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Old 07-15-2022, 06:23 AM   #221
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Although down considerably from the highs, lumber futures are still almost double pre-pandemic levels. Hopefully prices will continue to drop if demand stays low for a few more months.
Yes, they certainly are not at pre-pandemic levels.

I'm glad to finally see some movement in OSB products. The flooring we use a lot was $25 pre-pandemic, reached a high of $85 in the middle of the madness, and now is about $55. EDIT: it was $55 on Monday and has been reduced to $51 today. Wooo!

One thing I noticed is pressure treated lumber has come down more than interior framing lumber. I guess the big DYI deck rebuilding boom is over.
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Old 07-15-2022, 06:28 AM   #222
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Yeah, it's pretty much across the board - pretty much everything keeps going up. And a lot of people are confused. If inflation eventually drops, that doesn't mean all prices will go back down as the media and some politicians lead people to beleive, it just means they won't skyrocket as quickly as they are now. But even if we returned to 2% inflation, that means prices will actually continue to increase. Of course, there will be some things that come down in price. Just like gas prices, I can get gas for 6 cents per gallon less than the recent peak. But everything else is costing me more. That 6 cent savings on gas is insignificant in my budget compared to the increases for everything else. I'm sure I'm not alone in that. On balance, be prepared to keep paying higher prices.
ANother thing people get wrong is that they think 8% CPI is monthly. They think inflation was 8% up from last month. In reality it would be up zero percent over last month, if the CPI (annual) were 8% for June and also 8% for July. But 'zero percent' monthly inflation isn't a sexy headline, I guess.
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Old 07-15-2022, 06:51 AM   #223
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Here is one for those who do not see inflation. "372% surge in lumber prices during the past two years"

"Lumber futures have declined 33% since May 7, which likely reflects a mix of falling demand as contractors—shaken by the 372% surge in lumber prices during the past two years—back off potential projects and the slow but steady return of supply."
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Old 07-15-2022, 06:59 AM   #224
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ANother thing people get wrong is that they think 8% CPI is monthly. They think inflation was 8% up from last month. In reality it would be up zero percent over last month, if the CPI (annual) were 8% for June and also 8% for July. But 'zero percent' monthly inflation isn't a sexy headline, I guess.
Not quite. Inflation is normally reported on a year over year basis. So if prices were climbing last year from June to July, even if inflation was reported at 8% for both June and July of this year, prices still went up, because the base from which those two 8% numbers are measured is different.

The best way to determine the month to month inflation is to use the CPI-U. In May 2022, it was 292.296 In June 2022, it was 296.311. Therefore, prices inflated by 1.37% from May to June 2022. And next May and June (2023), if inflation were reported at 8% for each month, it would mean that prices actually went up 1.37% that month.

BTW, if prices continued to climb at that monthly rate for a full year, they would increase by 17.78% (1.0137 ^12 = 1.1778).
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Old 07-15-2022, 07:48 AM   #225
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The Home Depot near us has enough patio blocks, mulch, stones, pressure treated wood, etc for outdoor projects that they had to use part of the parking lot to store the excess inventory. And it's not moving.
They still want $40 for CDX 19/32 plywood which is still way above pre-pandemic levels of ~$18 a sheet.
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Old 07-15-2022, 07:48 AM   #226
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ANother thing people get wrong is that they think 8% CPI is monthly. They think inflation was 8% up from last month. In reality it would be up zero percent over last month, if the CPI (annual) were 8% for June and also 8% for July. But 'zero percent' monthly inflation isn't a sexy headline, I guess.
Nope. This is not how it is calculated.

As an aside, if the latest inflation report (+1.3% MoM) is annualized, it would be over over 15.6%.

The fact that the YoY inflation rate went from 8.3% (April, as announced in May) to 8.6% (May, announced in June) to 9.1% (June, announced in July) means that the RATE of inflation (upward change in price over time) is ACCELERATING.

