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2021 - Is inflation finally back in the conversation?


Reagan1k

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For the last four years, we've built the exact same two buildings in the same city with each building costing $15 million 4 years ago....so no design or location variances apply in my personal inflation experiment.

Each year, we've seen ridiculously large jumps in either labor or materials (or both).

This is year 5 and for first time, we are seeing certain areas staying flat with little danger of inventory shortages.

I deeply apologize for this very political message.  I'll take it to CR next time.

 

 

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16 minutes ago, Hornbeliever said:

For the last four years, we've built the exact same two buildings in the same city with each building costing $15 million 4 years ago....so no design or location variances apply in my personal inflation experiment.

Each year, we've seen ridiculously large jumps in either labor or materials (or both).

This is year 5 and for first time, we are seeing certain areas staying flat with little danger of inventory shortages.

I deeply apologize for this very political message.  I'll take it to CR next time.

 

 

Spot on.  First time I have here in awhile that we didn’t need to procure TPO and rigid insulation a year out.  In stock and actually holding off on cutting them loose for better pricing.  Roofing materials a very-loose proxy for other materials (electrical gear excluded).

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2 hours ago, Hornbeliever said:

For the last four years, we've built the exact same two buildings in the same city with each building costing $15 million 4 years ago....so no design or location variances apply in my personal inflation experiment.

Each year, we've seen ridiculously large jumps in either labor or materials (or both).

This is year 5 and for first time, we are seeing certain areas staying flat with little danger of inventory shortages.

I deeply apologize for this very political message.  I'll take it to CR next time.

Lumber seems to be on the rebound already, though a small Fed rate hike could slap it down one last time:

https://tradingeconomics.com/commodities

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6 hours ago, jimmyjazz said:

Because I read this thread regularly, and I know what drives most of y'all's perspectives.

Just put me on ignore if I'm such a pain in your ass.  This isn't hard.

You dont bother me.  I dont need to block you. We’ve never butted heads. 
I’m genuinely perplexed why you insist it turn into a strife. 

The conversation over which this started isnt a debate: ‘Is inflation high’, might as well be ‘is michael jordan tall’ and im telling you his measured height. 

‘What made it high’ is a completely other question, and absolutely yes I do think gov policies play a role, because in economics everything plays a role, and an agency of the govt was literally tasked with moderating it as an objective. 

But that wasnt the last 3 pages of discussion, over which youre lashing out. Take a chill beer

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6 hours ago, 52-80 said:

But that wasnt the last 3 pages of discussion, over which youre lashing out. Take a chill beer

Actually, a great deal of my participation over the last 3 pages has consisted of me trying to get the resident clown to admit he's lying about my historical takes on the subject.  But you knew that.

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2 minutes ago, Cheeseweasel said:

Some of y'all need to get laid.

Inflation sucks. Right now inflation is bad. It looks like it might be improving, but time will tell. 

Now go get some pussy/dick/sheep or whatever floats your boat and chill.

 

All of the above.  And we may or may not be in a recession but it sure feels like JPow has kicked me in the balls.

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1 hour ago, Captainant said:

I was told that companies extracting increased profit margins was their right and fiduciary responsibility? That's just some good ol fashioned gilded age free market economics baybeeeeee

Since eggs are coming up, wasn’t the root cause of this bird flu? And then some states exacerbated their problem locally by banning caged eggs? To be clear, I’m not judging that decision. But isn’t the egg situation a bit more nuanced than increased profit margins?

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21 minutes ago, B00M said:

Since eggs are coming up, wasn’t the root cause of this bird flu? And then some states exacerbated their problem locally by banning caged eggs? To be clear, I’m not judging that decision. But isn’t the egg situation a bit more nuanced than increased profit margins?

The egg thing is weird to me. Gas prices? I get it. It's big, bold numbers that you see everywhere and it's something that we all use regularly.

Eggs are such a small part of someone's budget that the amount of headlines given to it seems strange. I see more about eggs going from $2.50 to $5 than I did about college tuition going from $2,500 to $5,000 when I was in school. 

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8 minutes ago, FirstTimeCaller said:

The egg thing is weird to me. Gas prices? I get it. It's big, bold numbers that you see everywhere and it's something that we all use regularly.

