Inflation rockets to 41-year high

[Augie]

7 minutes ago, Marv's Neighbor said:

Bird seed @ Costco is up almost 75%, in the past year.  We see an occasional Indigo Bunting in VA.  Beautiful birds.

 

Right now, the red crested blackbirds, are cleaning us out.  Can't wait for them to migrate, and give us a break.

 

We stopped filling the bird feeder due to squirrels and other critters wanting the seeds. We left it at the old house four doors up the road when we moved in December. To keep it thread related, I probably can’t afford a new feeder OR the feed with today’s prices! 

[ALF]

Paul Volcker  Chairman of the Fed   79-87

During his time as the chairman of the Fed, Volcker is credited with ending the high levels of inflation that the United States experienced during the 1970s and early 1980s.

When he became chairman in 1979, inflation was high and peaked in 1981 at 13.5%. However, due to the work of Volcker and the rest of the board, the inflation rate dropped to 3.2% by 1983.

Volcker raised the federal funds rate from 11.2% in 1979 to 20% in June of 1981. The unemployment rate became higher than 10% during this time as well.

 

https://courses.lumenlearning.com/boundless-economics/chapter/historical-federal-reserve-policies/

 

To fix inflation means a recession if they follow Volcker's cure.

[Hapless Bills Fan]

Inflation ought to be a topic we can discuss

 

Economics is a complex topic with a breadth and depth far beyond who is President in the US at the moment and includes stuff like global trade, supply and demand, war and conflict in other regions of the world.  

 

If you think otherwise, consider taking it as a challenge to educate yourself.

 

It ought to be a topic we can discuss here without people making cute cheap political allusions (or outright political comments) but maybe it’s not?

 

Let’s give that a try and if I have to hide another “cheap political allusions” or “actual politics” post, it’ll lock and folks can go to PPP to discuss.

 

Special note to someone who said in this thread they were actually trying to get it moved to PPP (and anyone else who thinks that way):

If you want a PPP thread go there and start one, don’t be a passive-aggressive douchecanoe trying to deliberately derail a thread that’s here.  

[muppy]

I have a comment regarding the unemployment numbers and the effect of inflation. Where I live there are a lot of places in dire need of employees. It seems folks have ditched their minimum wage jobs and moved into better career employment (Yay) .....but the lack of available workers has impacted stores and retail/restaurant etc from what I see ....as a customer it impacts our time and resources as well

 

I think folks have been and will continue to flee my state of Cali for rents they can afford. It is outrageously expensive here. Inflation HELLO.

 

These topics give me anxiety Im going to try and just go with the flow best I can.  

[ALF]

14 minutes ago, muppy said:

I have a comment regarding the unemployment numbers and the effect of inflation. Where I live there are a lot of places in dire need of employees. It seems folks have ditched their minimum wage jobs and moved into better career employment (Yay) .....but the lack of available workers has impacted stores and retail/restaurant etc from what I see ....as a customer it impacts our time and resources as well

  

 

I would think immigrants from the southern border would want these minimum wage jobs , just vett them and give them a temp work permit. On the morning news 11 million job openings for 5 million looking for a job.

[muppy]

Just now, ALF said:

 

I would think immigrants from the southern border would want these minimum wage jobs , just vett them and give them a temp work permit. On the morning news 11 million job openings for 5 million looking for a job.

my point was more that folks are fleeing cali due to the high cost of living..those new folks would need housing and where they may find it cheaply enough I honesty have no idea.  anyway thanks for the input

[MarkyMannn]

18 hours ago, ExiledInIllinois said:

Wages are up... That's a good thing.  Right?

Awesome! Gonna be a millionaire in a few years when I retire! 

Good. Where are you since late November last year

[ALF]

40 minutes ago, muppy said:

my point was more that folks are fleeing cali due to the high cost of living..those new folks would need housing and where they may find it cheaply enough I honesty have no idea.  anyway thanks for the input

 

Most other states have cheaper housing , need more then one wage earner per household. One congressman from Texas said a lot of immigrant oil field workers were let go during the covid shutdown , including the vast Permian basin and N. Dakota and have not returned.

