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2021 - Is inflation finally back in the conversation?


Reagan1k

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.. inflation reduces purchasing power. Data show the changing value of the dollar and its purchasing power. Figure 1 shows the value of the dollar set at 100 (representing full value) in 1983. The value of the dollar is 37 in 2021. This means that since 1983, the purchasing power of a dollar has been reduced by 63 percent. ...

https://research.stlouisfed.org/publications/page1-econ/2021/12/01/a-dollars-worth-inflation-is-real

 

 

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The debt worries me. It worries me more because I don't think the people who have the power to solve the crisis have any interest in doing so.

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21 hours ago, FirstTimeCaller said:

The debt worries me. It worries me more because I don't think the people who have the power to solve the crisis have any interest in doing so.

the plan has always been to kick the can down the road, and then fund appropriations to build a longer road.
it has worked for quite a while, but when interest becomes the largest annual expenditure it seem s unsubstainable; but it has been a good run.

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4 hours ago, Wally Fairway said:

the plan has always been to kick the can down the road, and then fund appropriations to build a longer road.
it has worked for quite a while, but when interest becomes the largest annual expenditure it seem s unsubstainable; but it has been a good run.

that's how you know, without a doubt, that QE will be back at some point.  Suppressing rates is the only way the show goes on.  

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16 minutes ago, babysdaddy said:

that's how you know, without a doubt, that QE will be back at some point.  Suppressing rates is the only way the show goes on.  

Yes, every time I try to figure out what the Fed will do in the near future I conclude keeping rates about where they are makes a lot of sense.  Then I consider the debt costs and the only options are significant tax increases or accommodative monetary policy.

perhaps we thread the needle and grow our way out of this, but I figure the odds of that are 3720 to 1.

 

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On 1/27/2024 at 7:09 AM, MonkeyDoughnut said:

This is where all the talk of a "good" economy needs as asterisk. Pretty direct line to where the "growth" is coming from.

Pretty difficult to argue with a robust real GDP number in the 4th quarter of 3.3% following the Q3 number of 4.9%.  Increased consumer spending in both goods and services, increases in state and local government spending and nonresidential fixed investment, and increased federal government spending led the way.  Gross nominal GDP for the trailing 4 quarters was just a shade under $28 Trillion.  Inflation rate increases have subsided that gave a boost to real disposable personal income increasing 2.5% for the quarter. Overall real GDP for 2023 was up 2.5% after an increase of 1.9% in 2022.  

Nominal was up 6.3% in 2023 after a 9.1% increase in 2022.  If we review consumer balance sheets, specifically the liabilities, 66% of debt outstanding are mortgages and 90+% of those are still at the historically low rates of previous years indicating consumers are not feeling the pinch of higher interest rates.  The robust nominal GDP numbers have actually caused the Debt to GDP percentage to decrease the last couple of years, even with massive annual deficits (meaning the US has more borrowing capacity).

Those concerning increased interest rates have actually provided additional income to investors in the form of higher return on cash balances.

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8 minutes ago, babysdaddy said:

Pretty difficult to argue with a robust real GDP number in the 4th quarter of 3.3% following the Q3 number of 4.9%.  Increased consumer spending in both goods and services, increases in state and local government spending and nonresidential fixed investment, and increased federal government spending led the way.  Gross nominal GDP for the trailing 4 quarters was just a shade under $28 Trillion.  Inflation rate increases have subsided that gave a boost to real disposable personal income increasing 2.5% for the quarter. Overall real GDP for 2023 was up 2.5% after an increase of 1.9% in 2022.  

Nominal was up 6.3% in 2023 after a 9.1% increase in 2022.  If we review consumer balance sheets, specifically the liabilities, 66% of debt outstanding are mortgages and 90+% of those are still at the historically low rates of previous years indicating consumers are not feeling the pinch of higher interest rates.  The robust nominal GDP numbers have actually caused the Debt to GDP percentage to decrease the last couple of years, even with massive annual deficits (meaning the US has more borrowing capacity).

Those concerning increased interest rates have actually provided additional income to investors in the form of higher return on cash balances.

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(I agree with you on much of that.)

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On 1/19/2024 at 9:19 AM, Storm the Field said:

Best consumer sentiment reading since July 2021.

GENsK5RXEAAfgwr?format=png&name=900x900

Current conditions, future conditions, inflation expectations all much better than expected.

