Chuckanut
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+1. Some models now offer 0% financing.
Latest Inflation Numbers and Discussion
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+1. Some models now offer 0% financing.
That's not surprising with these car prices these days. It's ridiculous. A new article I read said new car prices are up 23% from 3 years ago.
OP
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I'm betting that most people do not look at the 3 year inflation rate when they decide to buy a new car. They look for something they like at a price they can afford. If prices rise beyond that point, people will stop buying them and the industry will have to lower the prices to move inventory off the lot. So it is ultimately self correcting.
JoeWras
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Joe, where do you follow Car Dealership Guy at? I can't locate a website.
Thanks..
He has a website: https://dealershipguy.com/
But that is just to get you on his mail list. I'm on his list. So far, I don't think he has sold my address.
Or, you can just follow him on X. https://twitter.com/GuyDealership
aja8888
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On here? The BTD site? Probably not many. But I suspect those of us who have changed our spending habits are not in the minority out in the real world.
I think this is very true, and things will settle down a bit.
This too. Again, reality may be catching up with some of them, and we may see some pulling back on spending.
At least, I hope consumers will start to act rationally and start putting some demand-side pressure on the more outrageous price increases.
I was forced to with the high increases in so many things. It leaves a lot less for discretionary spending.
In addition to all the stimulus money that was thrown out there, I have read that American credit card debt is as a record high, so people are spending more money they don't have. Of course, that catches up with you.
ShokWaveRider
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Isn't that the American way (Not for all but a fair majority), spend someone else's money until you cannot. THEN declare bankruptcy and start again.
No, it’s not the “American way”. Currently, 3% of credit card debt is in default right now, which is high for the post-pandemic era but below the 10:year average. See here https://fred.stlouisfed.org/series/DRCCLACBS
In 2023 there were 403k non-business bankruptcies filed in the US. That comes out to 0.12% of the population. Over a 10 year period that would come out to 1% of the population. Not a majority, not even a fairly small minority.
It’s pretty clear that most pay their obligations in full.
Getting back on topic, while inflation has fallen considerably, the much higher rate in ‘22 probably has pushed some into exceeding their capacity to pay.
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Rather than bankruptcy, it's more common to just have or want someone else to pay your bill, like with student loan debt.
Another piece to this is that personal savings rate is way down. So inflation is really eating into people's ability to save. It's taken a dive in recent years. I know there are concerns about inflation increasing again, but even a little inflation means prices are still going up, which is hurting a lot of people.
ShokWaveRider
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I get my Bankruptcy info from a friend who has a local Bankruptcy Law firm. They have had a lot of repeat customers over the years and tell me business has been pretty brisk and steady for the last 7 or so years.
Getting back on topic, the employment report for December was released today (link here)
The report will be subject to restatements and one shouldn’t read too much into one single report. Nonetheless, employment continues to increase, but overall the growth of new jobs is slowing. 2 important measures were not positive. Long term unemployed rose, and the participation rates fell. These are signs of slowing growth.
Average wages grew 4.1% YoY. This shows real wage growth, and is still a bit high for 2% inflation. The slowing jobs number should keep on this, but it is something to keep an eye on.
The report will be subject to restatements and one shouldn’t read too much into one single report. Nonetheless, employment continues to increase, but overall the growth of new jobs is slowing. 2 important measures were not positive. Long term unemployed rose, and the participation rates fell. These are signs of slowing growth.
Average wages grew 4.1% YoY. This shows real wage growth, and is still a bit high for 2% inflation. The slowing jobs number should keep on this, but it is something to keep an eye on.
I know they say inflation is 3.1 but that surprises me for our area. I'm really looking forward to seeing new data and seeing if my antidotal observations pan out.
- Rent prices have seen a significant drop, a unit that was charging $2100 in july 2022 can be rented today for $1500-1600 and some are eligible for first month rent free. We even had a few townhomes sell because when they re-listed they didn't rent for nearly what they had been renting for so people sold as the margins just weren't there.
- Car prices, certainly down, not sure how much but even from February when I begrudgingly bought, the lot was very very sparse, and now its all full of inventory.
- Food prices, lots more sales, lots more coupons offered. I went into Aldis yesterday and there was red sign after red sign of reduced prices like chips, I don't remember buying a bag of tortilla chips under $2 in forever, and there they were $1.89 with a big red sticker showing a rollback of prices.
- Rent prices have seen a significant drop, a unit that was charging $2100 in july 2022 can be rented today for $1500-1600 and some are eligible for first month rent free. We even had a few townhomes sell because when they re-listed they didn't rent for nearly what they had been renting for so people sold as the margins just weren't there.
- Car prices, certainly down, not sure how much but even from February when I begrudgingly bought, the lot was very very sparse, and now its all full of inventory.
- Food prices, lots more sales, lots more coupons offered. I went into Aldis yesterday and there was red sign after red sign of reduced prices like chips, I don't remember buying a bag of tortilla chips under $2 in forever, and there they were $1.89 with a big red sticker showing a rollback of prices.