 

https://www.texastribune.org/2022/03/25/texas-permian-basin-oil-russia-invasion/

Edited April 13, 2022 by ALF

[Hapless Bills Fan]

3 hours ago, muppy said:

my point was more that folks are fleeing cali due to the high cost of living..those new folks would need housing and where they may find it cheaply enough I honesty have no idea.  anyway thanks for the input

 

My kid had an internship out in Fairfield last summer.  The work was interesting and she liked the people, but the apartment costs were outrageous.  And, the big company she was working for paid the same wages to interns working on the coasts as they did in the Midwest.

 

Cali has a housing problem, no question.

[muppy]

2 minutes ago, Hapless Bills Fan said:

 

My kid had an internship out in Fairfield last summer.  The work was interesting and she liked the people, but the apartment costs were outrageous.  And, the big company she was working for paid the same wages to interns working on the coasts as they did in the Midwest.

 

Cali has a housing problem, no question.

It is SO bad hap. a studio apartment 1 room 1200, 2 BR appt 2000 Up depending on neighborhood. My house rents in the $4000 range (4br suburban good neighborhood/school district) DAYUM. just rent not utilities, phone. Garbage is included no limit , green and blue recycling. Friends of mine have cashed out on home equity and straight up buy a home elsewhere cheaper (Mainly AZ) and have zero mortgage. For long time homeowners GREAT for young people I don't know how they do it ...except like Alf said, dual income. The remedy is hopefully some affordable housing. The lines will be round the block to apply.

[Hapless Bills Fan]

5 minutes ago, muppy said:

It is SO bad hap. a studio apartment 1 room 1200, 2 BR appt 2000 Up depending on neighborhood. My house rents in the $4000 range (4br suburban good neighborhood/school district) DAYUM. just rent not utilities, phone. Garbage is included no limit , green and blue recycling. Friends of mine have cashed out on home equity and straight up buy a home elsewhere cheaper (Mainly AZ) and have zero mortgage. For long time homeowners GREAT for young people I don't know how they do it ...except like Alf said, dual income. The remedy is hopefully some affordable housing. The lines will be round the block to apply.

 

Yeah, kid wound up renting an AirBnB for I think 1200 a month.  Her hostess rented 3 rooms, she looked for student interns or resident physicians or contract nurses.  So I think she was bringing in $3600/month from the rooms, she could probably pay most of her mortgage with that and given the demographic she targeted, they were pretty much working too hard to cause her any problems.   I *guess* a young couple trying to buy a house could do something similar but obviously, there’s some risk there and I also know there are people who bought property to do AirBnB rentals and lost their shirts during the pandemic when travel went pffffffffftttt.

[muppy]

1 minute ago, Hapless Bills Fan said:

 

Yeah, kid wound up renting an AirBnB for I think 1200 a month.  Her hostess rented 3 rooms, she looked for student interns or resident physicians or contract nurses.  So I think she was bringing in $3600/month from the rooms, she could probably pay most of her mortgage with that and given the demographic she targeted, they were pretty much working too hard to cause her any problems.   I *guess* a young couple trying to buy a house could do something similar but obviously, there’s some risk there and I also know there are people who bought property to do AirBnB rentals and lost their shirts during the pandemic when travel went pffffffffftttt.

I think the thread topic could have some really informative legs based on everyones life experience and backgrounds.  These are some troubled ties we are in.  I think  its healthy to talk through and even more importantly Listen..and learn. I appreciate the venue very much. 

[Augie]

11 hours ago, ALF said:

Paul Volcker  Chairman of the Fed   79-87

During his time as the chairman of the Fed, Volcker is credited with ending the high levels of inflation that the United States experienced during the 1970s and early 1980s.

When he became chairman in 1979, inflation was high and peaked in 1981 at 13.5%. However, due to the work of Volcker and the rest of the board, the inflation rate dropped to 3.2% by 1983.

Volcker raised the federal funds rate from 11.2% in 1979 to 20% in June of 1981. The unemployment rate became higher than 10% during this time as well.

 

https://courses.lumenlearning.com/boundless-economics/chapter/historical-federal-reserve-policies/

 

To fix inflation means a recession if they follow Volcker's cure.

