Inflation for the month and year at highest rate in 13 years

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dmcmahon
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Re: Inflation for the month and year at highest rate in 13 years

Post by dmcmahon »

I am eventually going to clean up with my stockpile of toilet paper!
Whakamole
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Re: Inflation for the month and year at highest rate in 13 years

Post by Whakamole »

JoeRetire wrote: Thu Jul 15, 2021 8:15 pm
Whakamole wrote: Thu Jul 15, 2021 7:08 pm
JoeRetire wrote: Thu Jul 15, 2021 5:10 pm
atdharris wrote: Thu Jul 15, 2021 2:08 pm
JoeRetire wrote: Thu Jul 15, 2021 2:00 pm

Wow, that's expensive chicken - even at the normal price.
What locale is this?
HCOL city on the east coast. If I want organic, that will be nearly $7/lb or more!
Time to switch to pork.
Pork prices are up too. Beef is way up.
Where I live:
- split chicken breasts $0.89/lb
- pork chops $1.49/lb
- bottom round roast $2.99/lb

and now I'm getting hungry!
Where do you live, and is there high quality broadband so I can work remotely?
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JoeRetire
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Re: Inflation for the month and year at highest rate in 13 years

Post by JoeRetire »

Whakamole wrote: Thu Jul 15, 2021 9:04 pm
JoeRetire wrote: Thu Jul 15, 2021 8:15 pm
Whakamole wrote: Thu Jul 15, 2021 7:08 pm
JoeRetire wrote: Thu Jul 15, 2021 5:10 pm
atdharris wrote: Thu Jul 15, 2021 2:08 pm

HCOL city on the east coast. If I want organic, that will be nearly $7/lb or more!
Time to switch to pork.
Pork prices are up too. Beef is way up.
Where I live:
- split chicken breasts $0.89/lb
- pork chops $1.49/lb
- bottom round roast $2.99/lb

and now I'm getting hungry!
Where do you live, and is there high quality broadband so I can work remotely?
Coastal Maine, and of course.
Just remember: it's not a lie if you believe it.
atdharris
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Re: Inflation for the month and year at highest rate in 13 years

Post by atdharris »

Whakamole wrote: Thu Jul 15, 2021 7:08 pm
JoeRetire wrote: Thu Jul 15, 2021 5:10 pm
atdharris wrote: Thu Jul 15, 2021 2:08 pm
JoeRetire wrote: Thu Jul 15, 2021 2:00 pm
atdharris wrote: Thu Jul 15, 2021 1:41 pm I definitely noticed the price of meat going up in the grocery store. Chicken breasts I normally buy for $4.99/lb are now $5.49/lb. Not huge but it's still something
Wow, that's expensive chicken - even at the normal price.
What locale is this?
HCOL city on the east coast. If I want organic, that will be nearly $7/lb or more!
Time to switch to pork.
Pork prices are up too. Beef is way up.
Right. Time to become a vegan it seems.
Whakamole
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Re: Inflation for the month and year at highest rate in 13 years

Post by Whakamole »

atdharris wrote: Fri Jul 16, 2021 8:35 am
Whakamole wrote: Thu Jul 15, 2021 7:08 pm
JoeRetire wrote: Thu Jul 15, 2021 5:10 pm
atdharris wrote: Thu Jul 15, 2021 2:08 pm
JoeRetire wrote: Thu Jul 15, 2021 2:00 pm

Wow, that's expensive chicken - even at the normal price.
What locale is this?
HCOL city on the east coast. If I want organic, that will be nearly $7/lb or more!
Time to switch to pork.
Pork prices are up too. Beef is way up.
Right. Time to become a vegan it seems.
I've got some bad news for you...
atdharris
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Re: Inflation for the month and year at highest rate in 13 years

Post by atdharris »

Whakamole wrote: Fri Jul 16, 2021 8:44 am
atdharris wrote: Fri Jul 16, 2021 8:35 am
Whakamole wrote: Thu Jul 15, 2021 7:08 pm
JoeRetire wrote: Thu Jul 15, 2021 5:10 pm
atdharris wrote: Thu Jul 15, 2021 2:08 pm

HCOL city on the east coast. If I want organic, that will be nearly $7/lb or more!
Time to switch to pork.
Pork prices are up too. Beef is way up.
Right. Time to become a vegan it seems.
I've got some bad news for you...
You're right. Those beyond burgers are expensive. $5.99 for two 4oz patties!
Robot Monster
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Re: Inflation for the month and year at highest rate in 13 years

Post by Robot Monster »

rockstar wrote: Thu Jul 15, 2021 5:38 pm
Robot Monster wrote: Thu Jul 15, 2021 5:33 pm ...I read in an article that the Fed is expecting inflation "to begin calming in six months or so." link
I don't think they really know. It sounds like they're hoping isn't bad enough for them to do anything. I think, they're afraid of spooking markets.
I've just been trying to get a sense for how bad it could get for cash holders. Powell has made reassurances. I've shared this before, but:
"We understand our job we will do our job and we are focused as you seen for many years We have been focused on inflation 'deviating' below 2%, and we used our tools aggressively to put it back up at 2% if we do see inflation moving materially above 2% persistent way the risks of inflation expectation drifting up then we will use our tools to guide inflation and expectation back down to 2% no one should doubt that we will do that this is not what we expect but no one should doubt that in the event we will be prepared to use our tools."
YouTube video link
Begins at the 4:30 mark.
Unfortunately, Powell doesn't make it clear in this statement:
How far is "materially above"?
What length of time would be considered a "persistent way"?