Different survey, similar results, though this one shows much higher readings for "present situation" vs "future expectations"

 

 

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On 1/23/2024 at 12:15 PM, jimmyjazz said:

So, 1.0 -> 0.37 in 38 years (article is from 2021) implies an annual inflation rate of 2.58%.

This is news?  Run for the hills!

I just wanna say that data analysis jimmyjazz is best jimmyjazz Explaining Fran Healy GIF by Travis

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Reminder, there are posters on here who take Zerohedge seriously.

That's right, mass unemployment occurs every single January. The powers that be just don't tell you about it and hide it!

Getting real tired of these month-long Great Depressions occurring at the start of every year.

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  • 2 weeks later...
2 minutes ago, Skipper said:

This time last year I never would have thought we would go through the first quarter of 2024 without cutting rates. Now we may make it through the 2nd quarter.

I don't think we're cutting rates at all.  I think we'll hold here for the entirety of '24, and maybe halfway into '25.  

Edited by Trey3216
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Wall Street loading up on Baja Blast and Taco Bell before shitting themselves over a one-tenth of a percent difference is never not funny. Annual inflation drops from 3.4 to 3.1 and they want you to sell in the morning panic so they can buy it back later in the day and pump it the next morning.

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Everything has been fine as long as the jobs number stays strong. Recent layoff announcements across multiple industries making the market very skittish right now. Being an election year does not help. Very volatile market this year even though it should wash out in the end.

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2 hours ago, Trey3216 said:

I don't think we're cutting rates at all.  I think we'll hold here for the entirety of '24, and maybe halfway into '25.  

That's what I've been thinking for a while now.  I forget who it was that recently said something to the effect of "some (small/regional) banks are going to die, and we're cool with it", but it was a strong signal that they are firm in their commitment to hold rates in place.

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That's what I've been thinking for a while now.  I forget who it was that recently said something to the effect of "some (small/regional) banks are going to die, and we're cool with it", but it was a strong signal that they are firm in their commitment to hold rates in place.

It was JPow
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21 hours ago, Trey3216 said:

I don't think we're cutting rates at all.  I think we'll hold here for the entirety of '24, and maybe halfway into '25.  

I think this is a bit of a stretch based on a hot January CPI report. CPI spiked last January too. Several wonks pointed out that a lot of the overshoot came from an unexpected blip in OER, which doesn't seem to match up with other data concerning rents. 

GGOZs1UXwAAmiGM?format=jpg&name=medium

Now, if February and March numbers don't get back on track, "no rate cuts in 2024" might be more reasonable, but let's take a breather for a second.

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11 minutes ago, Storm the Field said:

I think this is a bit of a stretch based on a hot January CPI report. CPI spiked last January too. Several wonks pointed out that a lot of the overshoot came from an unexpected blip in OER, which doesn't seem to match up with other data concerning rents. 

GGOZs1UXwAAmiGM?format=jpg&name=medium

Now, if February and March numbers don't get back on track, "no rate cuts in 2024" might be more reasonable, but let's take a breather for a second.

I'm not basing it on a month's worth of CPI numbers.  I'm basing it on a feeling that's been building since last summer.  And speaking of rents, wait til the real effects of the craziness in the homeowners/dwelling insurance costs start showing up in the rental rates and OER numbers.  50% YoY increases in insurance cost is real $$, real inflation.  

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On 2/13/2024 at 12:34 PM, MonkeyDoughnut said:

Everything has been fine as long as the jobs number stays strong. Recent layoff announcements across multiple industries making the market very skittish right now. Being an election year does not help. Very volatile market this year even though it should wash out in the end.

I know it’s not showing up yet in the CPI, but in the circles we run in there have been a LOT of recent layoffs.  It’s made logging into LinkedIn a depressing experience.  

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18 hours ago, Fudge Nuggets said:

Always a sound strategery.

Fair enough.  But I read and listen/watch enough commentary from the folks that are laying it out there to see if you want to look for it and run that commentary against what the data and the market are telling us and make that 'feeling' a bit more of a hypothesis.  

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18 hours ago, LCHorn said:

I know it’s not showing up yet in the CPI, but in the circles we run in there have been a LOT of recent layoffs.  It’s made logging into LinkedIn a depressing experience.  

