Latest Inflation Numbers and Discussion

[Chuckanut]

No, you can only cut back so much, and I've been living frugally for years. No cable TV or streaming. No vacations. Making additional cuts resulting in starving or living on the street are not acceptable. I'm having to absorb ~30% inflation over the last few years. My homeowner's insurance alone is up 40%, and that's with high deductible and without any "extras" that they keep trying to get me to buy.

Don’t forget taxes. My single biggest source of increased basic living costs is higher taxes. They tax us like we are all working in tech making well over $100,000 a year. Or a quarter of a million of a couple.

 

[DJRR]

No, you can only cut back so much, and I've been living frugally for years. No cable TV or streaming. No vacations. Making additional cuts resulting in starving or living on the street are not acceptable. I'm having to absorb ~30% inflation over the last few years. My homeowner's insurance alone is up 40%, and that's with high deductible and without any "extras" that they keep trying to get me to buy.

I understand, and would never make light of anyone's circumstances. My only point being, for the purpose of the thread, is that anecdotes are anecdotes.

I doubt it makes you feel any better, but my homeowners insurance is $571 per year and has decreased by about 40%. That is due to me downsizing my home 2 years ago. So do we cancel each other out?

On a whole, as long as the numbers are consistently reported, the CPI accurately reflects the trend for the economy as a whole. As the anecdotes show, the end individual impact can vary greatly depending on your own spending profile and circumstances.

I would liken it to the Trump tax "cuts". For me, limiting SALT deductions to $10k actually increased my tax burden net net by a small fraction. I don't go around saying taxes are up because I understand that for the whole economy there was a significant decrease.

 

[Sunset]

I've heard this comment many times regarding inflation/standard of living discussions. I wonder, though, how legitimate it is. I fully agree that we don't have to pay for long distance calling anymore, but you could make a lot of long distance calls for the price of a new smart phone. I agree computers are smaller, faster, and flashier than they used to be, with immense amounts of storage. But they have to be. An old computer wouldn't function well, if at all, with the new internet. TV's. Well, you definitely win that one. I could still be watching my old 13" box TV, so the 65" flatscreen is a definite step up.

I think it would be better if the economists just picked an average device for the current situation and didn't try to accomodate the "improvements" in technology. It would make an impossible task slightly less impossible.

Maybe they should add up the costs of needing to upgrade things that are no good anymore.
As for the old 13" TV, I'm not sure it would actually work, as the Over The Air signals are now digital not analog.

Do economists do the same thinking in reverse.. as in when people compensate for inflation in purchasing, as a solution to inflation:

• Can't afford steak, then just eat chicken
• Can't afford chicken, eat Tofu
• Can't afford Tofu, chew on a thought

 

[Sunset]

No, you can only cut back so much, and I've been living frugally for years. No cable TV or streaming. No vacations. Making additional cuts resulting in starving or living on the street are not acceptable. I'm having to absorb ~30% inflation over the last few years. My homeowner's insurance alone is up 40%, and that's with high deductible and without any "extras" that they keep trying to get me to buy.

If you are being serious, then consider renting out a room in your house. When I worked in various cities, I'd rent rooms and 20 yrs ago I was happy to pay $500/mo (bedroom, and usage of kitchen & laundry).

I'm pretty sure it was tax free to the homeowners too.

These days I could would guess it's more like $700/mo.

Or do AirBnb for less commitment.

 

[eytonxav]

From the above link: "It is estimated the ANWR holds more than 10 billion barrels of oil."

From the EIA: "In 2022, the United States consumed an average of about 20.28 million barrels of petroleum per day, or a total of about 7.4 billion barrels of petroleum."

So, not 1 year, but 1 year and 4 months.

The question is have they really explored that region sufficiently to be more certain about such estimates. My guess is the answer is they have not, although it could be more or less. This below link highlights this point: "The Arctic Alaska (onshore) province is endowed with original oil reserves of 16.4 billion barrels and a discovered total of 70 billion barrels of oil in place."


https://www.boem.gov/about-boem/ass...ka (onshore) province,barrels of oil in place.

 

[Turbo29]

I've heard this comment many times regarding inflation/standard of living discussions. I wonder, though, how legitimate it is. I fully agree that we don't have to pay for long distance calling anymore, but you could make a lot of long distance calls for the price of a new smart phone. I agree computers are smaller, faster, and flashier than they used to be, with immense amounts of storage. But they have to be. An old computer wouldn't function well, if at all, with the new internet. TV's. Well, you definitely win that one. I could still be watching my old 13" box TV, so the 65" flatscreen is a definite step up.