Materially Above?
We now know from yesterday: "Mr. Powell said the current level of inflation is well above the Fed’s goal. 'This is not ‘moderately above 2%’ by any stretch…and we understand that,' he said."
link

Persistent Way?
Powell: "We’ve identified a half dozen things” that “look very much like temporary factors that will abate over time. What we don’t know is are there other things coming along to replace them?...We won’t have to wait a tremendously long time, I don’t think, to know whether our basic understanding of this is right.” I don't know what "tremendously long time" means. If inflation fails "to begin calming in six months or so," like the Fed expects, will over six months be considered long enough to disprove the "inflation is transitory" thing? Dunno.
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rockstar
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Re: Inflation for the month and year at highest rate in 13 years

Post by rockstar »

Robot Monster wrote: Fri Jul 16, 2021 9:44 am
rockstar wrote: Thu Jul 15, 2021 5:38 pm
Robot Monster wrote: Thu Jul 15, 2021 5:33 pm ...I read in an article that the Fed is expecting inflation "to begin calming in six months or so." link
I don't think they really know. It sounds like they're hoping isn't bad enough for them to do anything. I think, they're afraid of spooking markets.
I've just been trying to get a sense for how bad it could get for cash holders. Powell has made reassurances. I've shared this before, but:
"We understand our job we will do our job and we are focused as you seen for many years We have been focused on inflation 'deviating' below 2%, and we used our tools aggressively to put it back up at 2% if we do see inflation moving materially above 2% persistent way the risks of inflation expectation drifting up then we will use our tools to guide inflation and expectation back down to 2% no one should doubt that we will do that this is not what we expect but no one should doubt that in the event we will be prepared to use our tools."
YouTube video link
Begins at the 4:30 mark.
Unfortunately, Powell doesn't make it clear in this statement:
How far is "materially above"?
What length of time would be considered a "persistent way"?

Materially Above?
We now know from yesterday: "Mr. Powell said the current level of inflation is well above the Fed’s goal. 'This is not ‘moderately above 2%’ by any stretch…and we understand that,' he said."
link

Persistent Way?
Powell: "We’ve identified a half dozen things” that “look very much like temporary factors that will abate over time. What we don’t know is are there other things coming along to replace them?...We won’t have to wait a tremendously long time, I don’t think, to know whether our basic understanding of this is right.” I don't know what "tremendously long time" means. If inflation fails "to begin calming in six months or so," like the Fed expects, will over six months be considered long enough to disprove the "inflation is transitory" thing? Dunno.
It's going to be bad for cash holders. It's why I bought the max I Bonds I could this year. We're going to experience at least a year of high inflation. Hopefully, it comes back down without the Fed overreacting and sending us into another recession.
MishkaWorries
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Re: Inflation for the month and year at highest rate in 13 years

Post by MishkaWorries »

Robot Monster wrote: Fri Jul 16, 2021 9:44 am
rockstar wrote: Thu Jul 15, 2021 5:38 pm
Robot Monster wrote: Thu Jul 15, 2021 5:33 pm ...I read in an article that the Fed is expecting inflation "to begin calming in six months or so." link
I don't think they really know. It sounds like they're hoping isn't bad enough for them to do anything. I think, they're afraid of spooking markets.
I've just been trying to get a sense for how bad it could get for cash holders. Powell has made reassurances. I've shared this before, but:
"We understand our job we will do our job and we are focused as you seen for many years We have been focused on inflation 'deviating' below 2%, and we used our tools aggressively to put it back up at 2% if we do see inflation moving materially above 2% persistent way the risks of inflation expectation drifting up then we will use our tools to guide inflation and expectation back down to 2% no one should doubt that we will do that this is not what we expect but no one should doubt that in the event we will be prepared to use our tools."
YouTube video link
Begins at the 4:30 mark.
Unfortunately, Powell doesn't make it clear in this statement:
How far is "materially above"?
What length of time would be considered a "persistent way"?

Materially Above?
We now know from yesterday: "Mr. Powell said the current level of inflation is well above the Fed’s goal. 'This is not ‘moderately above 2%’ by any stretch…and we understand that,' he said."
link

Persistent Way?
Powell: "We’ve identified a half dozen things” that “look very much like temporary factors that will abate over time. What we don’t know is are there other things coming along to replace them?...We won’t have to wait a tremendously long time, I don’t think, to know whether our basic understanding of this is right.” I don't know what "tremendously long time" means. If inflation fails "to begin calming in six months or so," like the Fed expects, will over six months be considered long enough to disprove the "inflation is transitory" thing? Dunno.
Their tools to reduce inflation will be a sharp increase in interest rates. Then down goes bond funds, growth stocks collapse and the S&P 500 will be back to March 2020 levels.

