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2021 - Is inflation finally back in the conversation?


Reagan1k

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Here is an anecdotal piece that consumer demand may be waning in some areas.  We're going to Vegas on a Sat-Mon in a couple of weeks.  Have been looking at hotel prices 1X per week or so for the last 6 weeks.  Tentatively booked Palazzo last night as it was $525 all in for 2 nights including taxes and the $50/day resort fees.   That all in price a month ago was probably $900+.    That was the best deal but pretty much every hotel I was considering is down at least 25% from what is was a month ago.  I'm betting Vegas is going to have a rough go again.  Not only just less discretionary spending generally but I'm guessing drive in demand from LA and surrounding areas surely down with these gas prices.

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1 minute ago, Cheeseweasel said:

The whiplash of going from "shortages" to "excess inventory" is going to be a huge shit sandwich. 

Seems like we are going to be in a weird phase where staples are still priced sky high but potentially bargains to be found for big ticket items with lots of inventory.

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Just now, Skipper said:

Seems like we are going to be in a weird phase where staples are still priced sky high but potentially bargains to be found for big ticket items with lots of inventory.

Layoffs in many sectors. Shortages in others. Only Economists are thrilled about this because they can write books about "this unprecedented time in our history".

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17 minutes ago, Cheeseweasel said:

The whiplash of going from "shortages" to "excess inventory" is going to be a huge shit sandwich. 

yep.  I don't think economic data is picking up how bad it is right now, and people shouting about low unemployment and what have you have no idea how quickly the tables are turning.  This economy is looking like crash test commercial right now with how quickly it's halting.  

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5 minutes ago, washparkhorn said:

It sure looks like a robust contraction in production capacity and efficiency has taken hold. Demand destruction may be the wrong prescription for the current inflation variant. 


 

The amount of interest rates hikes and economic contraction needed to really bring down oil and other commodity prices is not tenable. So elevated energy prices will be setting an elevated floor under inflation until supply is increased or balance is somehow achieved.  

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3 minutes ago, Trey3216 said:

yep.  I don't think economic data is picking up how bad it is right now, and people shouting about low unemployment and what have you have no idea how quickly the tables are turning.  This economy is looking like crash test commercial right now with how quickly it's halting.  

 

FED hopes and dreams:

 

Images Repair GIF by getflexseal

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Just now, Snake Diggity said:

You f’n guys…

”Inflation is out of control!  We’re fucked!!!”

*fed raises rates to address inflation, market and economy respond exactly as expected*
 

”Inflation is getting fixed too fast. We’re fucked!!!”

As opposed to you f'n guys...

"No way we go into a recession, employment is too strong"

"Nothing is fucked here, Dude, nothing is fucked."  

 

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1 minute ago, Snake Diggity said:

You f’n guys…

”Inflation is out of control!  We’re fucked!!!”

*fed raises rates to address inflation, market and economy respond exactly as expected*
 

”Inflation is getting fixed too fast. We’re fucked!!!”

You're probably too young to remember Stagflation.

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1 minute ago, Snake Diggity said:

You f’n guys…

”Inflation is out of control!  We’re fucked!!!”

*fed raises rates to address inflation, market and economy respond exactly as expected*
 

”Inflation is getting fixed too fast. We’re fucked!!!”

The gripe here has always been the timing. If they had ended QE and started hiking sooner, perhaps they wouldn’t be having to play catch up, and taking extra risk in the process. 

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Just now, Trey3216 said:

As opposed to you f'n guys...

"No way we go into a recession, employment is too strong"

"Nothing is fucked here, Dude, nothing is fucked."  

 

I have never said we would not go into recession.  I have been saying we will likely have an odd recession where unemployment is still relatively low.  If that means “nothing is fucked”, ok.

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Just now, Immaculate Vibes said:

The gripe here has always been the timing. If they had ended QE and started hiking sooner, perhaps they wouldn’t be having to play catch up, and taking extra risk in the process. 

This is fair criticism of the Fed.  But I still think you’re overstating the risk (and using hindsight to justify more intense criticism than is warranted).

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1 minute ago, Snake Diggity said:

This is fair criticism of the Fed.  But I still think you’re overstating the risk (and using hindsight to justify more intense criticism than is warranted).

What's being overstated?  You think printing the majority of dollars ever printed in the last 24 months is "normal"?  

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If you remember stagflation you’re in your sixties and hopefully set for retirement rather than a job as a Walmart greeter.  If not, I’m sorry.

