Latest Inflation Numbers and Discussion

[Gumby]

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.

And I find the current obsession with inflation rates and the Fed's likely interest rate increases in response to be misguided. The best way for us all to get rich is to have a strong, vibrant economy that employs a lot of people.

 

[MichaelB]

= money to buy a new i-phone

= inflation

Not necessarily. New job = more production = more stuff to buy on the other side of that equation.

 

[JoeWras]

And I find the current obsession with inflation rates and the Fed's likely interest rate increases in response to be misguided. The best way for us all to get rich is to have a strong, vibrant economy that employs a lot of people.

I agree.

The problem is the markets sometimes get into this weird reverse psychology mode. I've seen this a few other times before.

My solution to the markets is to buy and hold broad indices, as I've been doing since the mid 80s. Then ignore the weird times.

 

[FREE866]

My solution to the markets is to buy and hold broad indices, as I've been doing since the mid 80s. Then ignore the weird times.

Exactly. The numbers are irrefutable --the hard data behind that philosophy is astounding.

 

[Mr._Graybeard]

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

A wise man once told me that monthly economic numbers are just noise.

 

[explanade]

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.

Florida home insurance market has been broken for a few years. Carriers have been leaving the state. State has had to fund to provide some coverage.

https://www.fox35orlando.com/news/f...es-bill-to-overhaul-property-insurance-system

 

[Freedom56]

Florida home insurance market has been broken for a few years. Carriers have been leaving the state. State has had to fund to provide some coverage.

https://www.fox35orlando.com/news/f...es-bill-to-overhaul-property-insurance-system

Tell me about it. Four years ago our condo insurance policy in Florida shot up to $1800 per year for a basic condo policy with a five hundred dollar deductible and only $5000 in personal property coverage. That rise was from $620 the prior year. Our condo even has hurricane impact glass and was built in 2008. We said no thanks and declined the insurance. Our condo fee included building insurance and covered the structure. We ended up selling the condo earlier this week with an all cash deal with a significant gain. We weren't using the condo that often and with bonds earning 6%, it made sense to sell it and save the expenditures and sit back and earn easy interest on the proceeds of the sale. We figured that the $15K we spent annually on property taxes, utilities, and condo fees would easily cover the cost of a high end hotel should we choose to visit Florida again.

 

[Koolau]

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?"

And why am I buying it off of a kiosk instead of from a pimply faced slacker at the front counter?

 

[Koolau]

And I find the current obsession with inflation rates and the Fed's likely interest rate increases in response to be misguided. The best way for us all to get rich is to have a strong, vibrant economy that employs a lot of people.

Sounds good! But when gummints (or pseudo gummints) manipulate the money, even a good economy can be inflationary - like now. Arguably, the economy is pretty good, jobs are available, relatively strong demand, etc. Lots of issues, of course, like Covid hang-over, not enough labor available for non-skilled, plus supply chain issues. But still, a lot better than a recession. SO, why is inflation still a major issue? Too much money floating around?? YMMV

 

[explanade]

Inflation is a global problem. Not because of one country's fiscal or monetary policies.

I posted an article about shortage of workers in the hospitality industry, especially restaurants.

Services or wage increases are a big component of why restaurant prices have rose. They can't find help because a lot of people are doing other types of jobs.

So they've raised wages but still not enough workers.

 

[Koolau]

Inflation is a global problem. Not because of one country's fiscal or monetary policies.

True. Most of the fiat currency countries (you know, like all of them in the 1st world) have been playing with the money supply. Not just us (US.)

 

[jimbee]

Inflation is a global problem. Not because of one country's fiscal or monetary policies.

Correct, but that information doesn't stop all of the whining about it on this forum and elsewhere.

 

[Koolau]

Correct, but that information doesn't stop all of the whining about it on this forum and elsewhere.

I think I read someplace that the founders were thinking about adding "the right to whine" to the bill of rights, but they had originally agreed to keep the list to only 10 and whining just barely missed the cut. Too bad.

 

[explanade]

True. Most of the fiat currency countries (you know, like all of them in the 1st world) have been playing with the money supply. Not just us (US.)

Poorer countries with really weak currencies have even worst inflation, for instance many countries in South America.

 

[Koolau]

Poorer countries with really weak currencies have even worst inflation, for instance many countries in South America.

True. Over the years, some of those countries have even defaulted on debt. Let's hope we never face that. I understand there are some disadvantages to a strong currency, but my personal opinion is that a strong currency is better - though YMMV.

 

[explanade]

I'm talking about now, in the past couple of years. As bad as inflation has been in the industrialized countries, it's worse for poorer economies.

They don't have big governmental budgets or significant central banks to flood with money supply.