Does anyone really expect the Feds to do that?

We're simply hoping the inflation is transitory and resolves itself. If not . . .

Unfortunately, I've noticed the fed has dropped the use of the word "transitory."
We plan. G-d laughs.
Ivygirl
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Re: Inflation for the month and year at highest rate in 13 years

Post by Ivygirl »

Robotic Process Automation could be a potential source of deflation. At least it looks that way to me. It's supposed to enable the automation of repeatable business processes using artificial intelligence and machine learning.

I'm a cubicle-dwelling support person. From my view from below, it seems very likely to happen. The medium-megacorp I work for, just a few weeks ago, had a meeting where we were earnestly assured we are all valued and that no reduction in force is planned. Hmm. And that a huge adjustment to job descriptions is coming. Huh. And there is an almost pathological aversion to hiring anybody, even though we need them desperately. Company had a very good year in 2020 and is not hurting financially, is generous with its employees. I do expect there will be no reduction in force due to an employee-positive company culture, but there seems to be some perplexity as to what to do with us all once the "changes" happen. To me that says Robotic Process Automation.

I looked up how this could affect the industry that employs me and, if it actually works and isn't just another impractical business-school bullpucky bright idea, the thing I do for a living will be reduced by about 70%. That's a business efficiency which, repeated over many thousands of people (millions?), would cause deflation.

Maybe this is the giant hole of deflation they are desperately shoveling money into, in anticipation of it?
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nedsaid
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Re: Inflation for the month and year at highest rate in 13 years

Post by nedsaid »

bobcat2 wrote: Tue Jul 13, 2021 2:38 pm New and used car & truck sales have contributed about 1% of the 3.6% inflation in the CPI so far this year. (Inflation without car & truck sales is about 2.6% annual rate over first six months.) Over the second half of the year car & truck sales could subtract about 1% from the inflation rate. This suggests that inflation has been somewhat overstated in first half of year by CPI and will probably be understated in second half of year.

BobK
I sure hope so. Haven't really done much in my portfolio to adjust other than shifting 1% of the portfolio to TIPS. I am a bit stock heavy for my age, I own REITS, TIPS, and a couple of natural resource stocks as inflation fighters. Also have a tilt towards Value which should help if inflation ticks up a bit.

There are countervailing deflationary trends in the economy such as increases in productivity through technology, low birth rates, aging population, etc. Hard to say what will happen but I lean towards saying this uptrend in inflation is transitory. Japan has had stimulative policies for years and it has been like pushing on a string, they have experienced slow economic growth and slight population decline. Whatever inflation Japan has experienced has been very little but their currency is very strong and their economy amazingly productive.

What concerns me is that no matter what happens, the Fed keeps saying this is all transitory. I wonder if they will be saying that five years from now.
A fool and his money are good for business.
Robot Monster
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Re: Inflation for the month and year at highest rate in 13 years

Post by Robot Monster »

rockstar wrote: Fri Jul 16, 2021 7:23 pm It's going to be bad for cash holders. It's why I bought the max I Bonds I could this year. We're going to experience at least a year of high inflation. Hopefully, it comes back down without the Fed overreacting and sending us into another recession.
Yeah, I maxed out my I Bonds, too. Beyond that, I added a lot to stocks and TIPS, yet I still have cash/trash languishing away in the money market dumpster. I think I could be okay with a year of high inflation if over a five year period the inflation averages out to something reasonable -- currently the 5yr Breakeven is 2.52, which is perfectly reasonable. If that number bubbled up above 3%, I would begin to squirm (and hopefully the Fed would also begin to squirm!)
MishkaWorries wrote: Fri Jul 16, 2021 7:43 pm Their tools to reduce inflation will be a sharp increase in interest rates. Then down goes bond funds, growth stocks collapse and the S&P 500 will be back to March 2020 levels.

Does anyone really expect the Fed to do that?
If inflation became a real serious threat to the economy, is it not possible they'd do exactly that? I don't expect this scenario to happen, but I've been so completely surprised again and again.
MishkaWorries wrote: Fri Jul 16, 2021 7:43 pm We're simply hoping the inflation is transitory and resolves itself. If not . . .

Unfortunately, I've noticed the fed has dropped the use of the word "transitory."
Yes, they seemed to have dropped the word transitory in favor of temporary.
source That Axios article is short, and worth the read, but their bottom line is: "The Fed is clearly willing to tolerate a lot of inflation if it means getting employment up. But there is a limit and not even the Fed seems to know where that is."

