Inflation Rates

[*ochocincos*]

While inflation rates are at their highest they've ever been, it's important to understand why (and why not).

Take a look at the numbers - https://www.usinflationcalculator.com/inflation/historical-inflation-rates/
A lot of people assume (incorrectly) that inflation happens more when democrats are in charge, and lower when republicans are.
But what actually affects it more is a healthy and growing economy.

2001-2008, you see many months where inflation was 3-5%. Those were George W. Bush years, and inflation was higher about every year compared to Obama's years.

But back in 2009, inflation was relatively 0 or even negative in some cases.
This can be attributed to the Recession striking right at the end of 2018 and Winter 2009.

As the economy picked up 2010-2012, inflation started to rise again.

2013-2016, inflation actually wasn't as high compared to 2010-2012.
In fact, 2015 was basically no inflation.

Then from 2017 up until the pandemic hit, you see inflation jumped back up to the 2.0-2.9 range pretty frequently.

Inflation then hit a wall starting March 2020 and stayed low until about a year later (April 2021) when the country started opening up more, COVID cases going down, and many people getting vaccinated. I only mention the last part because it did attribute to lower cases and comfortability to go out and do things.

Ever since things started trying to get back to normal starting 2Q of 2021, inflation has rapidly jumped.

If there's another Recession, inflation will drop again.

[treee]

(06-16-2022, 04:43 PM)ochocincos Wrote: While inflation rates are at their highest they've ever been, it's important to understand why (and why not).

Take a look at the numbers - https://www.usinflationcalculator.com/inflation/historical-inflation-rates/
A lot of people assume (incorrectly) that inflation happens more when democrats are in charge, and lower when republicans are.
But what actually affects it more is a healthy and growing economy.

2001-2008, you see many months where inflation was 3-5%. Those were George W. Bush years, and inflation was higher about every year compared to Obama's years.

But back in 2009, inflation was relatively 0 or even negative in some cases.
This can be attributed to the Recession striking right at the end of 2018 and Winter 2009.

As the economy picked up 2010-2012, inflation started to rise again.

2013-2016, inflation actually wasn't as high compared to 2010-2012.
In fact, 2015 was basically no inflation.

Then from 2017 up until the pandemic hit, you see inflation jumped back up to the 2.0-2.9 range pretty frequently.

Inflation then hit a wall starting March 2020 and stayed low until about a year later (April 2021) when the country started opening up more, COVID cases going down, and many people getting vaccinated. I only mention the last part because it did attribute to lower cases and comfortability to go out and do things.

Ever since things started trying to get back to normal starting 2Q of 2021, inflation has rapidly jumped.

If there's another Recession, inflation will drop again.

One notion I've heard from a lot of economists is that it is easier to get inflation under control than it is stimulate an economy; Japan's economy being a prominent example. I think this informs a lot of policy for both republicans and democrats and why they seem to be able to coordinate when it comes to combatting recession over the past couple of decades.

[Goalpost]

Well, it's obvious the stock market doesn't like the combo of negative GDP(recessionary) and high inflation. It puts the Fed in a box. I think they had to raise rates, which they did this week by 75 basis points...usually a rate hike is only a quarter point. So it is somewhat admitting they were behind the curve. Can the Fed get us out of this? I don't know. This week, the market went up the day they raised rates. Today it went down on fear of recession.

[KillerGoose]

(06-16-2022, 04:43 PM)ochocincos Wrote: Take a look at the numbers - https://www.usinflationcalculator.com/inflation/historical-inflation-rates/
A lot of people assume (incorrectly) that inflation happens more when democrats are in charge, and lower when republicans are.
But what actually affects it more is a healthy and growing economy.

Great post, ocho. I like root cause discussions like this. I wanted to add a little bit more to this particular point. Since 1960, inflation has actually been higher on average under Republican presidents (4.1%), not Democratic presidents (3.1%)

Of course, political affiliation doesn't cause it but I wanted to strengthen your point that this, among with several other partisan arguments, are not based in reality. Very rarely is something as simple as we think it is. Hence, why I enjoy these topics. They are educational. 

