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A primary problem is how we measure "inflation" the CPI is notorious for under-weighting housing costs (Rents + Housing prices) and over-weighting consumables like groceries.
The costs or values of houses in my area have doubled in 3.5 years and housing is anywhere between 30-55% of net take home pay for families. Yet the CPI has not accounting for 100% inflation of a 1/3 of costs for the inflation calc's in my MSA during this time. Literally the CPI for Feb '21 for a trailing twelve months YoY comparison is +1.5% which is just nukkin futs.
Economists agree that all of the major inflation indices including CPI-U, CPI-W, the GDP deflator, the chain-weighted CPI, or even the trendy personal-consumption expenditures index all overstate true inflation by somewhere between 2 and 5 percentage points or so.
The general price level is not increasing. We see specific items such as rent/housing increase in price and they are visible; we tend not to notice items that decline in price or are price-stable with increasing quality - for example Vail recently announced next year's Epic Pass (season lift pass at all Vail resorts) is being cut by 20%.
The CPI tends to overstate 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. For example, cellular telephones were introduced at a price point of an inflation-adjusted $10,000 per handset, but were not included in the CPI market basket until 15+ years later when prices had already declined by over 95% - thus, missing the price decline (and quality improvement).
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 - such as cell phones, tablets, IoT, etc.
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.
Economists agree that all of the major inflation indices including CPI-U, CPI-W, the GDP deflator, the chain-weighted CPI, or even the trendy personal-consumption expenditures index all overstate true inflation by somewhere between 2 and 5 percentage points or so.
The general price level is not increasing. We see specific items such as rent/housing increase in price and they are visible; we tend not to notice items that decline in price or are price-stable with increasing quality - for example Vail recently announced next year's Epic Pass (season lift pass at all Vail resorts) is being cut by 20%.
The CPI tends to overstate 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. For example, cellular telephones were introduced at a price point of an inflation-adjusted $10,000 per handset, but were not included in the CPI market basket until 15+ years later when prices had already declined by over 95% - thus, missing the price decline (and quality improvement).
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 - such as cell phones, tablets, IoT, etc.
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.
But then - daily lift tickets at Deer Valley this year - get this - $250!
Yeah, the push clearly is to move people from purchasing daily lift tickets towards season passes good at multiple venues.
Most everyone buys an Ikon Pass instead, or just buys the Deer Valley Season Pass.
As a side note, I passed 100 days so far this season, mostly at Deer Valley and PCMR:
So excellent! We've had these sorts of passes for many years now. The latest being the IKON. Up until my wife's unfortunate medical and surgical conditions the last 4 years, we averaged about 30 ski day a year. But she is getting better and we finally got her back up on skis at DV, and are heading to Mammoth tomorrow!
So excellent! We've had these sorts of passes for many years now. The latest being the IKON. Up until my wife's unfortunate medical and surgical conditions the last 4 years, we averaged about 30 ski day a year. But she is getting better and we finally got her back up on skis at DV, and are heading to Mammoth tomorrow!
I read once that Ski resorts actually dont make much off lift tickets. In fact skiing alone is in the red for a season. Its the food, beer, condos and everything else that they make money on. Even the summer months are more profitable than the winter in most resorts.
So excellent! We've had these sorts of passes for many years now. The latest being the IKON. Up until my wife's unfortunate medical and surgical conditions the last 4 years, we averaged about 30 ski day a year. But she is getting better and we finally got her back up on skis at DV, and are heading to Mammoth tomorrow!
Ski safe!
I'm done for the season. Here are my stats:
103 Days on the slopes.
1,526,125 vertical feet.
1,469 miles skied.
1485 ski runs.
51.2 mph max speed.
6 Near-misses.
1 Face plant.
2 very impressive yard sales.
1 poor Superman imitation.
2 hikes to retrieve ski poles.
1 hike to retrieve ski glove.
Countless moguls.
1 Kardashian sighting.
Too many bottles of Aleve.
0 broken bones.
And, of course, now that DV and PCMR are closed, it is snowing like crazy. Maybe 10 inches on my back deck.
I read once that Ski resorts actually dont make much off lift tickets. In fact skiing alone is in the red for a season. Its the food, beer, condos and everything else that they make money on. Even the summer months are more profitable than the winter in most resorts.
Historically, they make most of their money on real estate development. No one makes money operating the ski resort itself. Yes, they make money on food & beverage - but most is on the real estate development and lodging.
A primary problem is how we measure "inflation" the CPI is notorious for under-weighting housing costs (Rents + Housing prices) and over-weighting consumables like groceries.
The costs or values of houses in my area have doubled in 3.5 years and housing is anywhere between 30-55% of net take home pay for families. Yet the CPI has not accounting for 100% inflation of a 1/3 of costs for the inflation calc's in my MSA during this time. Literally the CPI for Feb '21 for a trailing twelve months YoY comparison is +1.5% which is just nukkin futs.
Exactly this. In my area housing has increased by about 60% in 4 years. Groceries? Based on my shopping, maybe 10-15% over the same 4 years, but that's counting a lot of discretionary items.
For staples? Things like flour, milk, sugar, eggs, etc.. basically most agricultural commodities, they are either flat or in decline. Something I confirmed by looking at the Fed's data a couple months ago. Agricultural commodities are hella cheap right now. Meat prices went up for a while because of supply chain issues, but if you WANT to eat cheap, it is very possible. Also things like clothing have become so cheap it's practically free. All that slave labor in Asia. I marvel every time I buy things like sweatpants at Wal-Mart, how I used to pay MORE in real dollars for the same sweatpants when I was young. When the pandemic started I literally filled my closet with athletic and leisure clothes for a total price of about $250. That stash will keep me clothed for a few years, especially since my business clothes are not getting worn out.
I remember back in the day when a single pair of jeans could cost $80, and outfitting my wardrobe PER YEAR could cost me 4 figures. It seems that the value behind name-brands in things like clothes has completely collapsed.
Last edited by redguard57; 04-14-2021 at 02:44 PM..
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