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2021 - Is inflation finally back in the conversation?

Reagan1k

By Reagan1k
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Bateshorn
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The only thing more predictable than the GOP running up huge deficits on tax cuts and military spending, is each one suddenly becoming horrified by deficit spending 5 mins after a Democrat is sworn in

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Cheeseweasel

Cheeseweasel 26437

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37 minutes ago, jimmyjazz said:

I'm no economist, but that sounds like a dumb idea.

Stagflation is an economic cycle characterized by slow growth and a high unemployment rate accompanied by inflation. Economic policymakers find this combination particularly difficult to handle, as attempting to correct one of the factors can exacerbate another.

 

Imagine reading that and thinking "Yup. That's what we need"

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Cheeseweasel

Cheeseweasel 26437

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Corporate Profits down 1.1%

 

Profits from current production  (corporate profits with inventory valuation and capital consumption adjustments) decreased $31.6 billion in the third quarter, in contrast to an increase of $131.6 billion in the second quarter.

 

https://www.bea.gov/data/income-saving/corporate-profits

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Hefeweizen

Hefeweizen 5307

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1 minute ago, washparkhorn said:

Services wages too hot for the Fed (even if below inflation rate).  

The Fed is reliant on killing jobs to fight inflation.

Employers want resiliency in their workforce and willing to pay for a deep bench. 

Jobs cuts are coming.  Too slow for many but I’m starting to plan my RIFs.  Sucks.

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Hefeweizen

Hefeweizen 5307

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3 minutes ago, Cheeseweasel said:

Send them my way. We need people.

What industry (besides Tech) is cutting back??

All the national home builders are cutting staff right now.  Developers putting projects on hold.  The housing issues are about to really get interesting because I think multi family is going to be where everyone heads in this new interest rate environment.

 

Single family housing just is not going to be affordable for a while.

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Cheeseweasel

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1 hour ago, Hefeweizen said:

All the national home builders are cutting staff right now.  Developers putting projects on hold.  The housing issues are about to really get interesting because I think multi family is going to be where everyone heads in this new interest rate environment.

 

Single family housing just is not going to be affordable for a while.

Brutal. Sorry, man. I've done some hard shit as a business owner/manager but sitting with a list of people deciding who stays/goes sucks ass more than anything. 

 

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jimmyjazz

jimmyjazz 45560

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11 minutes ago, Cheeseweasel said:

Brutal. Sorry, man. I've done some hard shit as a business owner/manager but sitting with a list of people deciding who stays/goes sucks ass more than anything. 

 

One time I had the pleasure of being told who to fire and who to keep.  It was my department (well, half department).  "Marginalized" didn't even begin to describe how I felt about that.  It was the kind of thing I had intuitively known could happen which made me try to craft a wholly technical career, but eventually I got sucked into management anyway.

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Cheeseweasel

Cheeseweasel 26437

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12 minutes ago, jimmyjazz said:

One time I had the pleasure of being told who to fire and who to keep.  It was my department (well, half department).  "Marginalized" didn't even begin to describe how I felt about that.  It was the kind of thing I had intuitively known could happen which made me try to craft a wholly technical career, but eventually I got sucked into management anyway.

I hate to admit it, but the bottle helps after those days. 

Will Ferrell Scotch GIF by Anchorman Movie

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babysdaddy

babysdaddy 2718

Posted
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1 hour ago, Hefeweizen said:

All the national home builders are cutting staff right now.  Developers putting projects on hold.  The housing issues are about to really get interesting because I think multi family is going to be where everyone heads in this new interest rate environment.

 

Single family housing just is not going to be affordable for a while.

Wife is getting antsy for a new house (we've beat the shit out of ours raising 3 kids in it for the last 10 years) and I talked to a buddy high up in a local bank here in Dallas and he told me to sit tight because every home under construction right now using an interim construction loan did not budget for a 7 or 8% mortgage and the new homes available for sale were going to be interesting in the next 6 to 12 months.  He also said lakehouse market will collapse.  

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troph

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1 hour ago, babysdaddy said:

Wife is getting antsy for a new house (we've beat the shit out of ours raising 3 kids in it for the last 10 years) and I talked to a buddy high up in a local bank here in Dallas and he told me to sit tight because every home under construction right now using an interim construction loan did not budget for a 7 or 8% mortgage and the new homes available for sale were going to be interesting in the next 6 to 12 months.  He also said lakehouse market will collapse.  

hi.

finishing up our house now.  expected 3.5% on a lot of construction.  now it's a lot of percent on a lot of construction.  working through it, but second hardest financial environment I've been in, financial crisis being the first.  thankfully we have what we need to do this (balance sheet, cash etc.), but I imagine a bunch of homes being built now are not going to sell to the buyer under the current contract.  that 5% rate hike in the last 9 months is insane. stress levels off the charts.