They also don't have currencies that most people outside those countries want.

In fact, in countries like Argentina, they want US dollars, not Argentine pesos.

 

[GenXguy]

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.

Yeah, they started the interest rate hikes way too late, and they have already reduced to lower rate increases the last two meetings, plus there is a delay in the full effect. Hopefully, they will keep up the rate hikes and get this inflation under control (ignore the short term noise as has been mentioned and keep an eye on year over year.)

 

[pb4uski]

... Services or wage increases are a big component of why restaurant prices have rose. They can't find help because a lot of people are doing other types of jobs.

So they've raised wages but still not enough workers.

I don't think it is necessarily about the money. I think that a lot of restaurant workers were stuck in a rut of working very hard, many hours and horrible work/life balance.

Then covid hit and they got laid off. During that time off they assessed their future and decided to change jobs for better work/life balance and move on to do something different from restaurant work.

That's my hypothesis anyway.

 

[explanade]

I don't think it is necessarily about the money. I think that a lot of restaurant workers were stuck in a rut of working very hard, many hours and horrible work/life balance.

Then covid hit and they got laid off. During that time off they assessed their future and decided to change jobs for better work/life balance and move on to do something different from restaurant work.

That's my hypothesis anyway.

That's definitely true in a lot of cases. I posted a link to a WaPo article in the Are you tired of dining out? thread.

It profiles several former restaurant workers who took the opportunity to change careers.

But the article also cites huge number of shortages in hospitality so while some are changing careers, a lot of it was probably low wages and the pandemic.

 

[jollystomper]

I think I read someplace that the founders were thinking about adding "the right to whine" to the bill of rights, but they had originally agreed to keep the list to only 10 and whining just barely missed the cut. Too bad.

I hear there was a cheese shortage at the time that influenced it. Many cannot have whine without cheese.

 

[Koolau]

I hear there was a cheese shortage at the time that influenced it. Many cannot have whine without cheese.

Heh, heh, my apologies for jollystomper. I opened the door and now I take full responsibility.

 

[Time2]

Just got our FPL Electricity bill for January 2023. It really was not bad. Here is the breakdown:

Point of Note is we are on Equal Monthly Billing.

1) The total usage for 2023 was$122.56 - Compared to Total Usage for January 2022 of $121.37

2) Total Bill for January 2023 $149.67 - Compared to January 2022 of $114.72.

Other months in 2022 have been comparable with about a $20 deviation. Because the equal billing skews things a bit the real comparison will be at the end of 2023 and the end of 2022.

Personally, I do not think it was too bad as it varies a lot on weather. This year we used a lot more heat than usual.

FPL bought our power company, then raised the price of the first 1000kWhs by 11% and anything over 1000kWhs 38%.

People were up in arms on local Nextdoor groups complaining about how there bill had doubled and even tripled. I offered several times to show people that was just not true if they would post two bills one year apart, no one ever did.

I'm glad we over saved! That 8.7% inflation hit on our net worth is real, and then add the 18% drop in the value of our stock portfolio... Yikes!

 

[Montecfo]

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."

Well, yes. And the annual report reflect s 12 months of monthly measurements dutifully reported, which I guess makes it dangerous indeed.

I read Powell's words in that regard to be saber rattling, meant to convince us of the Fed's steadfast resolve to kill inflation.

But reporting these monthly numbers and then pretending they are somehow not reliable strikes me as some serious doublespeak.

 

[Koolau]

Well, yes. And the annual report reflect s 12 months of monthly measurements dutifully reported, which I guess makes it dangerous indeed.

I read Powell's words in that regard to be saber rattling, meant to convince us of the Fed's steadfast resolve to kill inflation.

But reporting these monthly numbers and then pretending they are somehow not reliable strikes me as some serious doublespeak.

Too bad Louis Renault is no longer with us.

 

[Mr._Graybeard]

My truck has a gauge that tells me my mpg at any given moment. It's like a stopped clock in relation to the number it shows when I switch it over to "average fuel economy." Other owners of a similar truck on a forum I frequent tell me the "average" number is optimistic.

I just went for my annual "wellness" checkup. I weighed myself at home that morning and, lo and behold, the scale at the doc's office said I was 3 lbs heavier than my home scale. Which scale is wrong? Maybe the doc wants to scare me into healthy living, or the bathroom scale folks just want to make me happy with their product.

Those are micro measurements compared to the macro scale of the US economy. If a pickup truck or a bathroom scale can't get measurements right, how much accuracy can you expect from a relatively small crew of statisticians dealing with millions, billions and trillions?

The world is full of uncertainty, people. We're more comfortable with "the truth, the light, and the way." But that's not the way the world works. Margin of error doesn't equal conspiracy.