 5 and 6 percent right now. Its not good, but it is not "off the charts".
You don't have the kind of disruption this disease has caused without inflation resulting. Its a little deeper than "too much money being printed".
The facts do not align with the bolded statement.
Money supply has been growing well before COVID, going back to the early 2000s.
6.2% is just official CPI, that means real inflation is closer to 10%.
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Originally Posted by jeffdoorgunner
6.2% ???? Probably more like double that…….
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Originally Posted by jimmybirdie
Inflation is not 5% or 6%. Food inflation is 30% where I am. Everything else we buy is 10 to 20% more expensive.
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Originally Posted by Sunbiz1
An imaginary number for non-essential items.
No, no, no. No. Just no.
Economists of all flavors agree that the reported inflation numbers OVERSTATE true inflation.
There's always been a controversy over which measure of inflation is best: the CPI-U, the CPI-W, the GDP deflator, the chain-weighted CPI, or even the trendy personal-consumption expenditures index—each of which typically shows an inflation number within 0.3 percentage point of the others.
The overstatement of the CPI compared to the true inflation rate has been studied for at least 50 years. Over 20 years ago the BLS attempted to reduce the overstatement of inflation by introducing a quality adjustment called a "Hedonic Adjustment." The current controversy is that the way BLS implemented the Hedonic Adjustment is itself very flawed.
For example, the first operational cellphones were introduced in 1983 at an inflation-adjusted price of well over $10,000 in today's dollars. They were bulky, heavy, and very low quality products. Today, you can purchase a tracfone at Walmart for $29 and it is a much better product. Does the CPI or its alternatives track this steep decline in prices from over $10,000 to $29? Of course not. The BLS didn't include a cell phone into its market basket of goods until 1998, long after that $10,0000 1983 phone had declined down the price curve to be cheap.
Hence the upward bias in the statistic. CPI overstates true inflation.
Google Lens on a $35 phone, for example, can now translate and read aloud signs in 14 languages. Does the BLS capture the costs that technology saves compared with the services of human translators? Of course not.
Hence the upward bias in the statistic. CPI overstates true inflation.
Alan Greenspan's comments at Wharton not long before the Pandemic:
Quote:
“So there is a bias in the statistic [CPI]. You’re getting statistics which are not correct. ... If you had a 2% inflation rate as currently measured, it’s the equivalent of zero for actually what consumers are buying.”
The only controversy is HOW MUCH does the CPI overstate true inflation. Scholarly estimates range from a bit less than 1% to 5% or so.
We use Adobe Analytics data on online transactions for millions of products in many different categories from 2014 to 2017 to shed light on how online inflation compares to overall inflation, and to gauge the magnitude of new product bias online. The Adobe data contain transaction prices and quantities purchased. We estimate that online inflation was about 1 percentage point lower than in the CPI for the same categories from 2014--2017. In addition, the rising variety of products sold online, implies roughly 2 percentage points lower inflation than in a matched model/CPI-style index.
The CPI tends to overstate true inflation because of the following biases:
Substitution bias: When the price of a product in the consumer basket increases substantially, consumers tend to substitute lower-priced alternatives. Thus, since the CPI is a fixed-weight price index, it would not accurately predict the impact of the price increase on the consumer’s budget.
Quality bias: Over time, technological advances increase the life and usefulness of products, but the CPI does not reflect such improvements.
New Product Bias: New products are not introduced into the index until they become commonplace, so the dramatic price decreases often associated with new technology products are not reflected in the index.
Channel bias: the consumer shift to new outlets such as wholesale clubs and online retailers is not well-represented by the CPI. Therefore, it tends to overstate inflation due to an adjustment for channel.
Location: East of Seattle since 1992, 615' Elevation, Zone 8b - originally from SF Bay Area
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[quote=WRM20;62285865]
Quote:
Originally Posted by Sunbiz1
Why would the cost of construction even be a consideration for pricing a house? House prices are based on supply and demand, not cost.
I worked 15 years before I could afford a mortgage. My Dad worked 17, and made good money.
Sure, lets get rid of the Federal Reserve, and return to those halcyon days before the Fed, where the country was on a boom-bust cycle that was vicious.
Yes, for existing houses, but for new homes the cost of construction is a major consideration. Here the median cost of a house most 20-40 years old is just under a million, while in the new developments the least expensive home is $1.5 million, with the current construction cost of over $400/sf. With seniors remaining in place longer, there are more new homes available than pre-owned.
Just hang out for a while. In 2020 I got out and traveled and bought stuff while others were hunkered down, now I'm hunkering down while everyone else is perpetually in Black Friday mode.
Prices maybe won't go down, but inventory and ease of purchase WILL be better next year for a lot of goods. I would imagine most employers will match the CPI rate of inflation with wages in todays tight market. America's balance sheet is good, but consumers are winding down their savings, which means either less people spending or more people working eventually here. The whole iBuying of houses fire has been put out a little, and home price increases are stagnating. By this time 2022 the shipping crisis will be ironed out. Look what happened to the lumber price, it was all over the news when it was ridiculous, but that bubble popped and it's back to a normal range now.
Right now is just like a traffic jam period to be a consumer. It's best if you aren't going with the flow and in the same line as everyone else.
You can buy a car but now they are selling for MSRP or above (I believe $45k+ is average now).
People are seeing inflated prices for groceries and a slew of other things.
Fuel prices are creeping up to 2009ish levels where people were buying up all kinds of econo car. Now people are paying insane amounts of money for full size trucks/SUVs that get 17 mpg.
Collectibles of all kinds are going for insane amounts of money. As an example, I remember a few years ago when Michael Jordan rookie cards were like $5-10k — now they are $50k-$500k.
Will there come a point soon where those (cash rich?) not taking on all this debt will breathe a sigh of relief and clean up with lower prices?
I remember 2009/10 as not that bad — my parents were people that always lived below their means so despite their 401ks taking a hit, life was good when everything seemed very cheap back then. I remember dealerships almost giving away cars. I remember handymen/construction people on Facebook marketplace begging for work and you could get something fixed quick and cheap.
I've only taken two economics courses in my entire life, but from what I remember inflation can be triggered by an increase in money supply, increase in demand and quantity demanded, scarcity or reduced supply, and I'm sure there are some other factors. Economic policies such as off-shoring, dependency of a global supply chain, quantitative easing/money printing, economic stimulus relief, interest rate cuts (similar to money printing), elevated consumption (consumerism), higher energy costs, and commodities speculation are all responsible.
I'm doubt this is a exclusively an American problem and I'd love to know what's going on with inflation in some analogy nations such as the EU, Canada, Mexico, Germany, etc. Then I'd like to know what's going on with inflation in other nations like Iran, Columbia, and Egypt. My guess is that our service economy has been crippled by the pandemic and the rise in energy prices (oil) is a catalyst for the pain felt in transportation costs, food prices, and durable goods.
The solution is to tame the demand, increase the supply, increase our independence on other countries, and adjust our domestic economic policies to help people on the bottom while encouraging the wealth to use their wealth. I mean, it's nice when your money makes more money than you do but that gets dangerous when too many people are in that situation.
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