Latest Inflation Numbers and Discussion

[JoeWras]

Yeah, I got tired of straining my back trying to open the old windows - not to mention pinching my fingers when the darn things finally gave and went flying up (or down.) YMMV.

Right, us too. We replaced them in 2007 and can now use what was unusable and fogged over. But we save maybe 2 bucks a month in energy as best as I could estimate. The sound reduction was also a plus. But energy? Fuggetaboutit.

Back to inflation. Powell talked a lot about housing services and services in general. If you can hold off the windows a few years, demand may ease, and some of these companies won't soak people like they have been able to over the last 2 years.

 

[oiseux]

In my simplified world view, we've got to see some more demand destruction before we see some real movement in prices. There is still a portion of the population that isn't really impacted materially by inflation (including most of the people here), and there is enough pent up demand for some goods that they are still buying. But it seems like we're heading in the right direction, just hope we don't overshoot the mark.

On windows, we replaced our 80 year old windows with new wood ones --- the sales rep said this was her priciest order ever. Won't be seeing an ROI on these ---although at least they aren't as drafty and leaky (in our recent 15 days of constant sideways rain)

 

[Amethyst]

Seriously? The women only wanted to replace perfectly good windows because some other family got new windows? And your buddies had no other reason to replace those windows?

Do they also replace their spouses whenever anybody in the group gets divorced?

It sounds as if your married friends have more money than brains.

When we sold our Maryland home, the 29-year-old single-pane windows looked like new after a professional washing. Of all the critical comments we received, "The windows are old!" wasn't one of them.

.

Three of my ROMEO buddies wives have talked them into expensive window replacements ($30 K +) in 20 year old houses because that's what other wives are bragging about at the Garden Club luncheon meetings.

.

 

[bobandsherry]

Comcast (internet + basic TV) is $118, up from $110. That's a 7.3% increase.

Nothing new about that. I remember being with Comcast and every year getting hit for outrageous increases, only $8 isn't too bad based on my experience. But each year we'd do the long drawn out "cancel dance", letting them know it's too much, I need to trim expenses, yada, yada, yada..... in the end agent would tweak something to get a better price. I learned during that time to bypass the regular agent and ask for retention specialist, they could work some magic. And a buddy of mine went so far as to actually cancel service, calling at the beginning of the month for cancelation at end of month - Comcast reached out to him to see what they could do to keep him a customer.

So depends on how much you value your time vs just throwing another hunskie at them for the year.

 

[bobandsherry]

In my simplified world view, we've got to see some more demand destruction before we see some real movement in prices. There is still a portion of the population that isn't really impacted materially by inflation (including most of the people here), and there is enough pent up demand for some goods that they are still buying. But it seems like we're heading in the right direction, just hope we don't overshoot the mark.

The Fed isn't concerned with current prices, but only look forward price increase (inflation). These prices, overall, may signal the new normal. Economy perhaps playing catch-up for prior 10 years low inflation/price movement.

For those looking or expecting prices to drop.... unless prices drop due to increased productivity (lower costs to produce), prices dropping broadly would signal something else, deflation, and that's not a good thing either.

 

[GravitySucks]

Powell is emphasizing service inflation component. Still listening...

Haven’t taken the time to listen to yesterdays speech but in Decembers he broke out inflation to Goods, Services, and Wages. While then inflation for goods had fallen he warned that services and wage inflation was still high and that if they did not press on those increases it would feedback to Goods eventually. This was a new perspective on the issue for me.
Happy the Fed is keeping up the fight as inflation is the biggest threat to my happy retirement.

 

[JoeWras]

Haven’t taken the time to listen to yesterdays speech but in Decembers he broke out inflation to Goods, Services, and Wages. While then inflation for goods had fallen he warned that services and wage inflation was still high and that if they did not press on those increases it would feedback to Goods eventually. This was a new perspective on the issue for me.
Happy the Fed is keeping up the fight as inflation is the biggest threat to my happy retirement.

He was singing a similar tune, but also left a few doors open.

L don't recall him talking much about world issues like China reopen.

 

[pb4uski]

It only makes financial sense to replace windows in a house when the surrounding frame structure is rotted or so badly shrunk, re-caulking won't help stop all the drafts. Changing from single pane to double pane glass is good for noise abatement but leaking is generally from the seals at the frame interfaces.

Three of my ROMEO buddies wives have talked them into expensive window replacements ($30 K +) in 20 year old houses because that's what other wives are bragging about at the Garden Club luncheon meetings.

Even with leaking windows, payback periods are measured in decades. Gumby's post is right on.

That's the issue for her... noise abatement... but rather than spend big $$$$ on windows, I offered to buy her the best earplugs that money can buy. For some unknown reason, she didn't seem to be amused by that even though it was delivered with a .

I think FOMO with some of her girlfriends is an issue as well, but she'll never admit to that. While she is pretty frugal for everything else, for some reason she likes spending money on home improvement projects... sometimes wisely but often not.

I do have a priceless video of when the first vendor that she had over for new windows delivered their numbers to her... $70k full retail price installed to do 15 windows in our condo, but they were having a big sale so we could get them for an affordable $38k and if we signed on the dotted line that night there wre further discounts available. Priceless.

 

[Born2Fish]

I don't remember the exact words, but Powell mentioned that so far they have seen disinflation on half of the sectors they monitor, however, there was a sector that represented "the other half" of the total inflation that had not budged downward at all. He said the Fed is concerned about the lack of downward movement but will continue to monitor.