It's well worth noting Powell's own words:
"We're experiencing a big uptick in inflation, bigger than many expected, bigger certainly than I expected, and we're trying to understand whether it's something that will pass through fairly quickly, or whether in fact we need to act...One way or another, we're not going to be going into a period of high inflation for a long period of time, because of course we have tools to address that. But we don't want to use them in a way that is unnecessary, or that interrupts the rebound of the economy." Twitter link source

And...still left scratching my head about what "temporary" and "fairly quickly" means. (Maybe Rockstar is right about it being a year.)

***

Edit: And while I'm on the subject, it's worth remembering:
Inflation "has increased notably and will likely remain elevated in the coming months before moderating". Powell and Fed policymakers believe prices are "being temporarily boosted by base effects" that will decline as impacts on prices last spring during the first months of the pandemic "drop out of the 12-month calculation".
-- from Highlights Fed Chair Speech link

"The Fed chair attributed rapid price gains to factors tied to the economy’s reopening from the pandemic, and indicated in response to questioning that Fed officials expected inflation to begin calming in six months or so." link (The boldface is mine.)
Last edited by Robot Monster on Sat Jul 17, 2021 2:53 pm, edited 1 time in total.
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staustin
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Re: Inflation for the month and year at highest rate in 13 years

Post by staustin »

rockstar wrote: Thu Jul 15, 2021 11:12 am
AlwaysLearningMore wrote: Thu Jul 15, 2021 11:07 am
MishkaWorries wrote: Tue Jul 13, 2021 11:15 am I'm noticing a trend.

1. Inflation? What inflation?
2. Inflation is transitory.
3. Inflation is fine -- just like funemoployment! It makes your paycheck bigger.
4. It's likely transitory.
5. Next year inflation should run hotter than normal but the year after that will be lower and therefore within our targets.
6.???
Indeed, the shifting sands of 'inflation-splainin' would be comical if the underlying subject wasn't so serious.

Earlier today heard a rambling interview on Bloomberg (Sirius) where the interviewee (I believe a public figure -- I tuned in after intro was made) refused to be pinned down on a more precise meaning to "transitory." He said that the inflation target of 2% was, perhaps, over the course of an economic cycle, and the public would have to endure higher rates for the average to be 2%. The interviewee was answering questions with vague platitudes and generalities. (These folks wouldn't survive a week in the private sector.)
As long as you don't rent, don't plan to buy a car, or don't go out and eat, inflation is only around 3ish percent:)

spot on... recall the 'whence inflation' string on this board just a month or so ago.. how quickly things can change.
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Re: Inflation for the month and year at highest rate in 13 years

Post by bobcat2 »

nedsaid wrote: Sat Jul 17, 2021 9:55 am
bobcat2 wrote: Tue Jul 13, 2021 2:38 pm New and used car & truck sales have contributed about 1% of the 3.6% inflation in the CPI so far this year. (Inflation without car & truck sales is about 2.6% annual rate over first six months.) Over the second half of the year car & truck sales could subtract about 1% from the inflation rate. This suggests that inflation has been somewhat overstated in first half of year by CPI and will probably be understated in second half of year.
BobK
I sure hope so. ...
Just to be clear I am not saying that inflation will be lower in the second half of the year. What I am saying is that for the first half of the year the CPI has over stated inflation because approximately 1% of the 3.6% inflation is due to motor vehicle sales. (Without car & truck sales the annual inflation rate thru June would have been about 2.6%.)

In the second half of the year motor vehicle sales price changes will probably move downward. Since they are a relatively big weight in the CPI index that will probably lead to the CPI understating inflation. That doesn't mean inflation won't be high, it might or might not be high, but that the CPI will understate the inflation rate from July thru December. This is an unusual time and economic data, including inflation data, have to be interpreted with some care.

BobK
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Robot Monster
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Re: Inflation for the month and year at highest rate in 13 years

Post by Robot Monster »

The gains in the inflation numbers are less menacing when you take a closer look and find that, according to the economists at BNY Mellon, more than half the increase came in just seven categories: new autos; used autos; vehicle rentals; admissions to events; food away from home; airfare; and lodging. As the economists pointed out in a note to clients, the first three items are specific to the semiconductor shortage that is hurting the auto industry, and the rest are clearly associated with the economy’s reopening.
source link
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Socal77
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Re: Inflation for the month and year at highest rate in 13 years

Post by Socal77 »

No mention of rents and house prices? My rent was raised 10% this year and I quickly gave up trying to find a lower or similar cost apartment closer to work. Rental markets in Cali are severely distorted right now there is very little inventory.
AlwaysLearningMore
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Re: Inflation for the month and year at highest rate in 13 years

Post by AlwaysLearningMore »

bobcat2 wrote: Sat Jul 17, 2021 12:47 pm ...What I am saying is that for the first half of the year the CPI has over stated inflation because approximately 1% of the 3.6% inflation is due to motor vehicle sales. (Without car & truck sales the annual inflation rate thru June would have been about 2.6%.)