 

I graduated from college and started a career in banking in the early 80’s. I knew it was crazy times, but I didn’t realize how historically significant it was. A bank might give you 15-18% on a CD, but also wanted over 20% on a fixed rate mortgage. (My FIL loaded up on the longest term CD’s he could find.) NOBODY could buy much of anything unless you had cash. Real estate prices were naturally down with those rates, so cash was indeed King! 

 

Rates have been ridiculously low for a looong time, well before Covid. They were starting to rise some but then Covid arrived and dropped back to almost free money. We have a mortgage below 3% fixed for 15 years (on a 30 year amortization). Everybody can buy more at those rates! Lots of demand, almost zero supply. I recently looked at my last two neighborhoods in Florida. Combined there are well over 1,000 houses, and only ONE house was listed for sale. You can ask anything you want! 

 

Rates are going up. They have started, and they are certainly not done. Our first house we had a 30 year fixed at 8% and thought that was pretty good in 1986, after the spike. It will be a tricky balancing act. Add those prolonged low rates and the mountains of stimulus money they printed, and inflation was inevitable.

 

For some perspective, check out the chart on the link below:

 

https://www.macrotrends.net/2015/fed-funds-rate-historical-chart

 

 

.

Edited April 13, 2022 by Augie

[TheCockSportif]

52 minutes ago, Hapless Bills Fan said:

 

My kid had an internship out in Fairfield last summer.  The work was interesting and she liked the people, but the apartment costs were outrageous.  And, the big company she was working for paid the same wages to interns working on the coasts as they did in the Midwest.

 

Cali has a housing problem, no question.

The housing issues are happening everywhere, and in places that you would not expect.  We live in Portland, Maine.  12 years ago, when we bought ours, houses would be on the market for months.  Now they are on the market for a day!  Now even a 1,000 sq ft house is going for 500k (it would've been 190k 10 years ago) as a sale price, and so long as it's in a great location, there'll be a bidding war so that it hits 600k, at least.  This is a city of 65k people, and a metro area of 500k.  Outside of the populated areas of the state, Maine is massively poor, and with a terrible industrial base.  And yet, here we are.

 

Oh, and property values have had a cascading effect on the rental market, which is also through the roof.

[muppy]

This from a financial adviser Debra Brennan Tagg. I thought this info was pertinent to this thread. And to me interesting . Pay attention to financial transactions eh? That doesn't explain their thought processes really.  A follow up would be great I need practical info in how we as consumers are best served and how to weather this storm.  It's concerning.  any input anyone has Id appreciate reading. We do have a financial planner. But Im just curious as to how you all are going to deal with things now. Thanks.

Quote

 

The Labor Department announced today that the consumer price index rose by 8.5% from a year earlier – the highest jump since 1981. While two of the biggest contributors, gasoline and food, are likely to decrease throughout the year, some inflation – like wage growth - will be quite sticky. The Fed’s job this year will be a delicate balance to attempt to curb inflation while keeping the economy in growth mode. What does this mean to consumers and investors? It means it’s time to pay more attention to your financial transactions, from buying gas to taking out a loan. 

 

Edited April 13, 2022 by muppy

[DrDawkinstein]

Quote

 

How is AriZona iced tea still 0.99?

 

They decided to make less money.

 

70-year-old founder Don Vultaggio is choosing to keep the price flat,“I'm committed to that $0.99 price. When things go against you, you tighten your belt. I don’t want to do what the bread guys & the gas guys & everybody else are doing"

 

 

https://www.latimes.com/business/story/2022-04-12/az-iced-tea-inflation-99-cents?_amp=true

 

Just a reminder that almost every other company, certainly every consumer goods company, could be doing this same thing. Sacrificing the CEO's $25M/year bonus to keep prices flat. But nah. They'll happily use these excuses (supply chain issues, Russia, etc), to jack up prices and scrape more cash off the back of the working class while raking in record profits.

[Augie]

1 hour ago, DrDawkinstein said:

 

https://www.latimes.com/business/story/2022-04-12/az-iced-tea-inflation-99-cents?_amp=true

 

Just a reminder that almost every other company, certainly every consumer goods company, could be doing this same thing. Sacrificing the CEO's $25M/year bonus to keep prices flat. But nah. They'll happily use these excuses (supply chain issues, Russia, etc), to jack up prices and scrape more cash off the back of the working class while raking in record profits.

