Latest Inflation Numbers and Discussion

[Hyper]

Many small privately owned restaurants in my area are closing their doors for good after the latest round of minimum wage increases.

Some of the cities used to let employers use some tip money to backfill up to the minimum wage. But this year no more of this onerous “exploiting” the workers is allowed. Servers get all their tips and the full minimum wage. So instead people are losing their jobs or seeing their hours cut.

Alot of fast food and upper restaurants have closed in our state, especially in the last year. Those closed and those still open have significantly raised prices. Poor service. Worse food. Just not worth going out anymore. Also very few teens working at these jobs.
The fast food places and upper restaurants in our broad area employ those individuals that have been and continue going through the court system. That doesn't sit too well for us!

 

[Gumby]

....
The fast food places and upper restaurants in our broad area employ those individuals that have been and continue going through the court system. That doesn't sit too well for us!

Can they serve me expeditiously and correctly? Are they pleasant and attentive? If so, I don't care if they have been through the legal system or not.

 

[Hyper]

Can they serve me expeditiously and correctly? Are they pleasant and attentive? If so, I don't care if they have been through the legal system or not.

Miss the "poor service" stated? Depending on circumstance, once is easy enough to overlook. Repetitive trips through the court system...na.
If one doesn't care enough about their own well being, lives. Why would I think they would care much about the food they serve me?

 

[Taco]

Depending on circumstance, once is easy enough to overlook. Repetitive trips through the court system...na.

I'm curious how you know. I would have no clue what a random stranger's history is with regards to their trips through the court system.

Are you in law enforcement? A small town where everyone knows everyone?

 

[Gumby]

Miss the "poor service" stated? ...

No, I saw that, which is why I put qualifications on my response. I'll repeat - if they provide good service, I don't really care what else they have done in the past. I also note that serving at fast food restaurants may be one of the few jobs available to someone with a record. I would rather have those people working and trying to fit in with society and live productive lives than not. And, to my knowledge, almost every religious tradition holds out the possibility of redemption.

But even if they provide bad service, that is reason enough by itself not to return. Their criminal record is still irrelevant.

 

[CaptTom]

I once had a friend of a relative who was opening a new, moderately high-end restaurant. I'd had some experience and agreed to help them out for a while.

The kitchen staff were just about all ex-cons. That was one rough workplace! You had to be prepared to give it back as well as take it. Commercial kitchens are pretty intense anyway, but that one had it's own vibe. Looking back now, I remember it as a fun place to work. Oh, and the food was pretty good. I wouldn't hesitate to eat there.

 

[Koolau]

I once had a friend of a relative who was opening a new, moderately high-end restaurant. I'd had some experience and agreed to help them out for a while.

The kitchen staff were just about all ex-cons. That was one rough workplace! You had to be prepared to give it back as well as take it. Commercial kitchens are pretty intense anyway, but that one had it's own vibe. Looking back now, I remember it as a fun place to work. Oh, and the food was pretty good. I wouldn't hesitate to eat there.

I guess the cons must have picked up some useful skills in the prison kitchen. Still, w*rking in a rough environment with all those sharp knives around might be intimidating.

 

[CaptTom]

Still, w*rking in a rough environment with all those sharp knives around might be intimidating.

Oddly enough, it wasn't the knives I worried about. It was the wet towels. A good snap from one of those can hurt! I did get pretty good at wielding that particular weapon though. When in Rome...

I'm grateful for the experiences I've had and the people I've met doing jobs like commercial fishing, food service and construction. Not that I would have traded my office job for any of those, but there were days when I wished I could. I always volunteered for "plant cleanup day" when each department had to send someone out to work in the field. Even if it were just pushing a broom, it felt good to be doing something physical. And sometimes I'd be sent to interesting places or to do interesting things I'd never be allowed otherwise.

What does this have to do with inflation again?

 

[audreyh1]

Hotter than expected CPI report today with month over month 0.5% and unadjusted 12 months at 3.0%. Bond market is reacting with intermediate and longer term rates rising.

Consumer Price Index Summary - 2025 M01 Results

www.bls.gov

 

[MichaelB]

BLS released new inflation numbers this morning. CPI increased 0.5% vs December and 3% for the past year.

Core CPI rose 0.4% month over month and 3.3% over the past year.

The BLS report can be seen here Consumer Price Index Summary - 2025 M01 Results

Chained CPI rose 2.8% over the past year.

 

[Chuckanut]

At this point in 2025 we have already spent 200 Billion dollars more than at the same point in 2024.

The glidepath to 2% or less inflation is getting very bumpy.

 

[Car-Guy]

Well the silver lining with the hotter than expect inflation report again this month is it continues to support a higher IRMAA rate for 2026. It should also help keep CD rates where there are now, for a while longer.

 

[braumeister]

Another interesting way of looking at it in the CPI-W (which determines government COLA adjustment).

 

[Montecfo]

Well, it seems a bit like how we started last year. So.will see if things play out similarly. The egg prices were a big driver of grocery cost increases and of course that is supply driven not structural.

But tariff effects may well push out the next rate cut. Some rationalized government spending will help if we can get there. That gets more important as this interest rate level is not sustainable.
.
But it is potentially an opportunity to cherry pick some better bond yields.

 

[SnowballCamper]

And the ten year treasury auction resulted in higher rates too. I think both (inflation and bond yields) are gonna be on a slow upward climb for a while.

 

[Gumby]

.... this interest rate level is not sustainable...

Why? Although the "war on savers" between the Great Recession and Covid may have conditioned us to expect sub 2% rates, that is just recency bias at work. Over the course of the last 54 years, the one year treasury rate has usually been higher than 4%..