 This economy is really fucky.  I have some clients delaying new projects and others screaming to finish current ones.  Price inflation on pipe, concrete, electrical controls, etc mean that prices are usually good only for around 45 days.  But delivery of those goods may be more than six months off.  Supply chain still seems more the source of all this crap than anything else, but when the Fed moves hard there will be shockwaves all around.

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1 minute ago, Snake Diggity said:

This is fair criticism of the Fed.  But I still think you’re overstating the risk (and using hindsight to justify more intense criticism than is warranted).

Disagree. Look at bonds moves since last cpi print and leak of 75 bps hike. Massive sell off that can certainly have ripple effects.  
 

I shared the latest Druck interview on another thread, but the two highlights to me were, we’ve never had inflation over 5% and got it down with a soft landing. Also, we’ve never had inflation over 5% and tamed it without getting fed funds rate over cpi. That will never happen now. So what happens?

 

But if we had made moves last summer when experts wrongly said it was transitory, maybe we could’ve averted this crisis. And I say it’s a crisis because we’re really stuck in a corner if you look at the precedents I shared above. 

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5 minutes ago, Trey3216 said:

What's being overstated?  You think printing the majority of dollars ever printed in the last 24 months is "normal"?  

First, the government and the Fed are not the same thing.  But also you keep parroting that factoid about “majority of dollars…”.  How much of that money has actually been spent?  

 

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this 25.7% year over year increase is MUCH closer to the truth than the 8.6% quoted by the government.  My everyday items are 20-50% higher than last year, milk by itself about 60% for a gallon from $2.59 to $4.09.   Beef, chicken, eggs, butter, some vegies up 10-40%.  Electric rates up huge. 

So, for one, that chart is plotting CPI for certain categories - that is quoting the government.

The sectors named are energy and food - the latter being among the non-energy sectors most sensitive to energy prices. It’s essentially saying there’s a huge spike in energy prices.

People buy other things too, which brings the top line down. So that’s not necessarily in conflict with the overall CPI inflation rate. One’s own personal rate of inflation can vary pretty widely depending on where they spend their money. The NYT had an interesting little interactive for that recently, not sure if they’re updating data with each new release.
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The gripe here has always been the timing. If they had ended QE and started hiking sooner, perhaps they wouldn’t be having to play catch up, and taking extra risk in the process. 

Agreed, for once. The transitory crowd, of which I freely admit I was a member, has some crow to eat. In hindsight, earlier action probably would have been better. We would still be setting price shocks from various geopolitical happenings - we’d still be looking at the same fuel prices, for example, regardless of what the fed did - but it would have helped with the domestic part of the equation.

I'm still wondering why a certain few are shitting themselves over a recession.  They happen, deal with it.

It’s a not-so-subtle political circle jerk. Ignore it.
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38 minutes ago, Immaculate Vibes said:

Disagree. Look at bonds moves since last cpi print and leak of 75 bps hike. Massive sell off that can certainly have ripple effects.  
 

I shared the latest Druck interview on another thread, but the two highlights to me were, we’ve never had inflation over 5% and got it down with a soft landing. Also, we’ve never had inflation over 5% and tamed it without getting fed funds rate over cpi. That will never happen now. So what happens?

 

But if we had made moves last summer when experts wrongly said it was transitory, maybe we could’ve averted this crisis. And I say it’s a crisis because we’re really stuck in a corner if you look at the precedents I shared above. 

I think it’s important to distinguish between outcomes related to GDP, the stock market, unemployment, and inflation.  The Fed considers only the latter 2 when setting rates.  I’ve repeated it and repeated it but it appears to keep getting forgotten, I expect a recession and have for months.  The soft landing wasn’t happening.  But that’s a measure of GDP, not unemployment.  There are unprecedented demographic and geopolitical factors at play that I think will decouple unemployment from GDP (at least relative to previous recessions).  
 

So “stuck in a corner”, meaning we have inflation and recession?  Ok, maybe (although I don’t think that will be the case for long).  But if unemployment is still low, it’s mainly just a short term pain for the market.  Not a perfect outcome but not the MrT.gif pain y’all are crowing about.