Eggs are such a small part of someone's budget that the amount of headlines given to it seems strange. I see more about eggs going from $2.50 to $5 than I did about college tuition going from $2,500 to $5,000 when I was in school. 

If you needed any further proof that Waffle House is a cherished institution and should be protected at all costs, they are eating the costs of the price of eggs and not passing on to the consumer. 

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3 minutes ago, HamsterHookah said:

If you needed any further proof that Waffle House is a cherished institution and should be protected at all costs, they are eating the costs of the price of eggs and not passing on to the consumer. 

Yeah that's big for a major chain like that. Guess they figure it's a temporary thing.

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34 minutes ago, B00M said:

Since eggs are coming up, wasn’t the root cause of this bird flu? 

I saw a report that claimed avian flu was the catalyst.  The numbers didn't make a lot of sense to me.  It claimed something like 10% reduction in egg supply, so egg prices more than doubled?  I mean, I don't own a farm, but that doesn't square in my world.  Then again, when the world's supply of crude oil dips 5% oil prices skyrocket, so I suppose it could be similar.

 

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18 minutes ago, jimmyjazz said:

I saw a report that claimed avian flu was the catalyst.  The numbers didn't make a lot of sense to me.  It claimed something like 10% reduction in egg supply, so egg prices more than doubled?  I mean, I don't own a farm, but that doesn't square in my world.  Then again, when the world's supply of crude oil dips 5% oil prices skyrocket, so I suppose it could be similar.

 

You also came through a seasonal demand bulge with Christmas baking season. We've pretty well caught of up with broilers from bid flu, but it takes a bit more with layers. Milk futures are off about 20% since November, and that should continue to ease a bit. Beef and pork whole sale has moderated significantly, but pork will start the seasonal run higher soon with meh numbers overall, and beef eventually takes off a bit as we are headed into the tightest part of the cattle cycle soon, and biology is not your friend there. 

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31 minutes ago, HamsterHookah said:

If you needed any further proof that Waffle House is a cherished institution and should be protected at all costs, they are eating the costs of the price of eggs and not passing on to the consumer. 

Well, my IHOP Colorado Omelette last week looked one egg short of what they used to be.

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1 hour ago, B00M said:

Since eggs are coming up, wasn’t the root cause of this bird flu? And then some states exacerbated their problem locally by banning caged eggs? To be clear, I’m not judging that decision. But isn’t the egg situation a bit more nuanced than increased profit margins?

The stupidity of the reflexive ‘durrr companies arrr profit gouging again’ never ever cease to amaze me. 

Like theres 1 really really really really easy question to counter it: why the fuck didnt they do it before?

I mean if you’re talking 1 specific drug on which there is patent protection, or some other monopolistic situation with unilateral pricing power, sure. 

But commodities in a cut throat business?  The top 5 egg producers each have a single digit share, and its smooth tail all the way down. 

Who would’ve thunk the 21st century Rockfellers are actually egg barons. 

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1 hour ago, jimmyjazz said:

I saw a report that claimed avian flu was the catalyst.  The numbers didn't make a lot of sense to me.  It claimed something like 10% reduction in egg supply, so egg prices more than doubled?  I mean, I don't own a farm, but that doesn't square in my world.  Then again, when the world's supply of crude oil dips 5% oil prices skyrocket, so I suppose it could be similar.

 

domestically they've slaughtered 58 million birds to contain the avian flu outbreak.  43 million of them were egg-laying birds.  hens start laying eggs when they're 4-5 months old.  it's going to take some time to replenish those 43 million hens.  in the meantime our weekly supplies of eggs on hand have reached their lowest levels since 2014 and is off 20% yoy.  

 

at the same time though egg suppliers are booking record profits.  so those cost increases aren't only being passed on, suppliers are taking the opportunity to see how much they can raise their margins.

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1 hour ago, jimmyjazz said:

I saw a report that claimed avian flu was the catalyst.  The numbers didn't make a lot of sense to me.  It claimed something like 10% reduction in egg supply, so egg prices more than doubled?  I mean, I don't own a farm, but that doesn't square in my world.  Then again, when the world's supply of crude oil dips 5% oil prices skyrocket, so I suppose it could be similar.

The numbers don't make sense one bit. A 10% reduction in supply leading to a 250%+ increase in customer cost? That's some impressive yield lol. If I were operating a business with such razor thin instability and margins that a 10% haircut in a metric was THAT disruptive to my business model, I would be either out of business or operating fraudulently.