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troph

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Posted (edited)
6 minutes ago, Cheeseweasel said:

2008-2, electric boogaloo

in a way yes -secondary market is as close to frozen as it can get, or so a banker friend of mine has said.  Thinks it unthaws early next year when rates stabilize. high rates are one thing, velocity of increases though has money saying no thanks to mortgage backed securities right now.  painful.  question is whether it's going to act as a contagion or not.  right now I think people think not.  there was an acute trip wire in the 08 crisis because of the bad loans packaged into the deals, that tripped insurers of those and other "safe" securities into a free fall which caused rating agencies Moody, Fitch and Standard & Poors to first downgrade the obvious problem securities, but then when the insurers started to fail, that hit all the other bond markets out there. Out of now where hospital bonds for major hospital systems had massive automatic rate hikes because their ratings plummeted and on and on.  Dodd Frank has made loans much harder so right now it appears to truly be an affordability and demand problem, but whoa nellie if there is a trip wire.  I don't have 08-12 in me again.

Edited by troph
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babysdaddy

babysdaddy 2718

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3 hours ago, troph said:

hi.

finishing up our house now.  expected 3.5% on a lot of construction.  now it's a lot of percent on a lot of construction.  working through it, but second hardest financial environment I've been in, financial crisis being the first.  thankfully we have what we need to do this (balance sheet, cash etc.), but I imagine a bunch of homes being built now are not going to sell to the buyer under the current contract.  that 5% rate hike in the last 9 months is insane. stress levels off the charts.

And you're one of the lucky ones because of your balance sheet and liquidity situation.  The folks I really feel for are the ones in their current house with one under construction they stretched for.  They are not going to get what they were expecting for their existing house and their new loan payments are going to triple on what they were expecting.  Hang in there

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troph

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38 minutes ago, babysdaddy said:

And you're one of the lucky ones because of your balance sheet and liquidity situation.  The folks I really feel for are the ones in their current house with one under construction they stretched for.  They are not going to get what they were expecting for their existing house and their new loan payments are going to triple on what they were expecting.  Hang in there

100% that’s what I’m saying, super lucky and we are still getting crushed. BUT we get to keep it. I have no idea what I would do if we lost it after 3 years of renting (through Covid lockdowns) and building. How we went from dating to engaged and about to be married during all of that is beyond me.

I tell you - this generation of middle agers can’t catch a break - after coming of age right before the financial crisis, then a global pandemic, now inflation. Shit Sammiches. 

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troph

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On 12/9/2022 at 7:48 AM, Cheeseweasel said:

Wholesale prices rose 0.3% in November, more than expected, despite hopes that inflation is cooling

https://www.cnbc.com/2022/12/09/wholesale-prices-rose-0point3percent-in-november-more-than-expected-despite-hopes-that-inflation-is-cooling.html

 

Uh Oh Wrestling GIF by WWE

that entire article is actually positive. I really don't get this shit.

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troph

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16 minutes ago, Cheeseweasel said:

Prices still going up while fuel prices are going down isn’t great. 

[wholesale] prices "still going up" well if you read the full article, we are waaaay off peak inflation. .3% is 3.6% on a go forward basis. the article also says gas prices were offset by the increase in food which was 38% higher, but the article quotes an expert who says that those food increases are likely an anomaly. so....

patience is needed here, that article has nothing but positive data except that someone wanted this shit to go down faster and expectations were set at .2% and it was .3%.  omfg we are doomed.

a year ago? 1% and 10% on a look back 12 months and that increased by March 2022 when it hit 11.7% on a look back 12 month basis.  This month it's .3% and 7.4% annually with a look forward of 3.6%.

you can look at the rolling 12 and see that as soon as we get past the spring, as long as we are in the .2-.4% range per month that the "annual" inflation rate is going to fall like a rock as the 8-10% months fall off the look back period.

How that isn't good news to everyone is beyond me, really.

Edited by troph
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jimmyjazz

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I'm not sure inflation wouldn't continue to cool if the Fed took no more action.  Gas is way off its highs, which should create a ripple effect on the cost of delivering goods, not to mention the overall costs associated with petroleum (plastics, etc.).  Beyond that, as prices stabilize the inflation rate should fall year-over-year.  Then again, I'm no economist.

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washparkhorn

washparkhorn 9935

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BOJ bends the knee. 

“Tighter BoJ policy would remove one of the last global anchors that’s helped to keep borrowing costs at low levels more broadly,” Deutsche Bank analysts told clients, noting the BoJ move had come as markets were “already reeling” from the European Central Bank and Federal Reserve’s hawkishness last week.

