Latest Inflation Numbers and Discussion

[single2019]

Yes, your house is larger than mine. I have a hard time with the hot and humid weather (get faint, nauseous). I tried raising the temperature more, but started feeling sick.

Your bill is far higher than average. I would have the utility check the meter. Have you considered using a dehumidifier?

 

[Koolau]

I think inflation is now baked in for a while. It's gonna require a lot of pain to get it under control. I don't believe in soft landings. I think it's gonna be a bumpy couple of years. But I'm glass-half-empty so YMMV.

 

[mikes425]

From what I can see there is a lot of political influence behind this extreme market over-reaction. We're talking about "off" by 2 tenths of 1 percent of expectations. Total BS, unfounded market action. Things are NOT that bad, all variables considered, and from a global perspective. There's a sh*t-ton of manipulation at play here. Gas prices - down dramatically. Supply chain issues being addressed. I don't buy this fake-out for a second other than as a knee-jerk, directly correlated with the mid-terms being less than two months away. That's not cynicism, that's just a professional Journalist's read. Fi-Media loves to sensationalize and hype. This is right on brand with that pattern.

 

[GenXguy]

From what I can see there is a lot of political influence behind this extreme market over-reaction. We're talking about "off" by 2 tenths of 1 percent of expectations. Total BS, unfounded market action. Things are NOT that bad, all variables considered, and from a global perspective. There's a sh*t-ton of manipulation at play here. Gas prices - down dramatically. Supply chain issues being addressed. I don't buy this fake-out for a second other than as a knee-jerk, directly correlated with the mid-terms being less than two months away. That's not cynicism, that's just a professional Journalist's read. Fi-Media loves to sensationalize and hype. This is right on brand with that pattern.

Gas prices are still wayyy too high - about double from 2 years ago. Still many supply chain issues. Inflation is still wayyyyy tooo high. And even if it eventually drops, that doesn't mean prices drop - they will continue to increase. Hard times ahead, and many are expecting a recession in 2023. Hard times ahead. And keep the politics out of it.

 

[GenXguy]

I think inflation is now baked in for a while. It's gonna require a lot of pain to get it under control. I don't believe in soft landings. I think it's gonna be a bumpy couple of years. But I'm glass-half-empty so YMMV.

I think so also.... and I'm a realist. It's already been bumpy for a couple years, and I can easily see a couple more tough years.

 

[JoeWras]

It's about core. It's about wage inflation. Gasoline returning to early March levels doesn't mean it's over.

Way too much spin out there.

 

[aja8888]

From what I can see there is a lot of political influence behind this extreme market over-reaction. We're talking about "off" by 2 tenths of 1 percent of expectations. Total BS, unfounded market action. Things are NOT that bad, all variables considered, and from a global perspective. There's a sh*t-ton of manipulation at play here. Gas prices - down dramatically. Supply chain issues being addressed. I don't buy this fake-out for a second other than as a knee-jerk, directly correlated with the mid-terms being less than two months away. That's not cynicism, that's just a professional Journalist's read. Fi-Media loves to sensationalize and hype. This is right on brand with that pattern.

Demand is one of the big problems fueling the inflation. people are paying the high prices because there were trillions of free dollars dropped on the economy. To stop inflation you must kill demand and that's always done by unemployment rising and people stop buying. It's not rocket science.

The Gov or the FED have no control over suppliers.

 

[single2019]

From what I can see there is a lot of political influence behind this extreme market over-reaction. We're talking about "off" by 2 tenths of 1 percent of expectations. Total BS, unfounded market action. Things are NOT that bad, all variables considered, and from a global perspective. There's a sh*t-ton of manipulation at play here. Gas prices - down dramatically. Supply chain issues being addressed. I don't buy this fake-out for a second other than as a knee-jerk, directly correlated with the mid-terms being less than two months away. That's not cynicism, that's just a professional Journalist's read. Fi-Media loves to sensationalize and hype. This is right on brand with that pattern.

Do you really believe that any administration has that power?

 

[Gumby]

Moderator Note: Let us please avoid descent into political argument that violates the Community Rules. The thread is interesting and I don't want it to be locked. Thank you.

 

[audreyh1]

When the market reacts this violently to a seemingly minor news difference from expectation, I always figure someone got caught with their pants down - i.e. caught the wrong way in a big bet they couldn’t easily cover. Then volatility kind of feeds on itself.

 

[mikes425]

Do you really believe that any administration has that power?

No. That's my point. There is 'blame' being implied politically. This is a global condition. I am in zero way stating any administration "has that power" - tho some media would like to project that false narrative. That's all.

 

[mikes425]

Way too much spin out there.

Exactly my point.

 

[mikes425]

When the market reacts this violently to a seemingly minor news difference from expectation, I always figure someone got caught with their pants down - i.e. caught the wrong way in a big bet they couldn’t easily cover. Then volatility kind of feeds on itself.

Yep.

