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2021 - Is inflation finally back in the conversation?

Reagan1k

By Reagan1k
in Business and Markets

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Bateshorn
Bateshorn

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

PilotsError
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Cheeseweasel

Cheeseweasel 26437

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Our main finding is that the shift in consumption demand from services towards goods can explain a large proportion of the rise in U.S. inflation between 2019:Q4 and 2021:Q4.

 

I'm going to get on my soapbox on this until I turn blue.

1. We have become a service economy for China's goods which will continue to create a class of workers who are "expendable" during a crisis and will continue to suppress wages.

2. We have been sold on the idea of JIT inventory streams that provide little wiggle room during a crisis. No worries, if it goes bad, China will crank up the shop! (until they can't)

Until we bring manufacturing back to the US, this will happen again and again. 

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Snake Diggity

Snake Diggity 4614

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On 2/22/2023 at 11:31 AM, washparkhorn said:

Best explanation so far from the Fed. New Fed publication - the inflationary effects of sectoral reallocation from services to goods with Covid-19:

https://www.federalreserve.gov/econres/ifdp/the-inflationary-effects-of-sectoral-reallocation.htm

073F8BE6-435F-42B9-856F-CDD75B3082ED.thumb.jpeg.590086eed4a1d041ee17f735ef132660.jpeg96307E12-5F2F-41C6-A9D4-BBD29848A571.thumb.jpeg.3a0eb1d4576b10fec2cb535e68f37883.jpeg

 

I can haz summary of their predictions?

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bernorange

bernorange 8348

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On the heels of Bullard et al advocating for larger Fed rate increases, Jamie is letting markets know the Fed isn't doing enough.  Read between the lines.  The Fed is going to press the brake a little harder next time...

https://www.cnbc.com/2023/02/23/jamie-dimon-says-the-federal-reserve-has-lost-a-little-bit-of-control-of-inflation-.html

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1 hour ago, Cheeseweasel said:

Wasn't Dimon recently claiming that the FED was pushing us into recession? Gotta play both sides!

And saying that a "hurricane" was coming?

And a recession in 6-9 months as of October 2022 (meaning 6 months starts in March)  (https://www.cnbc.com/2022/10/10/jpmorgan-jamie-dimon-warns-us-likely-to-tip-into-recession-soon.html) followed by comments today that the "U.S. economy is doing quite well" and he isn't "breaking out the recession playbook"? (https://www.cnbc.com/video/2023/02/23/jpmorgan-ceo-jamie-dimon-says-he-always-has-a-recession-playbook-but-isnt-using-it-right-now.html)

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HamsterHookah

HamsterHookah 112

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3 hours ago, Cheeseweasel said:

 

I'm going to get on my soapbox on this until I turn blue.

1. We have become a service economy for China's goods which will continue to create a class of workers who are "expendable" during a crisis and will continue to suppress wages.

2. We have been sold on the idea of JIT inventory streams that provide little wiggle room during a crisis. No worries, if it goes bad, China will crank up the shop! (until they can't)

Until we bring manufacturing back to the US, this will happen again and again. 

Hence the rise of Shein and **checks notes for htis week** TEMU.

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bernorange

bernorange 8348

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27 minutes ago, Cheeseweasel said:

That seems to be the response to all news, good or bad.

Not true,  The markets are looking for news that the Fed's work is yielding disinflation.  The market wants to place bets on a Fed pivot (ending QT and rate increases).  The market wants more financial crack (QE, rate decreases).  News which shows the economy doing well or inflation running hot means the Fed has to keep pressure on the brake (futures no likey).  News which shows the economy under pressure or disinflation means the Fed might be persuaded to end the reign of (QT and rate increase) terror.  The markets just want to front run the Fed.

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Homercles

Homercles 10205

Posted
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On 2/16/2023 at 12:22 PM, HamsterHookah said:

I'm starting to think that we are a nation of consumers now who will literally not stop buying things until we are all broke and in the ditches of the muddy streets. And even then we will have a smart cell phone with cash app.

Sane, rational policies to try and get people to stop buying crap is not going to work in 2023, I guess is the fear.

 

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gsoda3

gsoda3 3237

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Posted
On 2/20/2023 at 5:07 PM, washparkhorn said:

Housing price inflation in one chart.

Peaked in April 2022 at 2.74 trillion. 

that doesn't show housing price inflation, it shows the total dollar amount of mortgage backed securities held on the fed's balance sheet at any point in time.  

 

if you're looking for a housing price inflation chart use the case shiller price index.  here's the chart for that over the same time period.

image.png.da812480a706568cc3f1288ccbc6b92f.png

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jimmyjazz

jimmyjazz 45566

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2 hours ago, Cheeseweasel said:

So housing prices have essentially doubled in the last decade.

Get fucked, grandkids.

