Jump to content

2021 - Is inflation finally back in the conversation?


Reagan1k

Recommended Posts

What are you guys seeing?

Most everyone has heard talk about things like lumber and OSB prices skyrocketing, but I'm now getting mid-year price increase notices from a variety of manufacturers on top of what they did in January as yearly increases.

Curious what your experiences are in the last month or two?  Covid is still wrecking some supply chains, and now pricing seem to be popping everywhere i turn on materials - no clue how it is in services.

Thoughts?

Link to comment
Share on other sites

3 hours ago, Felix said:

From what I've heard it's mostly supply disruptions due to various factors.  Lumber is out of control. Steel isn't as bad but it's going up steadily.

Getting drums for packaging sucks right now. We’ve seen an increase in caustic prices too that will probably trickle down to some of our other chemicals. Our materials and packaging cost increase is being estimated in the millions at this point. 

Link to comment
Share on other sites

Barry Habib (mortgage and bond markets guy) was predicting higher rates because of inflation driven mostly by supply chain disruptions as demand for pretty much everything increases.  He was also predicting deflation later in the year once the supply chain were moving smoother (and lower rates).  I suspect he’s less bullish on both outcomes with the stimulus.  

Link to comment
Share on other sites

I’m becoming weary of spending time that would be used selling to instead notify customers of a new price increase.

However, I will say that we still have an older stamp at my office that used to be used as a disclaimer on quotes from the 70‚Äôs. ¬†It says ‚ÄúPrice in effect at time of order.‚ÄĚ ¬†Those had to be fun times!¬†

  • Like 1
Link to comment
Share on other sites

  • 2 weeks later...

What do you mean by ‚Äúfinally back in the conversation‚ÄĚ? The cost of healthcare has been going up at a rate of nearly 10%/year for many years now. Same with higher education. Same with housing.

  • Hook 'Em 1
  • Like 1
Link to comment
Share on other sites

I work in healthcare.  My inventory orders have gone up insanely high.  Things I used to buy for $3-4 are now $30.  A box of gloves used to be $10.  I now pay $43 for a box of gloves.  I'm about to raise my prices about 25-30% across the board to keep up with the rising costs of materials in healthcare.  Oh also, staff is now demanding insanely high pay.  I cannot find a hygienist to hire.  They all want $50+ an hour with benefits.  Insurance reimbursements are like $40-60 a cleaning.  I'm not even breaking even but losing money on some procedures.  It's insane now what patient have to pay for health/dental care.

My wife and I also just recently bought a house.  We had to wait 4+ months for appliances and furniture and shit wasn't cheap.  

My friends in the restaurant business are all suffering.  They all complain to me about how expensive their inventory orders and deliveries are as well.  

Link to comment
Share on other sites

Inflation will continue to rise. We are at 1.7% and with the huge Covid and Infrastructure Spending, it will continue to rise, probably up to 2.5%, maybe event hit 3%. People will bitch and moan but we just went through one of the worst events in US History, the government is supposed to use its tools to stimulate the economy. It also has the tools to decrease inflation if it inches up too high. 

  • Hook 'Em 1
Link to comment
Share on other sites

Cost of chips, goods, etc are skyrocketing. We have to keep raising costs of good to the market to match. Just crazy.

On a personal note we’ve been buying new furniture for our house and the lead time has been crazy long.

Link to comment
Share on other sites

9 hours ago, TTU13 said:

Cost of chips, goods, etc are skyrocketing. We have to keep raising costs of good to the market to match. Just crazy.

On a personal note we’ve been buying new furniture for our house and the lead time has been crazy long.

I went apeshit when my fridge didn't show up on my scheduled delivery date.  We had waited two months and they told me it would be another two months.  Went down to the store to bitch them out and returned my order and bought the same fridge with same day delivery at Best Buy.

All of our furniture from Crate and Barrell took 4 months.  I'm about to order some damn curtain rods and it won't be shipped till fucking June.

  • Like 1
Link to comment
Share on other sites

23 hours ago, Neonmoon said:

Inflation will continue to rise. We are at 1.7% and with the huge Covid and Infrastructure Spending, it will continue to rise, probably up to 2.5%, maybe event hit 3%. People will bitch and moan but we just went through one of the worst events in US History, the government is supposed to use its tools to stimulate the economy. It also has the tools to decrease inflation if it inches up too high. 

We don't need to stimulate an economy that's coming out of lockdowns. It's regarded.

  • Hook 'Em 3
  • Like 1
Link to comment
Share on other sites

11 hours ago, washparkhorn said:

Cool so forward looking inflation expectation is around 2% and we've been consistently under 2 for the past 8 years or so. Looks like we'll be fine even if we run up to 2.5 or 3 until 2023. I'm not worried about a high inflation environment at all. Those who were worried about it after QE have massive egg on their face and maybe 20 years from now they will be right about massive inflation, but at that point they'll have called 30 of the last 1 inflationary spikes.