As I was, I meant unemployment rate, not CPI,  

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On 2/14/2024 at 8:52 AM, Storm the Field said:

I think this is a bit of a stretch based on a hot January CPI report. CPI spiked last January too. Several wonks pointed out that a lot of the overshoot came from an unexpected blip in OER, which doesn't seem to match up with other data concerning rents. 

GGOZs1UXwAAmiGM?format=jpg&name=medium

Now, if February and March numbers don't get back on track, "no rate cuts in 2024" might be more reasonable, but let's take a breather for a second.

OER is the most ridiculously stupid "statistic" I have ever seen and the fact that it is included in any official surveys or inflation calculations is mind bogglingly dumb. It's literally a made up number.

CPI rent data isn't great either - it's likely propping up headline inflation now just as it likely sold it short at the peak - but at least it is rooted in real numbers.

I don't know what Zillow's observed rent index is but keep in mind they are so good at projecting rent growth and valuations that they lost their ass as an iBuyer.

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This paper is from last year (but I just now found it):

Quote

Abstract

As a matter of arithmetic, the trends of US government debt and deficits will eventually result in an outrageously high government debt-to-GDP ratio. But when exactly will the United States hit the constraint of infeasibility and how exactly will policy adjust to it? This article considers fiscal dominance, which is the possibility that accumulating government debt and deficits can produce increases in inflation that "dominate" central bank intentions to keep inflation low. Is it a serious possibility for the United States in the near future? And how might various policies change (especially those related to the banking system) if fiscal dominance became a reality?
...
As the money supply is forced to grow by fiscal dominance, inflation rises, which creates a new means of funding government expenditures via "inflation taxation." ...
...
... because many people are unfamiliar with the concept of the inflation tax (especially in a society that has not lived under high inflation), they are not aware that they are actually paying it, which makes it very popular among politicians. ...

https://research.stlouisfed.org/publications/review/2023/06/02/fiscal-dominance-and-the-return-of-zero-interest-bank-reserve-requirements

 

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Just anecdotal -- my six month auto insurance and annual homeowners renew around the same time.

My auto-renew rates were $579 for auto (six months) and $2,210 for homeowners (full year). That's an increase over last year. Don't know the exact increase, but I'd estimate about 10-15%.

I then priced checked a few quotes online, including a new quote with my current insurer, Progressive. They had the lowest rate, which they quoted me at $459 for auto and $1,636 for homeowners with the same limits.

Instead of paying $2,789 in total, I paid $2,095 with the same company for the same coverage because... well... because... um... reasons, I guess?

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19 minutes ago, FirstTimeCaller said:

Just anecdotal -- my six month auto insurance and annual homeowners renew around the same time.

My auto-renew rates were $579 for auto (six months) and $2,210 for homeowners (full year). That's an increase over last year. Don't know the exact increase, but I'd estimate about 10-15%.

I then priced checked a few quotes online, including a new quote with my current insurer, Progressive. They had the lowest rate, which they quoted me at $459 for auto and $1,636 for homeowners with the same limits.

Instead of paying $2,789 in total, I paid $2,095 with the same company for the same coverage because... well... because... um... reasons, I guess?

That’s a @C-Man question.. curious as to the why 

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47 minutes ago, FirstTimeCaller said:

Just anecdotal -- my six month auto insurance and annual homeowners renew around the same time.

My auto-renew rates were $579 for auto (six months) and $2,210 for homeowners (full year). That's an increase over last year. Don't know the exact increase, but I'd estimate about 10-15%.

I then priced checked a few quotes online, including a new quote with my current insurer, Progressive. They had the lowest rate, which they quoted me at $459 for auto and $1,636 for homeowners with the same limits.

Instead of paying $2,789 in total, I paid $2,095 with the same company for the same coverage because... well... because... um... reasons, I guess?

 

28 minutes ago, UTPhil2006 said:

That’s a @C-Man question.. curious as to the why 

Beats me. There's two ways to get to Progressive -- either thru an independent broker like us or directly to them. I think pricing is slightly better if you go direct because then they don't have to pay the commission. Could be something changed slightly -- deductible options, coverages might've been tweaked slightly from your previous policies and it's possible you're getting a "new business" credit because the system didn't/doesn't recognize you as a current client. You might not have selected a few add-in coverages this time or they might no longer be offered. Could also be that you've got a better insurance score than the first go-round and the system could be spitting out renewal offers without updating that info. Really hard to tell exactly.

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