So, if current inflation is 6% and HALF of the sectors (representing 3%) are unaffected so far, it seems that the 2% overall target may NOT be attainable in the next year.

I thought that he would maintain the hawkish tone displayed on previous Fed speeches but he was really soft in response to questions from the gallery IMHO. The lack of ANY improvement on half of the inflation sectors seems darn serious.

The markets are acting like the battle has been won. Stock prices seem far too high based on valuations to me.

The worrier in me thinks this may get ugly. And as usual, the Fed will be to blame.

There is a lot of pent up energy in the market. I think it is poor judgment for the Fed to display such a "laissex-faire" attitude.

 

[JoeWras]

When you look at historical interest rates over time, we're back to normal, or maybe a shade above. During this century, the "markets" got used to free money or quick reversals, so they seem to be assuming that's going to return. Even in the 50s and 60s, the rate was more normalized around 3%.

20 years of low rates built an assumption.

Going back to longer term of 3% to 5% might be a process.

 

[11522914]

I already have windows. They let the sun in and keep the rain out. If/when they stop doing either of those things, I'll consider buying new windows.

Lol, I couldn't agree more.

 

[Freedom56]

One of our friends who live in Wellington Florida are upset over their home insurance renewal that they received today. Their 2023 policy has surged from an already high $3200 per year to $5400. They have a 3500 sqft home built in 2012 in a secure gated community. They are the original owners and never had a claim. The home was built to the latest building codes and has hurricane impact glass and even accordion storm shutters on all windows. But none of that appears to matter when you are in a risk pool surrounded by older homes outside their gated world.

 

[Koolau]

One of our friends who live in Wellington Florida are upset over their home insurance renewal that they received today. Their 2023 policy has surged from an already high $3200 per year to $5400. They have a 3500 sqft home built in 2012 in a secure gated community. They are the original owners and never had a claim. The home was built to the latest building codes and has hurricane impact glass and even accordion storm shutters on all windows. But none of that appears to matter when you are in a risk pool surrounded by older homes outside their gated world.

Sounds like the Insurance Co. is trying to make up for past bad claims experience. Bummer indeed.

 

[Montecfo]

Inflation has been running about 1% since June. It will not stay so low but that defines the current trend.

So we appear to be on track for a long-term Fed target of 2%. Only question is how much inflation rebounds from recent trend.

 

[JoeWras]

Inflation has been running about 1% since June. It will not stay so low but that defines the current trend.

So we appear to be on track for a long-term Fed target of 2%. Only question is how much inflation rebounds from recent trend.

Powell discussed the problem of extrapolating monthly or quarterly numbers to a yearly rate.

Funny, though, because 18 months ago the committee was happy doing so and calling the extrapolation "transistory."

 

[JoeWras]

Massively strong jobs report out this morning. Stock market futures off, 10 year treasury strongly up.

 

[MichaelB]

Massively strong jobs report out this morning. Stock market futures off, 10 year treasury strongly up.

There has to be either a revision or seasonal factor affecting this.

 

[Freedom56]

Some sectors are clearly seeing deflationary pressures such as computers and electronics as the demand from the pandemic era has faded and inventory levels have increased significantly. Home goods and apparel are also feeling the pressure. But leisure and travel is still strong. We have been in over a dozen coast to coast flights over the past four months and have yet to be in a flight that was not full. Even first class is always full and it's not the business travelers but leisure travelers filling up first class. The effects of the nearly 8 trillion stimulus are starting to diminish but we are just returning to normal supply/demand levels not the crazy supercharged supply/demand situations we experienced in 2020 and 2021. If you are a saver, you will do well during these times.

 

[jldavid47]

There has to be either a revision or seasonal factor affecting this.

November and December were revised upward by 71000 jobs. January always has an upward seasonal adjustment because there is normally a high number of people laid off after the holidays. Apparently, "seasonal" employees stuck around more than usual (undoubtedly because service companies are dying for employees).


I'm still waiting for the alleged "experts" gloom and doom scenario to happen. The economy was supposed to be in a full-fledged recession by now due to repeated hikes in interest rates. In fact, as interest rates have increased, the economy has gotten progressively stronger. They must feel like Marvin the Martian. ("Where's the kaboom? There was supposed to be an earth shattering kaboom!")

 

[target2019]

Comcast (internet + basic TV) is $118, up from $110. That's a 7.3% increase.

They've been raising prices just about every year, even before higher inflation.

Is my example not valid for this thread?

 

[Gumby]

Massively strong jobs report out this morning. Stock market futures off, 10 year treasury strongly up.

Oh, no! People have jobs.

 

[Fermion]

Oh, no! People have jobs.

= money to buy a new i-phone

= inflation

 

[Gumby]

= money to buy a new i-phone

= inflation

Yeah, you're right. It's much better when people don't have jobs because the economy is in the toilet and companies are failing.

 

[Fermion]

Yeah, you're right. It's much better when people don't have jobs because the economy is in the toilet and companies are failing.

I didn't say it was bad, I just said it is likely to cause some inflation or maintain inflation, since the whole thread was about inflation discussion.

 

[Fermion]

People are kind of funny. "Heck yeah we should pay people a living wage" "$22 an hour for fast food workers"

"Why is my happy meal $5 now when it used to be $3?"