BobK
Point of clarification, please: How is the CPI over stated when the components are established? Is it not accurate? Has it been miscalculated? :confused

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Re: Inflation for the month and year at highest rate in 13 years

Post by 3CT_Paddler »

AlwaysLearningMore wrote: Sun Jul 18, 2021 7:46 am
bobcat2 wrote: Sat Jul 17, 2021 12:47 pm ...What I am saying is that for the first half of the year the CPI has over stated inflation because approximately 1% of the 3.6% inflation is due to motor vehicle sales. (Without car & truck sales the annual inflation rate thru June would have been about 2.6%.)

BobK
Point of clarification, please: How is the CPI over stated when the components are established? Is it not accurate? Has it been miscalculated? :confused

Image
I read bobcat’s statement to mean that it overstates the inflation felt by the average consumer. CPI is an artificial measure of inflation with different weights of household goods and services.

Bobcat might be right, but it also might be the case that wage and base material inflation is only starting to work its way through supply chains and while some goods and services may normalize, other goods and services may also increase in price at the same time. There is typically a 6-9 month delay on wage increases that go to existing employees in response to inflation.
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nedsaid
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Re: Inflation for the month and year at highest rate in 13 years

Post by nedsaid »

bobcat2 wrote: Sat Jul 17, 2021 12:47 pm
nedsaid wrote: Sat Jul 17, 2021 9:55 am
bobcat2 wrote: Tue Jul 13, 2021 2:38 pm New and used car & truck sales have contributed about 1% of the 3.6% inflation in the CPI so far this year. (Inflation without car & truck sales is about 2.6% annual rate over first six months.) Over the second half of the year car & truck sales could subtract about 1% from the inflation rate. This suggests that inflation has been somewhat overstated in first half of year by CPI and will probably be understated in second half of year.
BobK
I sure hope so. ...
Just to be clear I am not saying that inflation will be lower in the second half of the year. What I am saying is that for the first half of the year the CPI has over stated inflation because approximately 1% of the 3.6% inflation is due to motor vehicle sales. (Without car & truck sales the annual inflation rate thru June would have been about 2.6%.)

In the second half of the year motor vehicle sales price changes will probably move downward. Since they are a relatively big weight in the CPI index that will probably lead to the CPI understating inflation. That doesn't mean inflation won't be high, it might or might not be high, but that the CPI will understate the inflation rate from July thru December. This is an unusual time and economic data, including inflation data, have to be interpreted with some care.

BobK
Thanks Bob for your response, I am interested in your comments. I am keeping my fingers crossed, I do not want to see a resurgence of inflation.
A fool and his money are good for business.
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Re: Inflation for the month and year at highest rate in 13 years

Post by Grogs »

I'm getting ready to become a renter for the first time in over a decade. My company is sending me up to the DC metro area for a few years and I'll be renting an apartment while I'm up there. I would say that between April when I first started looking at apartments and now (mid-July) when I signed a lease prices have increased about 10-15%. Talking to some of the leasing agents, they told me it's normal for prices to increase in the late summer but some of the increase seems to be attributable to people coming back to the area now that many government agencies are beginning to reopen.

While I'm on assignment, I'll receive a housing allowance that's based on a percentage of the GSA lodging rates for the area. I'll be very curious to see how those rates change come 1 October. I'm hoping the annual increases in the GSA rates keep up with my apartment rent, but I'm not optimistic.
TimeTheMarket
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Re: Inflation for the month and year at highest rate in 13 years

Post by TimeTheMarket »

Ivygirl wrote: Sat Jul 17, 2021 8:28 am Robotic Process Automation could be a potential source of deflation. At least it looks that way to me. It's supposed to enable the automation of repeatable business processes using artificial intelligence and machine learning.

I'm a cubicle-dwelling support person. From my view from below, it seems very likely to happen. The medium-megacorp I work for, just a few weeks ago, had a meeting where we were earnestly assured we are all valued and that no reduction in force is planned. Hmm. And that a huge adjustment to job descriptions is coming. Huh. And there is an almost pathological aversion to hiring anybody, even though we need them desperately. Company had a very good year in 2020 and is not hurting financially, is generous with its employees. I do expect there will be no reduction in force due to an employee-positive company culture, but there seems to be some perplexity as to what to do with us all once the "changes" happen. To me that says Robotic Process Automation.

I looked up how this could affect the industry that employs me and, if it actually works and isn't just another impractical business-school bullpucky bright idea, the thing I do for a living will be reduced by about 70%. That's a business efficiency which, repeated over many thousands of people (millions?), would cause deflation.

Maybe this is the giant hole of deflation they are desperately shoveling money into, in anticipation of it?
I do maintain a belief that long term most people will not be employable. We are not getting any smarter and it takes too long to retrain us.

But that's really far down the road. Long, long time. RPA for now is just another name for something we've had for eons: technology to automate processes. The challenge as always is finding suitable processes to automate, actually successfully automating those, and then maintaining the automations. Long story short the likelihood of your employer paying a contractor to come in and spend 6 weeks automating most of your job is slim to none.