I think it would be better if the economists just picked an average device for the current situation and didn't try to accomodate the "improvements" in technology. It would make an impossible task slightly less impossible.

In November 1973 I called a high school friend who had gone to college in North Dakota. I was calling from the Los Angeles area and waited until 11pm Pacific Time to get the cheapest rate. The one hour call cost $20 and change.

According to the BLS CPI Inflation Calculator, $20 in November 1973 had the same buying power as $133.78 does in August 2023. The last new 5G Android phone I purchased cost $400, or about 3 of those 1970s era long distance calls.

 

[CaptTom]

Good points about the relative value of modern vs. old electronics. I'm not sure where or if those fit into the models, but I can see where it would be hard to quantify.

One thing about old CRT TVs, though, is that they'd last forever compared to today's TVs. Our town recycling center takes old TVs. The bins used to be full of ancient CRTs. Now they're filling up with new-looking flat-screen TVs. Surely longevity factors into the cost of ownership.

I can see where the costs of these "discretionary" items can distort the numbers. Sure, large TVs and top-of-the-line cell phones haven't gone up as much as the daily necessities of life. If you buy a new one every year, along with a lot of other luxury and discretionary goods, then maybe to you inflation seems pretty tame.

Maybe that's the source of the problem with these low inflation numbers. Maybe they're factoring in items that only a small percentage of the population can afford.

I agree that inflation can be felt differently by different people. That's obvious. But shouldn't we be looking at what ordinary working people experience? You know, the people who are impacted by things like COLA? Maybe this is where the disconnect lies.

 

[Aerides]

One thing about old CRT TVs, though, is that they'd last forever compared to today's TVs. Our town recycling center takes old TVs. The bins used to be full of ancient CRTs. Now they're filling up with new-looking flat-screen TVs. Surely longevity factors into the cost of ownership.

A lot of those landfill TV's still work, but folks discard them as bigger/better/cheap comes along, and folks upgrade because why not. There's another game this weekend...

720p 48" was living LARGE in 2006. But you "needed" 1080p pushing 60" by 2009. And those were $3k at the time. We couldn't give ours away when we switched to 4k in 2018, worked perfectly well and I would not have swapped but the Xbox likes 4k so DH won that one.

Nowadays it's 85" 4k TVs for $1599. Geez maybe I should post in the deflation thread...

 

[DJRR]

Do economists do the same thinking in reverse.. as in when people compensate for inflation in purchasing, as a solution to inflation:

• Can't afford steak, then just eat chicken
• Can't afford chicken, eat Tofu
• Can't afford Tofu, chew on a thought

No. Those are substitutions and are not in the CPI. To the extent that the basket of goods is fixed over time the CPI OVERstates the actual increase in cost of living if people make substitutions for goods and maintain a similar satisfaction level. For example when chicken wings went to $4.65 per pound I switched to drumsticks at $.99 per pound and enjoyed buffalo drummies for much less.

Hedonic effects are fascinating, subjective, and UNDERstate the actual cost of living in the CPI. For example if your car goes up 10%, but includes air bags and ABS that was not in prior models then the CPI increase may be reduced to 5% with 5% attributed to improvement of quality. Like with HD TV or 1 TB RAM drives, etc.

I think this is an area where conspiracies can grow. If you believe people are bad actors then you could theoretically monkey with the CPI through hedonic adjustments or changes in the basket weightings or calculations (like healthcare). If the calcualtion is done the same way over time, then none of that matters but when changes are made there is a lot of attention. Unfortunately trying to update a number created in an industrial economy 50 years ago for our current tech/service economy requires changes. On a whole I think they do a great job, but certainly are not perfect.

 

[Montecfo]

Getting back to actual inflation numbers...

Headline PPI came it at 0.7% which was higher than expected. However, the more important core PPI was at 0.2% for the month and 2.1% over the past year. The latter is the lowest reading since January 2021.

https://www.cnbc.com/2023/09/14/ppi-inflation-report-august-2023-.html

These figures probably do not signal any change at the Fed but I m sure they remain data dependent for the November meeting.

 

[NW-Bound]

Last night, I was looking for the price of tin back 50 years ago in order to compare the cost of a tin foil hat back then and now.

What I stumbled across was a trove of prices of a lot of stuff, and I mean a lot, back in 1973.