[*Nately120*]

(06-16-2022, 05:57 PM)KillerGoose Wrote: Great post, ocho. I like root cause discussions like this. I wanted to add a little bit more to this particular point. Since 1960, inflation has actually been higher on average under Republican presidents (4.1%), not Democratic presidents (3.1%)

That would explain why neo-cons are so dead set on linking this stuff to Biden, go figure.  Side note, isn't the best economic combo a democrat in the white house and a republican controlled house (or something to that extent)?  I guess that'd be good news when democrats take a beating in the midterms. 

Then again, it's hard to compare this new breed of GOP to the old days, so who knows what will happen.  

[SunsetBengal]

(06-16-2022, 04:43 PM)ochocincos Wrote: But back in 2009, inflation was relatively 0 or even negative in some cases.
This can be attributed to the Recession striking right at the end of 2008 and Winter 2009.

That may have been when all of the TV commentators and prognosticators started admitting that we were in a recession, but depending upon what industry you were working in those years, for some it started earlier, much earlier.

Back at that time I was self-employed as an independent tradesman in the building trades (Tile, Stone, Wood floors and staircases, etc.).  For us, the faucet (work supply) went from full blast wide-open to nothing but a trickle, heading into the last quarter of 2006.  Previous to that, I typically was working two homes at a time with an expanded, split crew. The sudden stoppage of work seemed bizarre, for the first time ever I had to tell crew that I didn't need them until things picked back up.  I was strong headed, and just transferred my efforts into commercial flooring, as retailers were still updating stores and new commercial construction was still going.  Then, when corporate chains halted updates to their stores in 2008, we knew it was real and for the long haul.

You might say it was all a blessing in disguise, because after I exhausted my savings and was doing landscape and odd jobs to make house and truck payments, I went back to school to learn a new profession.  I think that I hit it right on this one, because working in the surveying and engineering fields is somewhat recession proof, if the company you work for is tied to infrastructure projects.

I didn't mean to take this thread on a personal tangent, but my point is that I've seen this before.  We made it through then, we will again.  Now, you listed stats on political affiliation to inflationary rate trends, and that is what it is, factual data.  Where I'm going to deviate my opinion is that in this circumstance, a lot of the current fuel and supply chain issues can be attributed to the climate change-transition to green agenda and the policies that come forth from the party that supports that agenda.

I'm not here to argue about climate change, or what needs to happen to slow it.  My point is that transitional measures should not be rushed upon a society not yet fully ready for it.  The President's people say that "The President has no bearing on the price of gasoline", but his policy actions and posturing certainly do.  Allowing completion of the Keystone Pipeline and putting the brakes on the Alaskan restrictions would have went miles toward averting the situation we are currently in, or at least had mitigating effect to soften the blow.  And further on that topic, just look at how many people in Ohio were, or in some cases still are without power, from a typical Summer storm.  How are we expecting to transition to all electric vehicles and tools, when our power grid cannot even handle large storms?  Too much work to be done, before these hard line transitionary policies are implemented.

Apologies for rambling, Sunset out- 

[basballguy]

This next recession that will happen will be a collective government failure of all parties. It all boils down to how those governments chose to handle Covid.

It was the governments that decided it was a good idea to shut down businesses for extended periods of time....

Ok businesses are shut down, and people are now losing income...let's just hand out trillions of dollars in money we don't have!

Oh everyone has a sudden influx of money and are now buying things up! PPE loans, income supplements, extended unemployment benefits....cool

Now demand for goods and services is up because people are buying things and supply chains have not recovered from being shut down for 3mo - 2 years.
------------------------------------------

Inflation will remain high and we will have a economically defined recession, no doubt. This time you can't blame it on the banks, you can't blame it on a war, or greedy Wall Street investors, or a disease. This next recession will be the worlds' governments failure and overreaction to actual handling of Covid....not the sickness itself.

It's the ultimate example of government overreach and will be a wonderful case study in 10 years.

