Latest Inflation Numbers and Discussion

[Car-Guy]

Headline PCE came in at 5.0% in December, down from 5.5% in Nov and well below expectations of 5.5%.

So-called core PCE, the Fed's favored gauge, came in at 4.4%, down from 4.7% in Nov.

Personal consumption declined in December.

All continuing to suggest reduced inflation pressure and suggesting a coming recession.

https://www.cnbc.com/2023/01/27/pce-inflation-december-2022-.html

Many of the talking heads are now revising their estimates that JP will only raise rates 1/4 point next week.

 

[Bigdawg]

Many of the talking heads are now revising their estimates that JP will only raise rates 1/4 point next week.

I was thinking 1/4 point. Are you saying higher? I highly doubt 1/2 point. Are you saying no rate raise? Obviously we are all speculating. We'll see soon enough.

 

[Sunset]

I was thinking 1/4 point. Are you saying higher? I highly doubt 1/2 point. Are you saying no rate raise? Obviously we are all speculating. We'll see soon enough.

Ditto, I think the next 2 are 1/4 each. Then probably a hold for a while.

 

[Car-Guy]

I was thinking 1/4 point. Are you saying higher? I highly doubt 1/2 point. Are you saying no rate raise? Obviously we are all speculating. We'll see soon enough.

I said the talking heads were speculating it would be 1/4 point. I happen to think they are right this time.

 

[jim584672]

I'm glad natural gas prices have come down to pre-pop levels.

 

[Happyras]

I said the talking heads were speculating it would be 1/4 point. I happen to think they are right this time.

A lot of hopeful thinking, but I really do not think the problem is going to resolve itself if we back down at this point. You have to believe the FED has done its lessons and will stand firm. Backing off too soon will create opportunities for wage inflation that will surpass what we have seen. I really hope the opposite and that Powell bites down hard and gives the next two hikes enough powder to make this really have a lasting effect.

I strongly believe the employment rate is so strong that we will see leaps in wages if things do not cool off sufficiently.

 

[Koolau]

I’ve read economic research (and posted about it previously) that says 5% inflation is a “threshold number”. When inflation hits 5% the level of public awareness and concern grows dramatically, and when it falls below, the relevance falls and public concerns shift to other matters.

This seems to be happening right now.

We've always had more than our share of inflation here. When the big story became inflation a year ago, I didn't "notice" a lot of difference - though there were some stand outs (like Costco Sodas going from $11 to $17 for 36.) BUT in the last month, Costco and Sams are making up for lost time. Loads of items are going up $2 and $3 on what were $10 items (Dinty Moore Beef stew for instance and most other 6 or 8 packs of canned goods.)

So, I think I've reached "my" threshold. It's not yet panic, but a bit of a feeling of dread. I know that even if inflation "drops," prices are not going back down. They're baked in the cake already. The price of Paradise has gotten yet higher though YMMV.

 

[Koolau]

A lot of hopeful thinking, but I really do not think the problem is going to resolve itself if we back down at this point. You have to believe the FED has done its lessons and will stand firm. Backing off too soon will create opportunities for wage inflation that will surpass what we have seen. I really hope the opposite and that Powell bites down hard and gives the next two hikes enough powder to make this really have a lasting effect.

I strongly believe the employment rate is so strong that we will see leaps in wages if things do not cool off sufficiently.

I have no idea what the FED is going to do. Not sure they do. In any case, if they go for 1/4, it probably means they are more interested in a "soft landing" than they are in actually curbing inflation. I'm not taking a side on which is preferable, but 1/4 won't send much of a message that "we're still serious about inflation." Very much a YMMV situation - especially since I can barely run my own finances (good saver - lousy investor.)

 

[ShokWaveRider]

We've always had more than our share of inflation here. When the big story became inflation a year ago, I didn't "notice" a lot of difference - though there were some stand outs (like Costco Sodas going from $11 to $17 for 36.) BUT in the last month, Costco and Sams are making up for lost time. Loads of items are going up $2 and $3 on what were $10 items (Dinty Moore Beef stew for instance and most other 6 or 8 packs of canned goods.)

So, I think I've reached "my" threshold. It's not yet panic, but a bit of a feeling of dread. I know that even if inflation "drops," prices are not going back down. They're baked in the cake already. The price of Paradise has gotten yet higher though YMMV.

Ah, but how much is the hot dog and drink?

 

[GenXguy]

So, I think I've reached "my" threshold. It's not yet panic, but a bit of a feeling of dread. I know that even if inflation "drops," prices are not going back down.

It seems a lot of people don't get that, though, not even in the national media. Heard a news story on national news where they said inflation came in lower, and the next thing they said was "not all prices are coming down yet" or something to that effect. No, they aren't getting lower, they are still going up.

Edit: Here's another one.

https://www.cnbc.com/2023/01/25/inflation-is-cooling-but-high-prices-will-stick-around.html

Inflation is cooling, but prices on many items are going to stay high for months

Slowing inflation hasn’t brought relief for consumers yet because prices are still well above where they were a year ago.