Source: https://www.mclib.info/Research/Local-History-Genealogy/Historic-Prices/Historic-Prices-1973

Now, let's keep in mind that the official cumulative inflation from Sep 1973 till Aug 2023 is 6.79x.

A short list of a few food items that I found on that Web page follows. A cursory look tells me that food prices have gone up less than 6.79x in 50 years. No wonder people are fatter.

Prices back on 1973:

Bacon, 1.19/lb
Beef, roast, 1.30/lb
Chicken, legs, 69 cents/lb
Ham, Armour, 3.99/3 lb can
Pork, boneless loin roast, 1.30/lb
Sausage, Jamestown, 69 cents/lb
Shrimp, frozen, 2.49/lb
Turkey, Butterball, 73 cents/lb

 

[Koolau]

Haha.....old wells pumping 100 BBL per day? You have to be kidding me. I've seen hundreds (maybe thousands) of wells in Texas and Oklahoma during my 30 years in the oilfield that were producing 5 BBL/day or less and that was good. When the oil cut in the water gets under say 5%, the well becomes marginal.

The big horizontals in shale will produce well over 1,000 BBL/day (generally) but peter out in a few months. That's generally enough production to pay for the well, especially if it can keep producing for a while longer. And the bonus is natural gas if it produces that.

The biggest cost in oilfield production is getting rid of produced water. Once the water hauling and disposal costs get high enough, the well will be shut in.

Yeah, I don't know the details on this stuff, but just pointing out that we'll go after very small amounts of oil - so we sure wouldn't ignore a year's USA supply of oil sitting in ANWR. Of course, for whatever reason, I guess we won't be going after that oil for at least a couple more years yet.

 

[JoeWras]

Last night, I was looking for the price of tin back 50 years ago in order to compare the cost of a tin foil hat back then and now.

What I stumbled across was a trove of prices of a lot of stuff, and I mean a lot, back in 1973.

Source: https://www.mclib.info/Research/Local-History-Genealogy/Historic-Prices/Historic-Prices-1973

Now, let's keep in mind that the official cumulative inflation from Sep 1973 till Aug 2023 is 6.79x.

A short list of a few food items that I found on that Web page follows. A cursory look tells me that food prices have gone up less than 6.79x in 50 years. No wonder people are fatter.

Prices back on 1973:

Bacon, 1.19/lb
Beef, roast, 1.30/lb
Chicken, legs, 69 cents/lb
Ham, Armour, 3.99/3 lb can
Pork, boneless loin roast, 1.30/lb
Sausage, Jamestown, 69 cents/lb
Shrimp, frozen, 2.49/lb
Turkey, Butterball, 73 cents/lb

What about the hat Did I miss it? This is important.

BTW I was 10 in 73 and I remember thinking I'd be dead by 20. Between the war, oil crisis, politics, nukes, global cooling, pollution, ozone in wrong places, I knew we were doomed.

 

[NW-Bound]

What about the hat Did I miss it? This is important.

BTW I was 10 in 73 and I remember thinking I'd be dead by 20. Between the war, oil crisis, politics, nukes, global cooling, pollution, ozone in wrong places, I knew we were doomed.

OK, if you must know.

Tin was $5,125/ton in Oct 1973. It is currently $25,688/ton. So, an increase of 5x in 50 years. Still below the 6.79x cumulative inflation factor.

In short, your tin hat is less expensive than it was 50 years ago. Still, one should consider aluminum foil hat. Works the same, yet 1/10 the cost. You would not know where to get tin foil anyway.

 

[JoeWras]

On tin, thumbs up. Kind of surprised since tin has replaced lead in a lot of common applications since 1973.

 

[Koolau]

I've heard this comment many times regarding inflation/standard of living discussions. I wonder, though, how legitimate it is. I fully agree that we don't have to pay for long distance calling anymore, but you could make a lot of long distance calls for the price of a new smart phone.

Right, and we had one old Bakelite rotary phone that we used for 30 years. My last cell phone was good for less than 2 years because of 5G. I understand (not that I have one) Apple phones are out of date in 18 months and they cost what? $600, $800, $1200?

 

[Koolau]

Maybe they should add up the costs of needing to upgrade things that are no good anymore.
As for the old 13" TV, I'm not sure it would actually work, as the Over The Air signals are now digital not analog.

Do economists do the same thinking in reverse.. as in when people compensate for inflation in purchasing, as a solution to inflation:

• Can't afford steak, then just eat chicken
• Can't afford chicken, eat Tofu
• Can't afford Tofu, chew on a thought

Switch to rice! Still affordable though the prices have risen.