[*michaelsean*]

(06-16-2022, 05:57 PM)KillerGoose Wrote: Great post, ocho. I like root cause discussions like this. I wanted to add a little bit more to this particular point. Since 1960, inflation has actually been higher on average under Republican presidents (4.1%), not Democratic presidents (3.1%)

Of course, political affiliation doesn't cause it but I wanted to strengthen your point that this, among with several other partisan arguments, are not based in reality. Very rarely is something as simple as we think it is. Hence, why I enjoy these topics. They are educational. 

Vote Republican!  We have higher inflation, and that's a good thing!

[grampahol]

8.5% is hardly the highest our inflation rate has been in history and around the world it's downright paltry in comparison to most of the world.. 
The US is uniquely situated to withstand this way more than anywhere on earth by virtue of both our economy and our geography .. Our inflation rate has been artificially low for so long we act like any increase in prices is a constitutional crisis and some other country, no matter how weak they actually are is about to overtake us any moment. China has been our boogieman for the past few years, but it was Japan for awhile and of course the Soviets..
None of them have an economy anywhere near as strong, none have a military anywhere near as strong and nobody else except Mexico and Canada, both weak allies have a giant mote on two sides so they can't attack us...  So with no real boogieman to scare us we have to turn inward and start finding the boogieman at home and demonize each other..  Welcome to a strong America.. 

[*michaelsean*]

I do enjoy watching the champions of the middle class explain why paying more for things is not only not so bad but may actually be good for them.

[*Nately120*]

(06-26-2022, 12:09 PM)michaelsean Wrote: I do enjoy watching the champions of the middle class explain why paying more for things is not only not so bad but may actually be good for them.

I assume you're ripping on the left, but it's also interesting seeing the conservative narrative go from "the only thing standing between you and wealth is hard work" to "thanks to Biden, hard working Americans can't even afford the basic life needs."  

Pretty wacky how both political parties are essentially pointing out that Americans can still work hard and have trouble scraping by, but since they completely disagree on which of the 2 parties is to blame there is a 100% chance this pseudo-agreement will just lead to more class warfare and non-solutions.


2016
PERSON - I can't afford to pay my bills.
GOP - LAZY!!  Work harder!  Stop buying avocado toast!

2022
PERSON - I can't afford to pay my bills.
GOP - Of course you can't...Trump isn't president anymore.  Not your fault!  Bidenflation is making life miserable and impossible for hard working Americans.


Side note, from a cynical perspective the video of Trump Jr. acting like Biden's gas prices had made him have to cut back on his lifestyle was the most amusing of them all.

Anywho, back to work...

[*ochocincos*]

(06-26-2022, 08:51 PM)Nately120 Wrote: I assume you're ripping on the left, but it's also interesting seeing the conservative narrative go from "the only thing standing between you and wealth is hard work" to "thanks to Biden, hard working Americans can't even afford the basic life needs."  

Pretty wacky how both political parties are essentially pointing out that Americans can still work hard and have trouble scraping by, but since they completely disagree on which of the 2 parties is to blame there is a 100% chance this pseudo-agreement will just lead to more class warfare and non-solutions.


2016
PERSON - I can't afford to pay my bills.
GOP - LAZY!!  Work harder!  Stop buying avocado toast!

2022
PERSON - I can't afford to pay my bills.
GOP - Of course you can't...Trump isn't president anymore.  Not your fault!  Bidenflation is making life miserable and impossible for hard working Americans.


Side note, from a cynical perspective the video of Trump Jr. acting like Biden's gas prices had made him have to cut back on his lifestyle was the most amusing of them all.

Anywho, back to work...

The amusing thing about all that too is you can that same logic back at them but in regard to gasoline.
Oh, spending too much on gas? Maybe trade/sell your car/truck and get one that has better fuel economy.

We traded in our car a few weeks ago that runs on premium (didn't realize it when we bought it in 2019) and actually made ~$5k more than we bought it for. Then we got a lower cost vehicle that only takes unleaded and still has about the same quality of interior/exterior and bells & whistles, not to mention better mpg. 
Ended up saving >$100/month on the payment with only using the previous vehicle as down payment.
Also saving plenty of $$ at the pump.