 

[mikes425]

This volatility is presumably a 'given' going into 2023. I've ranged between -9 to -12% YTD
with a 'moderate' allocation.... tho dividend outlook still solid. It is too late for me to bail on any bond funds for whatever that's worth... the damage was done months ago. Just maintaining ultra ST to Intermediate term exposure per my FA and have not jumped in and out of this market. I have to figure those in 60/40 PF's are feeling some pain - assuming they are not trying to "time the market"in which case I'd guess they're feeling more pain.

 

[Chuckanut]

Food is still much higher. Gas has dropped but is nowhere near where it was a year ago. Services are much higher than a year or two ago. School supplies are higher.

The situation is not good. Politicians are acting like King Canute. They think they can simply say inflation is going down and it must obey them. Like the king they will soon have wet slippers in their noble feet.

Or I could be all wet. I hope I am.

 

[plex]

Yea, inflation will moderate around the same time we see unemployment shooting up, and with it, we will be able to see the light at the end of the tunnel. Not going to be pretty getting there, and pretty much everyone has no idea how long it is going to take to reach that point. Inflation continuing to rise on a monthly basis with low unemployment numbers is basically another reading that says, "more pain to come."

 

[daylatedollarshort]

Yea, inflation will moderate around the same time we see unemployment shooting up, and with it, we will be able to see the light at the end of the tunnel. Not going to be pretty getting there, and pretty much everyone has no idea how long it is going to take to reach that point. Inflation continuing to rise on a monthly basis with low unemployment numbers is basically another reading that says, "more pain to come."

The last statistic I saw were two jobs for every one applicant. As long as people are quitting left and right on Reddit antiwork, and getting jobs easily for more money, it is hard to see how wages aren't going to keep going up. Historically, has high inflation ever been brought down without a recession?

Low unemployment and negative real interest rates are usually pretty key indicators to watch. It is going to take higher interest rates to change both of those.

 

[Koolau]

The last statistic I saw were two jobs for every one applicant. As long as people are quitting left and right on Reddit antiwork, and getting jobs easily for more money, it is hard to see how wages aren't going to keep going up. Historically, has high inflation ever been brought down without a recession?

Low unemployment and negative real interest rates are usually pretty key indicators to watch. It is going to take higher interest rates to change both of those.

Looking back, this time seems the "perfect storm" due to Covid, helicopter money, "new" rights for employees, renters, on and on. Unwinding all the free money will be painful - possibly in the extreme. YMMV

 

[Montecfo]

Doesn't look like the markets like it... At least pre-market. Dow is down ~600 now.

Our markets seem crazy. How could this have been a surprise?

It is the tyranny of the calculation. The actual inflation story is improving and of course that is not apparent from the annual numbers.

 

[Koolau]

Our markets seem crazy. How could this have been a surprise?

It is the tyranny of the calculation. The actual inflation story is improving and of course that is not apparent from the annual numbers.

I'm not sure what this means. "Inflation story is improving." I'm not seeing that though the numbers have been down a bit and certain items (fuel especially) have improved. Food has gotten worse I think. I'm no expert so am curious on your take.

 

[Montecfo]

From what I can see there is a lot of political influence behind this extreme market over-reaction. We're talking about "off" by 2 tenths of 1 percent of expectations. Total BS, unfounded market action. Things are NOT that bad, all variables considered, and from a global perspective. There's a sh*t-ton of manipulation at play here. Gas prices - down dramatically. Supply chain issues being addressed. I don't buy this fake-out for a second other than as a knee-jerk, directly correlated with the mid-terms being less than two months away. That's not cynicism, that's just a professional Journalist's read. Fi-Media loves to sensationalize and hype. This is right on brand with that pattern.

To me what is bizarre is the stock market rallies when we know or should know interest rates are going up, which both reduces earnings and makes those earnings less valuable.

 

[Montecfo]

I'm not sure what this means. "Inflation story is improving." I'm not seeing that though the numbers have been down a bit and certain items (fuel especially) have improved. Food has gotten worse I think. I'm no expert so am curious on your take.

It is easy to see. CPI flat in July, up .1 percent in August. It is a huge improvement from prior months.

 

[Koolau]

It is easy to see. CPI flat in July, up .1 percent in August. It is a huge improvement from prior months.

I consider that noise in relation to big-picture inflation. Big drops in fuel one month makes it look like inflation has gone down. But next month food goes up and it makes inflation look like it's heading up again. But year over year CPI differences are in the 8% to 9% range.

 

[youbet]

It is easy to see. CPI flat in July, up .1 percent in August. It is a huge improvement from prior months.

It's still a long way from "transient!"

 

[youbet]

But year over year CPI differences are in the 8% to 9% range.

Yep.

I've been doing some FireCalc runs where my expense entry is up 20%, 30% and 40% over current. I do believe that 2 - 3 years from now that will be the fact. And, of course, those higher expenses will continue to increase but likely at a slower rate than today.

My private sector pension, an important part of our income, is not COLA'd so we have to figure out what permanently higher (and still growing, just more slowly) expenses will mean to our household. It ain't pretty!