 

[Koolau]

If you are being serious, then consider renting out a room in your house. When I worked in various cities, I'd rent rooms and 20 yrs ago I was happy to pay $500/mo (bedroom, and usage of kitchen & laundry).

I'm pretty sure it was tax free to the homeowners too.

These days I could would guess it's more like $700/mo.

Heh, heh, if that comes with a private bath... I'm in.

 

[Cayman]

Right, and we had one old Bakelite rotary phone that we used for 30 years. My last cell phone was good for less than 2 years because of 5G. I understand (not that I have one) Apple phones are out of date in 18 months and they cost what? $600, $800, $1200?

"Out of date" depends on the user. DH the engineer just retired his 6s iPhone (he paid $310 for it new with no contract in 2017) now has a new, no contract iPhone SE 2nd gen and paid $121.......New iPhones can be had really cheap and the price has decreased with more memory, speed & features if you don't need/want the newest model.

 

[harley]

Switch to rice! Still affordable though the prices have risen.

More than affordable. We just broke out the 20 lb bag that DW stashed/hoarded during the early day of the pandemic. I'm doing lots of stir fry in the next month or so.

 

[DCdave]

...The one winning in the "war" is Russia. I believe they are making more $ now than ever before on their oil exports:


https://markets.businessinsider.com...ap-sanctions-ukraine-war-putin-g7-2023-8?op=1


China and India can't seem to get enough of that cheap Russian sourced oil.

Russia making more $$$$ than ever before?
That’s not what the article you posted says at all. Their July (one month) revenue increased 2.5 billion to 15.3 billion but that was still 4.1 billion, per your posted article, LESS than the same time last year.
In addition between Jan and June their 6 month revenue DECLINED 47% vs the previous year.

It is true that China and India can’t get enough of the cheaper Russian oil. The west is “looking the other way” as it would be disastrous if the Russian supply was completely cut off since having China and India depend on the Middle East would drive up prices world wide.

 

[Koolau]

"Out of date" depends on the user. DH the engineer just retired his 6s iPhone (he paid $310 for it new with no contract in 2017) now has a new, no contract iPhone SE 2nd gen and paid $121.......New iPhones can be had really cheap and the price has decreased with more memory, speed & features if you don't need/want the newest model.

I'm sure even iphones have their price ranges dipping down. But for the "latest - greatest" I understand they are quite expensive and lose their edge in just a year or two.

My phone (previous) was $89. My current one (android) cost IIRC about $130. BUT we were talking about the cost of the old long distance vs cost of new iPhones. I don't need the power of a "good" phone but do like the no long-distance charges. So, a cheap phone is perfect for me.

Some seem to need that latest-greatest to feel "in" I guess. Old long distance would have been cheaper for many of us - though time has marched on. I don't know but a couple of people without a "smart" phone. YMMV

 

[Gumby]

I'm sure even iphones have their price ranges dipping down. But for the "latest - greatest" I understand they are quite expensive and lose their edge in just a year or two.

My phone (previous) was $89. My current one (android) cost IIRC about $130. BUT we were talking about the cost of the old long distance vs cost of new iPhones. I don't need the power of a "good" phone but do like the no long-distance charges. So, a cheap phone is perfect for me.

Some seem to need that latest-greatest to feel "in" I guess. Old long distance would have been cheaper for many of us - though time has marched on. I don't know but a couple of people without a "smart" phone. YMMV

I have been unhip and unfashionable for my entire life and I'm happy that way. But that also means I simply cannot understand the need to have the latest and greatest of anything. I have probably missed out on investing opportunities as a consequence.

 

[Koolau]

I have been unhip and unfashionable for my entire life and I'm happy that way. But that also means I simply cannot understand the need to have the latest and greatest of anything. I have probably missed out on investing opportunities as a consequence.

Yeah, I only gave up my flip phone when they went to 4G. Then my $89 Android went the way of the Passenger Pigeon when my carrier would no longer support it. I'd rather still be using my flip phone, but...

 

[Taco]

My iPhone XR is about 5 years old and still chugging away. But, I'm thinking it's about time to upgrade.

I gotta grudgingly admit it is used a lot. It's my newspaper, map, weather guy, flashlight, boombox / walkman, camera, encyclopedia, telegraph, etc. etc. And a cordless phone to boot!

Given all it does, it seems worth it (to me) to blow-the-dough on a nice new one every so often.