Try to do what you can to save money, isn't that the conservative way?

[*ochocincos*]

(06-26-2022, 12:09 PM)michaelsean Wrote: I do enjoy watching the champions of the middle class explain why paying more for things is not only not so bad but may actually be good for them.

You'll usually see that stance from supporters of pure capitalism.
They believe it's the sign of a thriving economy and society, and it's great...until it affects things they want/need, such as gas prices, groceries, etc.

[*michaelsean*]

(06-26-2022, 09:15 PM)ochocincos Wrote: You'll usually see that stance from supporters of pure capitalism.
They believe it's the sign of a thriving economy and society, and it's great...until it affects things they want/need, such as gas prices, groceries, etc.

And yet...

[*Nately120*]

(06-26-2022, 09:15 PM)ochocincos Wrote: You'll usually see that stance from supporters of pure capitalism.
They believe it's the sign of a thriving economy and society, and it's great...until it affects things they want/need, such as gas prices, groceries, etc.

Does our current two party system even represent an option for a pure capitalism approach?  The GOP is painted as such, but their obsession with placing people born rich upon pedestals and socializing the costs of the highest earners has me more than a bit skeptical. 

[*ochocincos*]

(06-27-2022, 11:47 AM)Nately120 Wrote: Does our current two party system even represent an option for a pure capitalism approach?  The GOP is painted as such, but their obsession with placing people born rich upon pedestals and socializing the costs of the highest earners has me more than a bit skeptical. 

What I feel the GOP stance is - Look at these rich people. They got to where they're at by working as many hours as needed/wanted in order to get to their desired level of income. You too can achieve that if you just put in that much time/effort. Also, cut out "unnecessary" expenses like avocado toast to save more money.

What they don't seem to want to accept or care about:
- Wealth takes time to accumulate, and it's often passed down within the family as it accumulates. Not everyone in the family does or has to work that much once the wealth has been accumulated.
- The neighborhood, schooling system, and general environment one lives in can greatly affect their ability to start accumulating wealth. And it's not always possible to just up and leave that environment and move somewhere else like it may have used to be.
- Not everyone wants to spend a majority of their lives for years working crazy amounts of hours just to not have to live paycheck-to-paycheck.

So the short answer is no. Capitalism may work for some, but not for many others. The pure concept of higher demand, costs to make, and costs of labor resulting in increasing costs of the goods/services makes it more difficult for those consumers to afford things and build wealth.
And while the solution for some can be to put in extra hours to make more money, not everyone has the ability (or even desire) to put the same amount of time into making money. Not to mention that not every job makes about the same amount of money, so it can require even more time based on what job(s) you're doing.

[grampahol]

""
Dress sleeves to work sleeves in a couple generations..
The rich mommys and daddy's are all entering retirement. Most of their kids will blow most of the money in a generation or so.. History has proven that..
It's actually shirtsleeves to shirtsleeves in 3 generations. 1st generation builds it, 2nd runs it and 3rd spends it.. It's always been like that. 
Anyway..one very simple reason we have inflation and it's going to remain for 5-6 years is the US industrial base is all moving back to the mainland making huge investments for the factories and infrastructure. 
US, Mexico and Canada will soon be the only real viable industrial center of the universe because we're just about the only part of the world with both the money and the demographics to pull it off...plus we'll always have 2 gigantic motes known by the names of the Atlantic and Pacific oceans.   China, Russia and even Europe are in demographic hell with not enough young people and none of them have two big oceans. We are also more or less energy and food independent with advanced infrastructures that fit our systems not to mention great water navigation systems with rivers.  (except Mexico which doesn't really need it)
We just have to argue among ourselves since there really won't be any real competition in the coming decades..
Things are looking good for my kids and grandkids.  Yours too.. if we don't eat each other first..

There's a very good video about China's aircraft carrier attempts. They're just now getting around to attempting to copy our carriers after screwing around with 2 old Russian shit carriers and they haven't figured out how to use aircraft properly on them yet.. They'll always be behind us and will never rule the waves anywhere except for their own territorial waters and especially not the South China sea.. US navy will see to it..