 

Just playing devil’s advocate, but one COULD argue that their margins might shrink but they could actually come out ahead on increased volume due to the positive publicity. I mean, I would never be that cynical (as far as you know), but…….    🤷‍♂️

 

We’ll never know who did what (and why) behind the scenes, but sometimes what looks like a gallant act is just another way to make more money. 

 

And now I will remove my cynic’s tin foil hat and eyeglasses and hope this was exactly what it looked like. We all know there are plenty of companies gouging out there, especially the oil companies who are so lightning quick to raise prices, and so excruciatingly slow to lower them. 

[DrDawkinstein]

8 minutes ago, Augie said:

 

Just playing devil’s advocate, but one COULD argue that their margins might shrink but they could actually come out ahead on increased volume due to the positive publicity. I mean, I would never be that cynical (as far as you know), but…….    🤷‍♂️

 

We’ll never know who did what (and why) behind the scenes, but sometimes what looks like a gallant act is just another way to make more money. 

 

And now I will remove my cynic’s tin foil hat and eyeglasses and hope this was exactly what it looked like. We all know there are plenty of companies gouging out there, especially the oil companies who are so lightning quick to raise prices, and so excruciatingly slow to lower them. 

 

I mean, if you read the whole article it's clear that's not really the case. They are losing $45M this year due to the increased cost of Aluminum alone.

 

But the aluminum part is interesting. The article mentions how they hedge against the cost so they prepare themselves and the company for stuff exactly like this....

 

I'm reminded of the beginning of the pandemic, when after years of hearing (from corporate sponsored mouthpieces) that folks not having much money was due to things like "avocado toast" and "buying starbucks", and that people should cut back and focus on savings... but when COVID hit, it turned out that all these companies who rake in BILLIONS of dollars every year had the savings to cover exactly ZERO months of operating costs. They had $0 saved! And were about to all collapse immediately if not for, once again, the taxpayer bailing them out.

 

They still cut those fat bonus checks for the execs tho (thanks to the taxpayers). And now that things are back on track, theyre pulling in even bigger profits, and charging it to us.

 

Funny how the huge, shareholder lead companies are so greedy, but the privately held company started and operated by a guy who came from the bottom (delivering beer/drinks in a truck) knows how to properly run a business, plan for trouble, and also take care of his customers.

[Augie]

8 minutes ago, DrDawkinstein said:

 

I mean, if you read the whole article it's clear that's not really the case. They are losing $45M this year due to the increased cost of Aluminum alone.

 

But the aluminum part is interesting. The article mentions how they hedge against the cost so they prepare themselves and the company for stuff exactly like this....

 

I'm reminded of the beginning of the pandemic, when after years of hearing (from corporate sponsored mouthpieces) that folks not having much money was due to things like "avocado toast" and "buying starbucks", and that people should cut back and focus on savings... but when COVID hit, it turned out that all these companies who rake in BILLIONS of dollars every year had the savings to cover exactly ZERO months of operating costs. They had $0 saved! And were about to all collapse immediately if not for, once again, the taxpayer bailing them out.

 

They still cut those fat bonus checks for the execs tho (thanks to the taxpayers). And now that things are back on track, theyre pulling in even bigger profits, and charging it to us.

 

Funny how the huge, shareholder lead companies are so greedy, but the privately held company started and operated by a guy who came from the bottom (delivering beer/drinks in a truck) knows how to properly run a business, plan for trouble, and also take care of his customers.

 

Admittedly, I clicked the link, saw the product and turned around (because I have the attention span of a gnat at times).

 

I don’t understand people or companies who live on the edge like that. I just couldn’t sleep at night. When I was young and even more stupid, I’d see lovely homes and fancy cars and be jealous of those people. I quickly learned they were often living paycheck to paycheck and 30 days behind on the AMEX card and 60 days late on the BMW loan. The lady of my favorite house came into the bank sobbing and begging for another 30 days to bring the mortgage current.  No thanks. 

 

Hats off to people who do the right things, and for the right  reasons.