Next month (August) when we get the July report, we may see a decrease in the inflation rate (i.e. downward rate) because of the recent (in real terms) decline in gasoline prices. The pendants will all be celebrating that we are "past the peak", but the reality will be that prices will still be increasing (overall) at a rapid rate. Even if the inflation RATE dropped to ZERO, we still have the higher prices already accumulated over the last year or so.
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Old 07-15-2022, 08:14 AM   #227
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Here is one for those who do not see inflation. "372% surge in lumber prices during the past two years"



"Lumber futures have declined 33% since May 7, which likely reflects a mix of falling demand as contractors—shaken by the 372% surge in lumber prices during the past two years—back off potential projects and the slow but steady return of supply."
Lumber is a red herring. Did a farmer get more for the trees? How about the mill? Not a dime more for them either, been there done that. All through the production chain nobody made more $ except the retail price went up 300%+..
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Old 07-15-2022, 08:38 AM   #228
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Lumber is a red herring. Did a farmer get more for the trees? How about the mill? Not a dime more for them either, been there done that. All through the production chain nobody made more $ except the retail price went up 300%+..

The entire chain made money. Mills ramping up chasing prices etc. Its not so much who gets the $$$ but more about inflation overall. Like my homeowners ins. went up 25% this year. Due to the rise in const. costs. Just one example..
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Old 07-15-2022, 08:54 AM   #229
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Next month (August) when we get the July report, we may see a decrease in the inflation rate (i.e. downward rate) because of the recent (in real terms) decline in gasoline prices. The pendants will all be celebrating that we are "past the peak", but the reality will be that prices will still be increasing (overall) at a rapid rate. Even if the inflation RATE dropped to ZERO, we still have the higher prices already accumulated over the last year or so.
Yeah, I can see that now. It gets reported all over the news that inflation is dropping. And a lot of people with interpret that as prices are dropping and expect to see lower priced groceries, which in fact, will continue to increase quickly, on top of the steep increases we've already seen over the last two years.
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Old 07-15-2022, 10:19 AM   #230
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Inflation is reported in many ways and they all mean different things but the real data is simply the CPI (pick your flavor). The one that really matter to me is CPI-W. That determines the SS COLA which is also my military pension COLA. That uses the actual value of CPI-W average of July/Aug/Sep compared to the same average in the previous year. While inflation may slow down this year, I highly doubt it will go negative in Jul/Aug/Sep. The current SS COLA is projected to be 9%. If the CPI-W does not go up in Q3 (0% inflation), then the COLA will still be 9%. My guess it will be 10%.
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Old 07-15-2022, 10:31 AM   #231
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I also track CPI-W, as it is the index we used in our contract triple net lease when we sold our business. We are so lucky, as this increases our rental income on that one commercial property, but never goes down. So in our personal inflation rate, we actually look forward to seeing a high CPI-W in August for our annual lease payment adjustment. We get far more monthly from that one rent payment than all of our pensions and SS combined! But personally, the things we spend money on are not outrageously rising with inflation.
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Old 07-15-2022, 10:32 AM   #232
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The one that really matter to me is CPI-W. That determines the SS COLA which is also my military pension COLA. That uses the actual value of CPI-W average of July/Aug/Sep compared to the same average in the previous year. While inflation may slow down this year, I highly doubt it will go negative in Jul/Aug/Sep. The current SS COLA is projected to be 9%. If the CPI-W does not go up in Q3 (0% inflation), then the COLA will still be 9%. My guess it will be 10%.
^So glad DW and I have 2 COLA Military pensions. Additionally DW will have a FERS (COLA) pension someday (10 years in so far) and we both will have COLA SS someday (assuming we make it that far). I can only imagine the stress felt by those folks trying to figure it all out w/out pensions (COLA or not).
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Old 07-15-2022, 10:45 AM   #233
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^So glad DW and I have 2 COLA Military pensions. Additionally DW will have a FERS (COLA) pension someday (10 years in so far) and we both will have COLA SS someday (assuming we make it that far). I can only imagine the stress felt by those folks trying to figure it all out w/out pensions (COLA or not).
It's friggin' awesome. If the COLA is 9% for 2023, that would mean a total of 16.17% for 2022 and 2023. We can control the personal inflation pretty well, although it will suck if we have to move or buy a car/truck. I think we can go 10 years without needing a new car as we bought all new ones right before retiring. No plans to move. That and my mortgage being fixed means inflation is a positive for my model.