Same here, I'm seeing a lot more than 3.1% or 3.2% inflation, still way above target. Heck, just recently got a 22% increase in my car insurance from a year ago (no coverage changes/claims/tickets), an increase in my internet bill (no speed change), and keep seeing higher food prices. Even my eggs have gone back up in price. lol I was looking to get a new car, but after these last few years, they're simply unaffordable, especially combined with the much higher car insurance that hasn't stopped increasing several times faster than 3.2% core PCE. Was thinking about relocating when I fired, but house prices are way up from prepandemic - can't afford it now combined with skyrocketing homeowner's insurance and property taxes, again far in excess of CPI.
One thing is down from highs, gas is only about $3/gal, but that's still up a lot from what I was paying back in Jan 2020, so I don't really feel good about that, either. But everything else seems to keep going up faster than the gub'ment figures.
Yeah, I can believe it. More CC debt, less savings, people running out of stimulus, all while paying a lot more for everything.
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OP
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Your insurance is affected by more than the general rate of inflation. If your insurance company had a larger number of claims than normal last year (say there was a big hurricane), your insurance probably will go up regardless of inflation. House prices are also not particularly tethered to the general rate of inflation, and that affects your homeowners insurance as well. If you get a speeding ticket, your car insurance goes up. If you get a new car, your insurance goes up. And car insurance has gone up a lot and will go up due to the new technology in cars, like proximity sensors. It is way more expensive to repair them even after a minor accident.
And I'm actually seeing prices decrease at the grocery -- for meat, eggs, milk and a lot of other things.
And I'm actually seeing prices decrease at the grocery -- for meat, eggs, milk and a lot of other things.
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JoeWras
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We've discussed it a lot. The CPI number is composed of many, many items. Car and food prices are only a few components. Those have shown relief in the last few months and that is factored into the cooling CPI.
Shelter is another animal and has a well known lag. Consider this: if there wasn't a lag, the inflation number[-] EDIT: in late 2021[/-] mid 2022 would have been well into the double digits. It works both ways. Shelter is starting to cool and will continue to do so for the next year or more, slowly.
We can debate the reason for this lag if we want, but right now it is what it is. It wasn't always computed this way.
I've heard some analysts complain that shelter will obviously cool, so the Fed should act and discount it. Well perhaps they should have moved earlier when shelter was obviously hot, but the CPI wasn't reflecting it.
In any case, BLS also reports a number that omits shelter. It is in every monthly report. For the record, the latest report has year over year CPI that excludes shelter at 1.4%.
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Montecfo
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Yes. Definitely seeing some softening of prices and deductions. Good to see. I think inflation is moderating more than a lot of folks think.
And as you note even meaningful reductions in things like rent which are not yet in the already at target recent core PCE numbers.
At this stage individual price increases are no longer signs of inflation, they are just ordinary price increases. Producers or retailers believing they can increase a price and deliver higher profits, with consumers just accepting the higher prices and continuing to consume.
The response to PepsiCo price increases shows consumers may have accepted the increases a year ago but are no longer willing do so. This was reinforced by WalMart earnings comments saying they were seeing signs of falling prices in consumer goods.
The response to PepsiCo price increases shows consumers may have accepted the increases a year ago but are no longer willing do so. This was reinforced by WalMart earnings comments saying they were seeing signs of falling prices in consumer goods.
JoeWras
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Funny thing: in the last two weeks my Walmart raised prices on Pepsi drinks.
I refused to buy them. I reached my limit. Probably good for me.
A&W is $7 for a 12 pack now also. I cringe every time I go into a grocery store or restaurant because something else is always getting jacked up in price, and they tend to be big increases much higher than the CPI figures that are released.
Anyway, the core PCE is target is 2%. And the latest year over year figure is 3.2%. So, we haven't hit the target yet, and it really needs to run cool for years to get us down to an average 2% in line with the core PCE target. Historically, inflation has already been too high. More importantly, I would like to see real world inflation much lower, which is worse than those figures. And there are more inflation pressures on the horizon with shipping/supply chains and wages (e.g. - minimum wage just went up in many locations). CNN just had an article "Inflation Isn't Beaten Yet". The Economist article says the threat is still alive.
Did someone say rent prices were down where they live? Definitely not seeing that where I was looking.
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This is where I'm so glad I'm not brand specific, I drink fizzy water. Wegmans had 12 liters for $6 and Aldis had some winter variety packs they wanted to get rid of for 34 cents for 8pk... a whole whopping 4 cents a can so I picked up 80 cans for $3.40, that should last me a while.
Yes it was me talking about rent prices dropping. Obviously depends but some areas have been busy building apartments the last few years and they are finally starting to rent out and its helping ease some of that price pressure.
Closet_Gamer
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I just hope the Fed doesn't get weak in the knees if they need to hold or bump rates again to finish the job on inflation. Now that they've set the expectation of flat or down, it will be harder to reverse course if necessary.
latexman
Thinks s/he gets paid by the post
Two of my kids are looking to rent right now. They say rents have and are continuing to come down here.
I've yet to see a utility bill drop that wasn't base on usage drop. In fact, my electrical bill went up anyway. I don't have in front of me, but one reason is that they raised the facility charge to about $70, so that's charged before I use my first kWh of electricity. The gas bill went up also a while back for that reason. Water bill is up recently also, and they announced they are going up more. Very difficult to stay ahead. Of course, we can say that the prices of everything going up isn't inflation and make up reasons why these particular things have gone up in price, but it is part of the inflation picture.
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