Also I recognize that heretofore technology has only disrupted, but not essentially cored out the employment market (e.g. technology obliterated large numbers of jobs in farming, but people moved elsewhere). Additionally, technology is associated with more productivity and economic growth; even if you kill a person's job you probably made up for it and more with whatever you killed it with. As such, despite my belief that the end point is huge unemployment, the economy will also be strong. Universal employment/social programs will become more pervasive.
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Ivygirl
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Re: Inflation for the month and year at highest rate in 13 years

Post by Ivygirl »

TimeTheMarket wrote: Mon Jul 19, 2021 10:45 am
Ivygirl wrote: Sat Jul 17, 2021 8:28 am Robotic Process Automation could be a potential source of deflation. At least it looks that way to me. It's supposed to enable the automation of repeatable business processes using artificial intelligence and machine learning.

I'm a cubicle-dwelling support person. From my view from below, it seems very likely to happen. The medium-megacorp I work for, just a few weeks ago, had a meeting where we were earnestly assured we are all valued and that no reduction in force is planned. Hmm. And that a huge adjustment to job descriptions is coming. Huh. And there is an almost pathological aversion to hiring anybody, even though we need them desperately. Company had a very good year in 2020 and is not hurting financially, is generous with its employees. I do expect there will be no reduction in force due to an employee-positive company culture, but there seems to be some perplexity as to what to do with us all once the "changes" happen. To me that says Robotic Process Automation.

I looked up how this could affect the industry that employs me and, if it actually works and isn't just another impractical business-school bullpucky bright idea, the thing I do for a living will be reduced by about 70%. That's a business efficiency which, repeated over many thousands of people (millions?), would cause deflation.

Maybe this is the giant hole of deflation they are desperately shoveling money into, in anticipation of it?
I do maintain a belief that long term most people will not be employable. We are not getting any smarter and it takes too long to retrain us.

But that's really far down the road. Long, long time. RPA for now is just another name for something we've had for eons: technology to automate processes. The challenge as always is finding suitable processes to automate, actually successfully automating those, and then maintaining the automations. Long story short the likelihood of your employer paying a contractor to come in and spend 6 weeks automating most of your job is slim to none.

Also I recognize that heretofore technology has only disrupted, but not essentially cored out the employment market (e.g. technology obliterated large numbers of jobs in farming, but people moved elsewhere). Additionally, technology is associated with more productivity and economic growth; even if you kill a person's job you probably made up for it and more with whatever you killed it with. As such, despite my belief that the end point is huge unemployment, the economy will also be strong. Universal employment/social programs will become more pervasive.
Yes, I thought it was "really far down the road, long, long time" too until that meeting. It's here now. It's imminent enough that some, at least, big companies are making staffing decisions based on using it.

We already started the process at the beginning of this year where I work. Part of it involves denying personal service to our customers, our long-time loyal customers, and telling them "take it or leave it, this is all we will do for you, anything else does not fit our automatic processes." This is not a good idea. Customer needs should drive the business, not what your robot needs.

It's much closer than you think. It's here. And it will be massively deflationary. No wonder they are shoveling out the money as though they are stoking a locomotive with a firebox about to go out. It's just the timing that perplexes them. They want to be early.

So far as investing goes, I am keeping my bond and REIT allocations, and also adding to cash. This was all in my plan already so I did not change anything except to increase amounts. Also I may not be selling my house in a year as planned, I don't think I could afford to buy another one.
TimeTheMarket
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Re: Inflation for the month and year at highest rate in 13 years

Post by TimeTheMarket »

Ivygirl wrote: Mon Jul 19, 2021 12:16 pm
TimeTheMarket wrote: Mon Jul 19, 2021 10:45 am
Ivygirl wrote: Sat Jul 17, 2021 8:28 am Robotic Process Automation could be a potential source of deflation. At least it looks that way to me. It's supposed to enable the automation of repeatable business processes using artificial intelligence and machine learning.

I'm a cubicle-dwelling support person. From my view from below, it seems very likely to happen. The medium-megacorp I work for, just a few weeks ago, had a meeting where we were earnestly assured we are all valued and that no reduction in force is planned. Hmm. And that a huge adjustment to job descriptions is coming. Huh. And there is an almost pathological aversion to hiring anybody, even though we need them desperately. Company had a very good year in 2020 and is not hurting financially, is generous with its employees. I do expect there will be no reduction in force due to an employee-positive company culture, but there seems to be some perplexity as to what to do with us all once the "changes" happen. To me that says Robotic Process Automation.

I looked up how this could affect the industry that employs me and, if it actually works and isn't just another impractical business-school bullpucky bright idea, the thing I do for a living will be reduced by about 70%. That's a business efficiency which, repeated over many thousands of people (millions?), would cause deflation.

Maybe this is the giant hole of deflation they are desperately shoveling money into, in anticipation of it?
I do maintain a belief that long term most people will not be employable. We are not getting any smarter and it takes too long to retrain us.

But that's really far down the road. Long, long time. RPA for now is just another name for something we've had for eons: technology to automate processes. The challenge as always is finding suitable processes to automate, actually successfully automating those, and then maintaining the automations. Long story short the likelihood of your employer paying a contractor to come in and spend 6 weeks automating most of your job is slim to none.