I get the sentiment, but housing equity is one of the biggest traditional sources of "wealth" accumulation for the average Joe.  Maybe there will be something to leave those grandkids.  (Yes, the buying power of each dollar is diminished, too.)

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11 minutes ago, jimmyjazz said:

I get the sentiment, but housing equity is one of the biggest traditional sources of "wealth" accumulation for the average Joe.  Maybe there will be something to leave those grandkids.  (Yes, the buying power of each dollar is diminished, too.)

The issue is exactly that. Grandparents were able to buy an affordable house and build wealth through it. The grandkids aren't able to do so near as easily. Instead of building wealth themselves, they are now hoping that grandparents leave them a little something.

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Cheeseweasel

Cheeseweasel 26437

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Posted
3 minutes ago, FirstTimeCaller said:

The issue is exactly that. Grandparents were able to buy an affordable house and build wealth through it. The grandkids aren't able to do so near as easily. Instead of building wealth themselves, they are now hoping that grandparents leave them a little something.

Attorneys specializing in murder of grandparents to get wealth before they blow it is going to be a lucrative business.

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Captainant

Captainant 27472

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Posted
3 hours ago, Cheeseweasel said:

So housing prices have essentially doubled in the last decade.

Get fucked, grandkids.

https://www.keranews.org/business-economy/2022-06-14/investors-bought-nearly-a-third-of-all-homes-in-texas-last-year

That's what happens when homes stop being a place to live and exist in and start being a place to keep your money.

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Guest

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Lol. Redfin's home value estimates are hot garbage. I explained on another thread that I keep a monthly spreadsheet of accounts. I pull the Redfin and Zillow home estimates and average them together.

At the peak, Redfin said my house was worth $680K. It is now sub-$500k just about 8 months later. But if you look at their chart of the historical value, it rose in 2020/2021 and has now just been flat. It's like they decided to just ignore that they ever had the house value that high. 

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jimmyjazz

jimmyjazz 45566

Posted
Posted
35 minutes ago, FirstTimeCaller said:

Lol. Redfin's home value estimates are hot garbage.

They definitely seem disconnected.  Last time I got an "estimate" from Redfin, it was roughly 0.6X what Travis County appraises my house for.  Zillow is dead nuts on TCAD, barely 0.3% higher.  Redfin's assessment of my immediate neighbors, whose houses are decades older, smaller, on similar lots are way higher than their estimate for my house.  I dunno, I'm thinking Redfin is basically a roulette wheel.

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Hefeweizen

Hefeweizen 5307

Posted
Posted
2 hours ago, Cheeseweasel said:

Yes, but I've been informed not to worry because we are paying the interest to ourselves. 

Only if all of ourselves hold t bills, right?  I am very interested in the potential outcomes here and I don’t see that ultimately it is either austerity or inflating out of debt that’s the answer.  Maybe both!  But it’s going to get fugly eventually.

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bernorange

bernorange 8348

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The S&P CoreLogic Case-Shiller 20-city house price index rise fell 0.5% in December, its sixth monthly decline.

Year-over-year appreciation was still up 4.6%, but has slowed down from a 6.8% annual increase in the previous month.

A broader measure of home prices, the national index, fell a seasonally adjusted 0.3% in December, but was up 5.8% over the past year.
...
Big picture: Home prices reflect the major slowdown the interest rate-sensitive housing sector went through at the end of last year.

And with mortgage rates back up, housing sales are poised to take a hit, meaning that home prices will likely continue this downward slide in the coming months.
...

https://www.marketwatch.com/story/mortgage-financing-remains-a-headwind-for-home-prices-home-price-growth-slows-in-december-with-san-francisco-leading-the-way-60a0332c?rss=1&siteid=rss

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StassneyHorn

StassneyHorn 6540

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Hate anecdotal posts but I’ve been seeing a lot from the below article in regards to falling rent in Scottsdale and Chicago. Saw a place advertising first 2 months free and a $1000 gift card in Scottsdale, places near LakeShore Dr on the north side of Chicago with 1BR for $1550 or less with most amenities and internet included. Studios in the $1100 area. 

https://www.businessinsider.com/rent-decline-fall-apartment-housing-market-landlords-tenant-lease-construction-2023-3?amp

Landlords aren't just lowering rents — they're handing out perks like gift cards and free parking

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Js1

Js1 85135

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30 minutes ago, StassneyHorn said:

No they aren’t. $1000 gift cards ARE uncommon, especially combined with 2 months free or 6 weeks are. 

My second apartment in Denver, granted that was in 2020, was 6 weeks free and $2000 gift card. It was wild 

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StassneyHorn

StassneyHorn 6540

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Posted

 

2 hours ago, tbone_ said:

Stassney - do you really want to argue with me on what’s common and what isn’t common regarding new apartment complexes?

I literally agreed with you. Change your tampon. Tons of places offer free month rent or 500 dollar gift cards. Not two months free and 1000-2000 dollar gift cards.

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