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1 hour ago, Skipper said:

Here is an anecdotal piece that consumer demand may be waning in some areas.  We're going to Vegas on a Sat-Mon in a couple of weeks.  Have been looking at hotel prices 1X per week or so for the last 6 weeks.  Tentatively booked Palazzo last night as it was $525 all in for 2 nights including taxes and the $50/day resort fees.   That all in price a month ago was probably $900+.    That was the best deal but pretty much every hotel I was considering is down at least 25% from what is was a month ago.  I'm betting Vegas is going to have a rough go again.  Not only just less discretionary spending generally but I'm guessing drive in demand from LA and surrounding areas surely down with these gas prices.

Travel going into the fall will be interesting.  I think a lot of people booked travel/vacations for this summer back in the spring.  There was pent up demand from 2020 and 2021 still being kind of a shit show.  Huge demand, high prices, full planes.  Are the airlines going to be able to charge over $1K for basic routes after Labor Day?  I don't think so.  There could be a major drop off in demand due to high prices and your example may illustrate that.

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23 minutes ago, Snake Diggity said:

I think it’s important to distinguish between outcomes related to GDP, the stock market, unemployment, and inflation.  The Fed considers only the latter 2 when setting rates.  I’ve repeated it and repeated it but it appears to keep getting forgotten, I expect a recession and have for months.  The soft landing wasn’t happening.  But that’s a measure of GDP, not unemployment.  There are unprecedented demographic and geopolitical factors at play that I think will decouple unemployment from GDP (at least relative to previous recessions).  
 

So “stuck in a corner”, meaning we have inflation and recession?  Ok, maybe (although I don’t think that will be the case for long).  But if unemployment is still low, it’s mainly just a short term pain for the market.  Not a perfect outcome but not the MrT.gif pain y’all are crowing about.

TIL the Fed doesn’t consider the stock market. 🤔 

 

31 minutes ago, washparkhorn said:

Derivatives remain the unknown risk with these hikes. I have little doubt we will end up in another debt crisis. 

8879F6B3-ED81-478A-AB8E-38EC1626EAAC.gif.627bf453f15e540282e3f5851a3cc682.gif

 

Interest rates, big currency moves like the yen. Disorderly moves in a complex system  

 

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1 hour ago, gmr548 said:


Agreed, for once. The transitory crowd, of which I freely admit I was a member, has some crow to eat. In hindsight, earlier action probably would have been better. We would still be setting price shocks from various geopolitical happenings - we’d still be looking at the same fuel prices, for example, regardless of what the fed did - but it would have helped with the domestic part of the equation.


It’s a not-so-subtle political circle jerk. Ignore it.

It’s also a group that has vehemently saying this shit for over a year

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38 minutes ago, Aqua Buddha said:

Travel going into the fall will be interesting.  I think a lot of people booked travel/vacations for this summer back in the spring.  There was pent up demand from 2020 and 2021 still being kind of a shit show.  Huge demand, high prices, full planes.  Are the airlines going to be able to charge over $1K for basic routes after Labor Day?  I don't think so.  There could be a major drop off in demand due to high prices and your example may illustrate that.

Agreed 100%.  We booked a Disney trip in late January or early February (for May travel) and Vegas in April (for June travel) and airline prices increased dramatically during that window.  Obviously they have only gone up from there.  I think it was around $1k total for 4 in economy DFW-Orlando when we booked.  I would like to do some kind of a quick trip this fall but probably won't even start considering plans until after Labor day when demand drops.

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So, this inflation is really really painful for so many people (and just a pyscholgical shit show) b/c shit people actually buy and can't not buy- like gas and food at home- is up something like 25%  

I just got back from a 12 day RV trip. IT was a bummer.  It's a bummer every time I go to the store.  We were planning a trip around Texas and figured on $800 in gas and $400 in food. Instead it was something like $1200 in gas and $550 in food.  That shit matters.  Every time I pick up groceries now for our family of 5 it has a 3 at the beginning of it- that used to be a 1 at the beginning of it (it was a really high 1, and a low 3, and our kids are getting older so they eat more, and there's other stuff going on - but it sucks). It has us changing our lives some (eating out less- eating cheaper food- eating less steaks and eating more pork instead) and we know how blessed we are compared to so many other people.  Cancelled a trip to padre and replaced it with a trip around Houston.  Cancelled a trip to the grand canyon next spring break.  That has to, I believe, be going on all around the country.  

I have read about/know all about the 1970's and inflation but never felt it. It sucks.  It really really really sucks.  I can't imagine there is enough tolerance for that kind of pain to kill fossil fuels, I just don't believe true after living through this bleakness. 

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