Also I recognize that heretofore technology has only disrupted, but not essentially cored out the employment market (e.g. technology obliterated large numbers of jobs in farming, but people moved elsewhere). Additionally, technology is associated with more productivity and economic growth; even if you kill a person's job you probably made up for it and more with whatever you killed it with. As such, despite my belief that the end point is huge unemployment, the economy will also be strong. Universal employment/social programs will become more pervasive.
Yes, I thought it was "really far down the road, long, long time" too until that meeting. It's here now. It's imminent enough that some, at least, big companies are making staffing decisions based on using it.

We already started the process at the beginning of this year where I work. Part of it involves denying personal service to our customers, our long-time loyal customers, and telling them "take it or leave it, this is all we will do for you, anything else does not fit our automatic processes." This is not a good idea. Customer needs should drive the business, not what your robot needs.

It's much closer than you think. It's here. And it will be massively deflationary. No wonder they are shoveling out the money as though they are stoking a locomotive with a firebox about to go out. It's just the timing that perplexes them. They want to be early.

So far as investing goes, I am keeping my bond and REIT allocations, and also adding to cash. This was all in my plan already so I did not change anything except to increase amounts. Also I may not be selling my house in a year as planned, I don't think I could afford to buy another one.
Are they really making these decisions or talking about them? Have you seen people actually get laid off because of it yet?

My company (manufacturing) invests very heavily in automation (RPA is early days for us, though). It is critical to our growth. However, we're also desperate for workers because there is still a great deal not automated and it won't be in the near future.

Full disclosure I have limited exposure to RPA but I have researched it and spent some time in the studio of one of the more popular products. it seems to me evolutionary and largely building upon concepts that have been around, and applied, for a very long time.
We already started the process at the beginning of this year where I work. Part of it involves denying personal service to our customers, our long-time loyal customers, and telling them "take it or leave it, this is all we will do for you, anything else does not fit our automatic processes." This is not a good idea. Customer needs should drive the business, not what your robot needs.
Yes. I hate this. I actively avoid dealing with companies that force me to deal with robots. Also, they never, ever, ever work properly. If I can I always do whatever is necessary to trick the system into sending me to a human being, whether that's hitting 0 immediately, mumbling into the phone in another, fake language until the system gives up, or threatening to cancel service immediately.
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NiceUnparticularMan
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Re: Inflation for the month and year at highest rate in 13 years

Post by NiceUnparticularMan »

Just a really big picture observation:

In a way we went through this before, as the mechanization of agriculture eliminated something like 90% of the jobs people had been working before then. But rather than that causing a permanent crisis of unemployment, it ultimately just freed up labor to do new and productive jobs that didn't exist before, and here we are. Of course there can be difficult transitions both on the individual level and during certain periods, but overall willing labor is a resource that tends to get used.

I think in the midst of these sorts of changes, it can be hard to predict what sorts of new jobs might eventually replace the jobs being eliminated. And in that sense, it is hard to PROMISE new jobs are coming, because that requires the sort of foresight about the future that people don't tend to have.

But still, I wouldn't count out the creativity of future generations when it comes to finding ways to put willing labor to productive use.
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Re: Inflation for the month and year at highest rate in 13 years

Post by ray.james »

Socal77 wrote: Sat Jul 17, 2021 8:23 pm No mention of rents and house prices? My rent was raised 10% this year and I quickly gave up trying to find a lower or similar cost apartment closer to work. Rental markets in Cali are severely distorted right now there is very little inventory.
Rents are now more than pre-pandemic level in my northcal county in Bay area. Inventory for rental market seems ok, not as low as buyer market. Due to WFH and people leaving, I did not expect this so early in recovery!
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Re: Inflation for the month and year at highest rate in 13 years

Post by IMO »

NiceUnparticularMan wrote: Tue Jul 20, 2021 10:29 am Just a really big picture observation:

In a way we went through this before, as the mechanization of agriculture eliminated something like 90% of the jobs people had been working before then. But rather than that causing a permanent crisis of unemployment, it ultimately just freed up labor to do new and productive jobs that didn't exist before, and here we are. Of course there can be difficult transitions both on the individual level and during certain periods, but overall willing labor is a resource that tends to get used.

I think in the midst of these sorts of changes, it can be hard to predict what sorts of new jobs might eventually replace the jobs being eliminated. And in that sense, it is hard to PROMISE new jobs are coming, because that requires the sort of foresight about the future that people don't tend to have.

But still, I wouldn't count out the creativity of future generations when it comes to finding ways to put willing labor to productive use.
Well, don't forget to look at the big picture issue (when it comes to the US) that any job that can be done WFH can be outsourced to anywhere in the world. How that can't/won't change at least US employment is beyond me as time goes on.

There are fields of work in the US that are not even WFH, that are changing now, such as the pharmacy job world (as one example) where the oversupply/production of available pharmacists is making it harder and harder to find viable career options (go out and ask new grads about this).