SS is a weird one because it uses labor rates and not inflation if you are not retired yet. Since pay is going up slower than inflation, there isn't as big of an increase in projected SS benefits as there is for my pension. 2021 labor rate growth was anemic, so my SS benefits only went up $76/year.
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Old 07-15-2022, 11:01 AM   #234
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SS is a weird one because it uses labor rates and not inflation if you are not retired yet. Since pay is going up slower than inflation, there isn't as big of an increase in projected SS benefits as there is for my pension. 2021 labor rate growth was anemic, so my SS benefits only went up $76/year.
That's another way SS benefits are effectively being cut, just like how tax thresholds were not indexed to inflation means lower net benefits after taxes when adjusted for inflation, which makes this an even bigger issue with today's soaring inflation. And big SS benefit cuts could be coming down the road.

I'm relying mostly on my investments, which are down, while my expenses are climbing even faster than government inflation figures.
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Old 07-15-2022, 11:07 AM   #235
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I was watching ABC World News Tonight from two days ago and it said that inflation has hit the 40-year high. Consumer Price Index is 9.1% higher than a year ago. The typical households in America spent $493 for the same services in June than a year ago.
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Old 07-15-2022, 11:19 AM   #236
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Year over year CPI was 5.4% a year ago, and year over year was 9.1% in June 2022, so 3.7 percentage points higher is a 68.5% increase in the inflation rate from a year ago. I'm sure that would confuse a lot of people more than they already are.
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Old 07-15-2022, 02:13 PM   #237
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Year over year CPI was 5.4% a year ago, and year over year was 9.1% in June 2022, so 3.7 percentage points higher is a 68.5% increase in the inflation rate from a year ago. I'm sure that would confuse a lot of people more than they already are.


Yes math can be crazy… We could have 100% inflation one year, then 0% for 2 years running and Fed would say it was transitory and inflation was gone. But if it was say, 6% for three years running, they would be fighting it hard and saying inflation was rampant. For that period of time, my wallet would rather have had the latter scenario than the former, ha.
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Old 07-15-2022, 06:19 PM   #238
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Yesterday I went to Walmart to pick up my prescriptions and there’s clothes everywhere marked down to super cheap prices and the store is a mess with racks of clothes everywhere. I have never seen that many clothes in a store so cheap.
I can't even identify with buying clothes. Last time I went to Walmart to buy tidy whities, they no longer carried my brand/size. Had to go to Target. Other than that, I've got enough clothes to last the rest of my life. YMMV
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Old 07-15-2022, 06:26 PM   #239
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... SS is a weird one because it uses labor rates and not inflation if you are not retired yet. Since pay is going up slower than inflation, there isn't as big of an increase in projected SS benefits as there is for my pension. 2021 labor rate growth was anemic, so my SS benefits only went up $76/year.
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That's another way SS benefits are effectively being cut, just like how tax thresholds were not indexed to inflation means lower net benefits after taxes when adjusted for inflation, which makes this an even bigger issue with today's soaring inflation. And big SS benefit cuts could be coming down the road.

I'm relying mostly on my investments, which are down, while my expenses are climbing even faster than government inflation figures.
I thought that it used labor rates until you reach your FRA and then inflation once you are at your FRA.

Can it really be a cut if it has always been that way?... or just a whiner whining?
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Old 07-15-2022, 06:27 PM   #240
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I can't even identify with buying clothes. Last time I went to Walmart to buy tidy whities, they no longer carried my brand/size. Had to go to Target. Other than that, I've got enough clothes to last the rest of my life. YMMV
Besides, clothes are optional in Hawaii.
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