Many economists now expect the BOJ to raise interest rates next year, joining the Fed, the ECB and others after a decade of extraordinary stimulus. 
 

https://www.bloomberg.com/news/articles/2022-12-19/asia-stocks-set-to-fall-as-inflation-fight-endures-markets-wrap?srnd=premium

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washparkhorn

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I believe this will be the first engineered recession in modern history. There is no playbook to follow, only theories of how the animal spirits will react. “Demand destruction via unemployment” is the play called by the Fed. In a consumer driven economy like the US (roughly ⅔ of GDP is consumer spending), the Federal Reserve is meddling with the primal economic forces of nature. 

Edited by washparkhorn
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jimmyjazz

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Average price for a gallon of gas fell this week to $3.09-$3.12, depending on the source.  $3 by Christmas is expected.  Current price is an 18-month low.

Gassy

 

The Biden administration has also started the process of refilling the Strategic Petroleum Reserves, having sold at ~ $96/bbl and targeting purchase at ~ $72/bbl.   It's expected to take months if not a year or more, so I wouldn't expect that price to be constant.

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B00M

B00M 6280

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On 12/13/2022 at 11:07 AM, jimmyjazz said:

I'm not sure inflation wouldn't continue to cool if the Fed took no more action.  Gas is way off its highs, which should create a ripple effect on the cost of delivering goods, not to mention the overall costs associated with petroleum (plastics, etc.).  Beyond that, as prices stabilize the inflation rate should fall year-over-year.  Then again, I'm no economist.

Is falling oil the biggest driver of official inflation rates falling?

If so, how much of the drop in price was due to releasing strategic reserves? now that we’re (slowly) refilling the reserves, will we see a reversal in the inflation trend? 
 

 

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jimmyjazz

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4 minutes ago, B00M said:

Is falling oil the biggest driver of official inflation rates falling?

If so, how much of the drop in price was due to releasing strategic reserves? now that we’re (slowly) refilling the reserves, will we see a reversal in the inflation trend? 
 

 

Well, I don't know, Milton.  That's why I said "I'm no economist".  You tell me.

I do think I understand year-over-year price effects, though, but if I'm wrong, by all means, let me have it.

Y'all SO want inflation to stay high. 

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washparkhorn

washparkhorn 9935

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Posted (edited)
1 hour ago, B00M said:

Is falling oil the biggest driver of official inflation rates falling?

Services inflation is the sticky wicket as we go forward. Goods inflation has peaked or will peak shortly. Services inflation remains elevated — and is reflective of rising wages according to JPowell.

Monetary, not fiscal (politics), decisions are driving policy. 

Edited by washparkhorn
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bernorange

bernorange 8348

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In the third quarter, the drop in asset prices continued to reduce the biggest wealth disparity ever between the “Bottom 50%,” who gained a little wealth, and the very top households – the “Top 0.1%” and the “Remaining 1%” – who gave up some of their vast wealth for the third quarter in a row, according to the Fed’s data on the distribution of wealth by category of wealth.

In other words, the tightening by the Fed – the higher interest rates and the beginning of QT that the crybabies on Wall Street bewail on a daily basis – has undone a small portion of the horrendous wealth inequality that the prior years of QE and interest rate repression had caused.
...

https://wolfstreet.com/2022/12/21/fed-tightening-reduces-horrendous-wealth-disparity-that-qe-and-interest-rate-repression-have-wrought-fed-data/

Quote

... Mark Zandi, the chief economist at Moody’s Analytics, who said in a Twitter thread Sunday that he’d been asked “with regularity” whether it really mattered if the U.S. economy simply weakened or plunged into an official downturn.

“The answer is an emphatic YES,” Zandi said in a tweet.

“The recession debate is not a parlor game,” Zandi added. “There have been 12 recessions since WWII, lasting 10 months on average, with a peak-to-trough decline in real GDP of almost 3%, and given the current size of the labor force we would lose about 4 million jobs, pushing unemployment to 6%.”

The pain of that would be most acutely felt by low-income people, who could be set back years financially since their savings have dwindled, Zandi noted. Already, credit-card debt balances among lower-income people have surpassed their pre-pandemic levels.
...
“Once you get into a recession and things are going negative and we’re backtracking, it’s hard to know how that all plays out,” Zandi told MarketWatch. “Maybe it will be mild, but things start breaking when revenues start falling and businesses start going bankrupt and people start defaulting on their mortgages. Things can take a life of their own.”

https://www.marketwatch.com/story/the-recession-debate-is-not-a-parlor-game-a-downturn-would-hit-low-income-people-the-hardest-says-moodys-zandi-11671482912

Monetary policy favors the wealthy.  Consequences of monetary policy (inflation) hurt the poor (disproportionately).  Rx for consequences (recession) going to hurt the poor even more.  Is the fiat monetary system immoral?  Or is this an acceptable price for allowing the dubiously noble goal of providing the political class with mostly unfettered spending power?

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