I actually think there are limitations in what many presume the world can handle when it comes to continued overpopulation. Be it the strain on limited natural resources, the damage/concerns from things like aquaculture farming, CO2 production per person, etc, AND the lack of viable employment opportunities with overpopulation. Have you not been to any 3rd world countries and seen this issue personally? I guess foresight/creative ways of employment mean young kids selling gum at places like the US/Mexico border, young girls turning to prostitution, etc.
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Tubes
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Re: Inflation for the month and year at highest rate in 13 years

Post by Tubes »

ray.james wrote: Tue Jul 20, 2021 11:48 am
Socal77 wrote: Sat Jul 17, 2021 8:23 pm No mention of rents and house prices? My rent was raised 10% this year and I quickly gave up trying to find a lower or similar cost apartment closer to work. Rental markets in Cali are severely distorted right now there is very little inventory.
Rents are now more than pre-pandemic level in my northcal county in Bay area. Inventory for rental market seems ok, not as low as buyer market. Due to WFH and people leaving, I did not expect this so early in recovery!
It takes some time for the CPI to properly show the true effects of "shelter" costs. The BLS publishes a comprehensive explanation on this, but beware, it is thick reading.

Renter costs compute fairly quickly, but the other shelter calculation involves actual homes, which is computed by an estimated "cost to rent out my home" question.

My quick take away on this is there is a lag because some of it is theoretical, and it takes time for people to realize what it would take to rent out their home. For example, part of the calculation is based on this question to the sampled participants: "If someone were to rent your home today, how much do you think it would rent for monthly, unfurnished and without utilities?" It takes a while for people to factor in the quick changes occurring around them to properly answer this question.

In my case, I just got my homeowner's insurance renewal. We're discussing the current renewals here. So if I were in the survey, my 25% insurance rise would only be hitting now, and that's if I answered the question factoring insurance into my answer. (There is no specific homeowners insurance factor in CPI, it comes secondary from this theoretical rent question.) I am also trying to get my head around the 25% increase in neighborhood housing prices just this calendar year.
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Re: Inflation for the month and year at highest rate in 13 years

Post by alpenglow »

atdharris wrote: Fri Jul 16, 2021 9:16 am
Whakamole wrote: Fri Jul 16, 2021 8:44 am
atdharris wrote: Fri Jul 16, 2021 8:35 am
Whakamole wrote: Thu Jul 15, 2021 7:08 pm
JoeRetire wrote: Thu Jul 15, 2021 5:10 pm
Time to switch to pork.
Pork prices are up too. Beef is way up.
Right. Time to become a vegan it seems.
I've got some bad news for you...
You're right. Those beyond burgers are expensive. $5.99 for two 4oz patties!
Beans and rice! Delicious, nutritious, cheap, and healthy.
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Re: Inflation for the month and year at highest rate in 13 years

Post by Robot Monster »

A Twitter thread that might be of interest. It's by Greg Ip of the Wall Street Journal. It begins:

"Most of the inflation handwringing is over traditional demand-driven inflation. But the real threat is supply-driven inflation, and it explains the growing worries over the recovery's health."
Twitter link

For those who subscribe to the Wall Street Journal, here is the link to his article, "How Inflation Threatens the Recovery".
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Re: Inflation for the month and year at highest rate in 13 years

Post by aj76er »

rockstar wrote: Thu Jul 15, 2021 4:01 pm
atdharris wrote: Thu Jul 15, 2021 3:56 pm
rockstar wrote: Thu Jul 15, 2021 3:28 pm
atdharris wrote: Thu Jul 15, 2021 3:08 pm
Yesterdaysnews wrote: Thu Jul 15, 2021 2:18 pm Things have definitely gotta a bit more expensive. I don’t get the whole transitory concept, why would any business lower prices after a new baseline has been established? If people get used to spending $50 at Chipotle and still eat there I don’t see why they would lower prices.
They won't lower, but the prices may not go up at the pace which they are now. I suspect if we are still seeing 4-5% inflation a year from now, the Fed will be forced to do something.
It's what sticks. Higher salaries and higher rent are likely to stick. Used car prices should come down or not grow another 40%. If they do, they'll cost much more than new, which seems extremely unlikely.
One can only hope I see a higher salary next year...

I agree used cars and materials should come down over time. I'd also like to think the housing market will slow, but who really knows the answer to that.
People usually sign leases for a year, so rent is pretty much what it is. It's not coming down anytime soon. The chip shortage and used car demand should normalize. No idea about home prices that have gone up more than 13%. The supply should eventually catch up. But if you already have this stuff locked in, own a car and own a home, then it doesn't really matter. You might see a slightly higher property tax bill. But that shouldn't be as bad as what folks renting are seeing.

I still expect it to be over 2% for at least a year.
We are currently renting, and while our rent only increased ~3% this year, the lease renewal options reduced to 9mos and 10mos. Last year we had the option of signing a 12yr or 13yr lease. So shorter leases is just another form of hidden inflation (eg over 5 years, there will be 6 rent increases).
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