9 minutes ago, 52-80 said:

The stupidity of the reflexive ‘durrr companies arrr profit gouging again’ never ever cease to amaze me. 

Like theres 1 really really really really easy question to counter it: why the fuck didnt they do it before?

Because it was a norm to not price gouge, under the assumption that the FTC would do something about it. But since the weakening and destruction of many of those institutions, there's nothing really to stop them but the boldness to try and belief they'll get away with it.

Plus, yeah it's not like there's singular distributors that control 20% of the market and have been the originator of many of these market moves, or anything (Reuters reporting), while also reporting YoY profit increases of 600%. Totally normal stuff there and DEFINITELY 100% not correlated with their massive price increases on their principle commodity. By the way - they haven't reported any avian flu outbreaks either, so lucky they've been able to capitalize on the market conditions for maximum profitability!

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25 minutes ago, Cheeseweasel said:

Supply / Demand.

Do we not study economics anymore?

i don't know what point you're speaking to.  suppliers are trying to find the point where increased margins affect consumers' willingness to buy.  this provides perfect cover to do so.

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2 hours ago, gsoda3 said:

domestically they've slaughtered 58 million birds to contain the avian flu outbreak.  43 million of them were egg-laying birds.  hens start laying eggs when they're 4-5 months old.  it's going to take some time to replenish those 43 million hens.  in the meantime our weekly supplies of eggs on hand have reached their lowest levels since 2014 and is off 20% yoy.  

 

at the same time though egg suppliers are booking record profits.  so those cost increases aren't only being passed on, suppliers are taking the opportunity to see how much they can raise their margins.

Do you have example earnings reports showing 2021 and 2022 for an egg supplier booking record profits? I’m just curious if maybe their objective is to exceed prior profit margins in order to replace the lost birds or something less nefarious than price gouging the poors that actually give a shit about egg prices 

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1 hour ago, B00M said:

Do you have example earnings reports showing 2021 and 2022 for an egg supplier booking record profits? I’m just curious if maybe their objective is to exceed prior profit margins in order to replace the lost birds or something less nefarious than price gouging the poors that actually give a shit about egg prices 

cal maine (CALM) reported earnings just before the new year.  they're the largest producer of eggs in the country, something like 40%.  i didn't listen to their conf call so they might have given insight (intentions into price behavior) but as far as i remember they didn't provide any in their earnings report. 

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Until I receive further evidence, I have not seen any "price gouging" per se.  It seems most companies are "passing along" the price increases, thereby maintaining their margins on a percentage basis, but also probably making more money on a gross basis.

For better or worse, I think most people think "passing along price increases" is not very detestable behavior.  On the other hand, why would companies/businesses feel compelled to pass along price increases?  Especially when pretty much the entire world is going through an inflationary crisis?  Are they raising their employees wages concomitantly?  Why are businesses and their shareholders exempt from feeling this pain?  And, of course, there's no real reason to believe shareholders would actually be harmed if they just raised prices say 80% of the increased COGS.

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1 hour ago, TwiceHorn said:

Until I receive further evidence, I have not seen any "price gouging" per se.  It seems most companies are "passing along" the price increases, thereby maintaining their margins on a percentage basis, but also probably making more money on a gross basis.

For better or worse, I think most people think "passing along price increases" is not very detestable behavior.  On the other hand, why would companies/businesses feel compelled to pass along price increases?  Especially when pretty much the entire world is going through an inflationary crisis?  Are they raising their employees wages concomitantly?  Why are businesses and their shareholders exempt from feeling this pain?  And, of course, there's no real reason to believe shareholders would actually be harmed if they just raised prices say 80% of the increased COGS.

In a lot of businesses that are cyclical (and a lot of commodities) it is because these "boom times" make up for the "bust times" when organizations break even or lose money when looking at the longer term business model and timelines. Think of the Oil & Gas industry for example. I find it funny that people begrudge a company like Chevron/Exxon for making record profits and passing on costs instead of being patriots and taking lower profits because they can afford it right now, but were not offering to pay more for gas when it was cheaper and Chevron/Exxon were losing billions just a handful of fiscal quarters ago.

Human beings are emotional creatures and don't realize or don't like that good business, while being lawful and ethical and fair, is not emotional.

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