1 Year Treasury Rate - 54 Year Historical Chart

Interactive chart showing the daily 1 year treasury yield back to 1962. The values shown are daily data published by the Federal Reserve Board based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a one-year maturity.

www.macrotrends.net

 

[MichaelB]

What determines an affordable level of interest rates is an interesting problem.

Higher interest rates discourage spending growth and if high enough can even make current levels of spending unaffordable. People who wish for lower spending would see higher rates as beneficial. When people are unwilling to make hard spending choices the burden of higher rates can leave them with no other option.

The real danger is higher interest rates combined with low economic growth. This can lead to stagflation, which is very difficult to resolve.

Lower rates reduce the debt service burden and free money to be used for other purposes, such as stimulating growth, but they also give debtors breathing room and allow them to continue spending.

No easy answers

 

[Montecfo]

Why? Although the "war on savers" between the Great Recession and Covid may have conditioned us to expect sub 2% rates, that is just recency bias at work. Over the course of the last 54 years, the one year treasury rate has usually been higher than 4%..

1 Year Treasury Rate - 54 Year Historical Chart

Interactive chart showing the daily 1 year treasury yield back to 1962. The values shown are daily data published by the Federal Reserve Board based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a one-year maturity.

www.macrotrends.net

It's unsustainable because of the debt. Something will have to give in my opinion.

I don't think the Fed's important task of trying to avoid recession is a war on anything except maybe unemployment. Savers should choose the best place for their savings. Those who invested in equities during the "war" made out extraordinarily well

No one is sure what the neutral Fed rate is now. We will have to see. Classically it has been viewed as being 2.5 % or so. 10 year then at 3.5- 3.75% or so.

If that is true then rates are indeed high right now.

 

[HFWR]

Some ran-dumb thoughts:

Wasn’t long ago we were worried about deflation.

Subsidies to big oil, big ag, etc. hid the inflation from individual items using government debt. Pretty much all natural resources are getting harder to find, and/or are of lessor quality/lower concentrations, requiring ever more expensive processing. For some reason, we seem to think that artificially low prices are our birthright.

 

[Chuckanut]

Some ran-dumb thoughts:

Wasn’t long ago we were worried about deflation.

Subsidies to big oil, big ag, etc. hid the inflation from individual items using government debt. Pretty much all natural resources are getting harder to find, and/or are of lessor quality/lower concentrations, requiring ever more expensive processing. For some reason, we seem to think that artificially low prices are our birthright.

I can’t think of one person in the last 20 years whose financial acumen I admire who was worried about deflation. I haven’t seen a deflated year in my lifetime.

While I am against subsidies in general I don’t think they hide inflation overall. They just transfer the inflation to somebody else. The guy who gets a $7500 subsidy to buy a new EV simply means that somehow, somewhere the rest of us are paying it. For those who pay for the $7500 subsidy, I suppose that would contribute to their personal inflation. Lucky them.

 

[HFWR]

I can’t think of one person in the last 20 years whose financial acumen I admire who was worried about deflation. I haven’t seen a deflated year in my lifetime.

While I am against subsidies in general I don’t think they hide inflation overall. They just transfer the inflation to somebody else. The guy who gets a $7500 subsidy to buy a new EV simply means that somehow, somewhere the rest of us are paying it. For those who pay for the $7500 subsidy, I suppose that would contribute to their personal inflation. Lucky them.

Here’s what Forbe’s had to say about deflation in 2018.

Deflation Remains Biggest Threat As Lofty Stock Markets Head Into 2018

Given high (and rising) debt levels, deflation may be a bigger threat than inflation.

www.forbes.com

I was thinking more about what, say, the price of gasoline would be if oil companies weren’t subsidized. Or what our food prices would be without subsidies keeping prices stable/up, and farmers in business in lean years.

 

[SnowballCamper]

Why? Although the "war on savers" between the Great Recession and Covid may have conditioned us to expect sub 2% rates, that is just recency bias at work. Over the course of the last 54 years, the one year treasury rate has usually been higher than 4%..

1 Year Treasury Rate - 54 Year Historical Chart

Interactive chart showing the daily 1 year treasury yield back to 1962. The values shown are daily data published by the Federal Reserve Board based on the average yield of a range of Treasury securities, all adjusted to the equivalent of a one-year maturity.

www.macrotrends.net

Because interest on the debt is about 14% of government spending, and not going down.

 

[Flieger]

I can’t think of one person in the last 20 years whose financial acumen I admire who was worried about deflation. I haven’t seen a deflated year in my lifetime.

While I am against subsidies in general I don’t think they hide inflation overall. They just transfer the inflation to somebody else. The guy who gets a $7500 subsidy to buy a new EV simply means that somehow, somewhere the rest of us are paying it. For those who pay for the $7500 subsidy, I suppose that would contribute to their personal inflation. Lucky them.

This same argument can be made for ACA so many game their income to take advantage of, the rest pay for it.

Flieger

 

[HFWR]

Because interest on the debt is about 14% of government spending, and not going down.

Some of that interest hits my IRA every month.

 

[HFWR]

I was thinking more about what, say, the price of gasoline would be if oil companies weren’t subsidized. Or what our food prices would be without subsidies keeping prices stable/up, and farmers in business in lean years.

Thou quoteth thyself…

Arguments about subsidies tend to stray into forbidden territory.

I was thinking more about how we’ve come to expect growth to continue unabated, with no effect on cost. Voters don’t like that! Of course, if we mine the ocean floor, and the moon, and, asteroids, we could continue consuming forever! But I’d bet that would be costly…

Now, what to do with all of the waste produced?