Edited by TheFlyingBoat
  • Haha 1
Link to comment
Share on other sites

6 hours ago, TheFlyingBoat said:

Cool so forward looking inflation expectation is around 2% and we've been consistently under 2 for the past 8 years or so. Looks like we'll be fine even if we run up to 2.5 or 3 until 2023. I'm not worried about a high inflation environment at all. Those who were worried about it after QE have massive egg on their face and maybe 20 years from now they will be right about massive inflation, but at that point they'll have called 30 of the last 1 inflationary spikes.

I can understand why you would say that looking at this chart. However the chart is a bit of bullshit to be honest. ¬†In order to understand why that chart does not truly reflect¬†inflation experienced by the US consumer¬†you need to understand how the fed calculates inflation. They use hedonic adjustments to lower inflation rates down to their desired 1.5-2%. They have also removed housing prices from inflation and use a ‚Äúrent equivalent basis‚ÄĚ for their housing component.¬†
 

If you care to read more on the subject the below two links will get you going. If you want to dismiss the issue and put your head in the sand, be my guest.

https://wolfstreet.com/2021/04/13/yup-dollars-purchasing-power-dropped-to-record-low-again-but-more-sharply-and-its-worse-than-cpi-shows/

http://www.chapwoodindex.org/

  • Hook 'Em 2
  • Like 2
Link to comment
Share on other sites

On 4/3/2021 at 7:31 AM, deadshank said:

Lumber up

Roofing up

Copper up

Metal up

Appliances up

Concrete up 

Still have people wanting house built or remodeled.   The tipping point has not been reached. Demand is still there.  

And let's hope we don't have an active Tropical season on our coasts.....   

  • Like 1
  • Rage+1 1
Link to comment
Share on other sites

9 hours ago, TheFlyingBoat said:

Cool so forward looking inflation expectation is around 2% and we've been consistently under 2 for the past 8 years or so. Looks like we'll be fine even if we run up to 2.5 or 3 until 2023. I'm not worried about a high inflation environment at all. Those who were worried about it after QE have massive egg on their face and maybe 20 years from now they will be right about massive inflation, but at that point they'll have called 30 of the last 1 inflationary spikes.

 

3 hours ago, Johnny Chimpo said:

I can understand why you would say that looking at this chart. However the chart is a bit of bullshit to be honest. ¬†In order to understand why that chart does not truly reflect¬†inflation experienced by the US consumer¬†you need to understand how the fed calculates inflation. They use hedonic adjustments to lower inflation rates down to their desired 1.5-2%. They have also removed housing prices from inflation and use a ‚Äúrent equivalent basis‚ÄĚ for their housing component.¬†
 

If you care to read more on the subject the below two links will get you going. If you want to dismiss the issue and put your head in the sand, be my guest.

https://wolfstreet.com/2021/04/13/yup-dollars-purchasing-power-dropped-to-record-low-again-but-more-sharply-and-its-worse-than-cpi-shows/

http://www.chapwoodindex.org/

I’m pretty new to the RE side, but housing prices are way up. Part of that is lumber being way up - I think it was Friday board hit another all time high. A builder I was talking to said he can’t give me a quote that will last more than a week or two. Roofing contractor I use said his material prices just went up again and he expects to raise again in August.
 

Im not new to the industrial side. Raw materials, packaging, metal, chemicals are all up and some have incredibly long lead times. Shipping can be hard to lock down. About the only good thing in all this is molly prices are up, and if they go a little more, you can turn stuff that was being land filled in to a product to reclaim the metal and be profitable. Chart is bullshit 

  • Hook 'Em 1
Link to comment
Share on other sites

https://voxeu.org/article/inflation-aftermath-wars-and-pandemics

Inflation in the aftermath of wars and pandemics

Kevin Daly, Rositsa D. Chankova 15 April 2021

The economic consequences of Covid-19 are often compared to a war, prompting fears of rising inflation and high bond yields. However, historically, pandemics and wars have had diverging effects. This column uses data extending to the 1300s to compare inflation and government bond yield behaviour in the aftermath of the world’s 12 largest wars and pandemics. It shows that both inflation and bond yields typically rise in wartime but remain relatively stable during pandemics.

Although every such event is unique, history suggests high inflation and bond yields are not a natural consequence of pandemics. 

Link to comment
Share on other sites

On 4/13/2021 at 4:52 PM, BearSchlong said:

It's not quite that easy. You don't expand the money supply like that and expect it to not be a bitch in the long term.
Those tools. . .ouch. It's not gonna be pretty.

I wouldn't be long in any fiat, for sure.
 

That's what I think is going to happen. You can't keep printing trillions out of thin air without a hit to your currency. Especially when most of the "stimulus" is going to pet projects that aren't really putting dollars back into the economy. I don't think it's gonna be Weimar Republic bad, but I could see another Great Depression. I have been buying up depreciated assets (tractor, skid steer, and a UTV), all are about bottomed out on depreciation, they have nowhere to go but up. I can use them myself, and could do work for others if need be. Just bought the Kubota tractor about two hours ago. Useable assets are not gonna be any cheaper for a long time, and you don't want to be caught with a bunch of worthless paper if shit really got bad.