 

[jim584672]

The market doesn't believe the Fed that is why it is going up. If they do a .25 they are saying we want growth over killing inflation and the market will be right. However I have seen the market be wrong in the past so time will tell.

 

[Koolau]

Ah, but how much is the hot dog and drink?

Yeah, ya got me there. I guess I'll just hang out at Costco and eat 3 meals a day. I can live on $4.50 (plus tax) per day.

 

[Freedom56]

Went to Shake Shack in Boca Raton Florida yesterday and ordered two Double Shacks, fries, and lemonades. It tasted so good that we forgot that we just paid $38.60 for a burger, fries, and drinks for two. Gas prices jumped from $3.18 10 days ago to $3.49 yesterday in Palm Beach County. On a positive side to inflation, our condo sold at 6.8 times what we bought it for in 2011 during the last real estate crash in Florida. This will be an all-cash private sale where the buyer is paying all close costs. So much for a slowing housing market. After paying long term capital gains, the proceeds will be invested in high grade corporate bonds earning income at over 5% versus paying monthly fees, utilities, annual property taxes and insurance on a property we were rarely using. Florida Real Estate outperformed most investments over the past 12 years and staged a remarkable turn-around from the doom and gloom of 2011.

 

[HF63]

The price increase are coming from all over but been able to down play some of them by canceling services or going w/ a different provider. I also stop stocking up on sale items because it seem a good idea at that point.


We started to just buy what we need and it seems to work out fine at this moment.

 

[Koolau]

The price increase are coming from all over but been able to down play some of them by canceling services or going w/ a different provider. I also stop stocking up on sale items because it seem a good idea at that point.


We started to just buy what we need and it seems to work out fine at this moment.

The way I learned navigation of high inflation was to buy and store. Prices will go up if you wait. Generally, this has served me well, but YMMV.

 

[HF63]

The way I learned navigation of high inflation was to buy and store. Prices will go up if you wait. Generally, this has served me well, but YMMV.


Does one way, I hope to achieved greater savings when I moved later on.

 

[Gumby]

If you have a chance, read Paul Krugman's latest in the New York Times, where he talks about inflation and its measurement. A taste:

When it comes to economic assessment, feelings are no substitute for hard data. A plurality of Americans say that we’re in a recession; the actual numbers on jobs and gross domestic product show an economy that remains quite strong.

https://www.nytimes.com/2023/01/27/opinion/inflation-housing-data.html

 

[Markola]

Thanks for the article. I always read Paul Krugman’s articles and can’t help but agree with this one, which shows how the data that researchers rely on to assess and project inflation are skewed, limited and selective. But I also only trust Krugman only up to a point. He’s been wrong about transformational technologies like the internet, he missed the Great Recession, he missed the current inflation spike, and he never talks about monetary inflation as a fundamental component of price inflation. To him, it’s as if the overworked money printers of central banks around the world in 2020, which created from thin air for example some 40% of all US dollars in circulation, never existed and never happened. He doesn’t like inflation but doesn’t seem to DISLIKE monetary inflation’s role in it. I think he’s wrong about that.

 

[GenXguy]

Right, he was wrong about inflation. I think he even admitted that a while back.

 

[Montecfo]

He has been very wrong about many things. Unfortunately some of these personalities become slave to politics and economic views espoused thus need heavy filtering.

 

[Montecfo]

And just to put a finer point on it, there is amble evidence that the economy has slowed markedly. Just look at q4 GDP sans the inventory build and government spending: under 1%.

And the record growth in credit card debt suggests people are struggling to make ends meet.

 

[Markola]

+1. And car loan delinquencies are way up. https://finance.yahoo.com/news/americans-struggling-pay-car-loans-200000703.html

 

[Christine]

There was an article in the local paper about timber prices coming back down to pre covid levels. But it seems people are not yet aware since they still don't sell much volume.


I'm thinking people are too busy paying for everything else to be interested in timber.

 

[explanade]

Lower inflation rate than last year doesn't necessarily mean prices of all goods are falling.

Some goods may see falling prices or lower price increases on a percentage basis than last year.

Restaurants raised menu prices a lot. They may not drop them any time soon as long as they still get good business.

Or maybe they push more lunch specials as job growth declines or there are more and more layoffs.

 

[GenXguy]

Lower inflation rate than last year doesn't necessarily mean prices of all goods are falling.

Some goods may see falling prices or lower price increases on a percentage basis than last year.

Restaurants raised menu prices a lot. They may not drop them any time soon as long as they still get good business.

Or maybe they push more lunch specials as job growth declines or there are more and more layoffs.

When inflation is above zero, even if it's lower than what it was, it doesn't mean prices are dropping, just the opposite. I've mentioned this various times here, including in this thread. Positive inflation means that prices are going up on average. There are always some exceptions, of course, like gas prices that fluctuate a lot. You would need some sustained deflation to see prices fall on average.

https://www.early-retirement.org/fo...ers-and-discussion-114292-53.html#post2888166