CHIEF

  • Hook 'Em 4
  • Like 1
Link to comment
Share on other sites

That's what I think is going to happen. You can't keep printing trillions out of thin air without a hit to your currency. Especially when most of the "stimulus" is going to pet projects that aren't really putting dollars back into the economy. I don't think it's gonna be Weimar Republic bad, but I could see another Great Depression. I have been buying up depreciated assets (tractor, skid steer, and a UTV), all are about bottomed out on depreciation, they have nowhere to go but up. I can use them myself, and could do work for others if need be. Just bought the Kubota tractor about two hours ago. Useable assets are not gonna be any cheaper for a long time, and you don't want to be caught with a bunch of worthless paper if shit really got bad.
CHIEF

Aren’t they able to invent money without inflating the currency because they are the worlds reserve currency, and everything is denominated in $ ??? So basically they can?
Link to comment
Share on other sites

1 hour ago, KeysPhoneWallet said:


Aren’t they able to invent money without inflating the currency because they are the worlds reserve currency, and everything is denominated in $ ??? So basically they can?

they're able to create dollars without inflating the currency  because much of the economy is sitting on the sidelines.  V is perfectly capable of dropping in reaction to more M (in other words, MV = PQ really doesn't tell you shit)

Link to comment
Share on other sites

59 minutes ago, KeysPhoneWallet said:


Aren’t they able to invent money without inflating the currency because they are the worlds reserve currency, and everything is denominated in $ ??? So basically they can?

You have to operate in Good Faith. You can't do stupid things that would jeopardize that standing, like having 75% of the dollars being circulated having been printed in the last year. Our GDP was 90% a year ago, it's at 102% after the pandemic, and projected at 107% by 2023 and 195% by 2050. That is not sustainable. We are also moving to multiple Reserve Currencies, which will compete, and then dominate the Reserve Currencies if the US cannot get this under control.

https://www.institutionalinvestor.com/article/b1qd5szwghvm32/The-Dominant-Dollar-s-Long-Term-Status-is-Set-to-Wane

CHIEF

  • Hook 'Em 1
Link to comment
Share on other sites

Economist or politician?

Because economists aren't running the show. There are no adults in charge, and haven't been for a long damned time.

Our last president honestly thought that a hyperinflated stock market was the equivalent of a good economy.

Literally everyone parked their money in stock because there are no investments with a better IRR. That is horrifying.

  • Hook 'Em 2
Link to comment
Share on other sites

4 hours ago, BearSchlong said:

Economist or politician?

Because economists aren't running the show. There are no adults in charge, and haven't been for a long damned time.

Our last president honestly thought that a hyperinflated stock market was the equivalent of a good economy.

Literally everyone parked their money in stock because there are no investments with a better IRR. That is horrifying.

People's 401ks are happy though. 

You reminded me of this. Kensyian economics is the winner of the day, unfortunately.

https://reason.com/video/2021/04/05/does-national-debt-still-matter-americas-greatest-gamble/

The libertarian economist Murray Rothbard once wrote that when economists started telling politicians that it was the "government's moral and scientific duty to spend, spend, and spend," they went from being the "grouches at the picnic" to in-house yes-men. 

 

Link to comment
Share on other sites

On 4/14/2021 at 4:01 PM, workswithseed said:

We don't need to stimulate an economy that's coming out of lockdowns. It's regarded.

I understand the line of thinking that you don't want a complete economic collapse resulting in a depression, no problem with propping shit up a bit.  But last year when unemployment was skyrocketing, we needed just enough to keep things from spiraling down the drain - a bit of deflation would have not been the end of the world.  People are out of work, no one has any money, let's make shit more expensive.  Great strategy there.

Link to comment
Share on other sites

13 hours ago, CHIEF said:

Our GDP was 90% a year ago, it's at 102% after the pandemic, and projected at 107% by 2023 and 195% by 2050. That is not sustainable.

Why isn't that sustainable?  It works out to roughly a 2.5% increase in GDP per year for the next 30 years.  That's far from being uncontrollable.

  • Hook 'Em 2
Link to comment
Share on other sites

12 hours ago, BearSchlong said:

The other book I've been listening to. Narrated by a sexy female Brit:

31f1c90458a2e43606a28c0f9dce017d.jpg

You can't fuck with bitcoin?  Someone needs to tell that to all the people that have had theirs stolen in various hacks or the idiots that threw away portable hard drives loaded with bitcoins from the days it was < $1,000.

Link to comment
Share on other sites

4 hours ago, Fudge Nuggets said:

I understand the line of thinking that you don't want a complete economic collapse resulting in a depression, no problem with propping shit up a bit.  But last year when unemployment was skyrocketing, we needed just enough to keep things from spiraling down the drain - a bit of deflation would have not been the end of the world.  People are out of work, no one has any money, let's make shit more expensive.  Great strategy there.

As I was told "when someone drives a truck through your business they owe you damages." 

Link to comment
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.



√ó
√ó
  • Create New...