Is Inflation Going To Cripple The Economy ?

[doublebase]

I got rid of bond funds a long time ago. They used to say keep money in bonds as it'll do the opposite of stocks, when stocks are down, bonds will be up and vice versa, But lately they're in lock step so why bother locking in a lower rate of return. I've basically pared my holdings down to a large chunk of the S&P 500 and the rest in funds that tend to track the Nasdaq more. I guess we'll see what happens and as the saying goes from a guy falling out of a window before hitting ground, so far so good...

Yeah I have myself set up in mostly an s&p index, then real investment trusts, a target date retirement fund (but I extended it way out to so it wouldn’t be conservative), healthcare funds, metals, and growth funds. Up 22% this year even with two bond indexes dragging me down. But who knows what the future holds.

 

[Dave Hess]

Like I said, easily demoralized. Other countries have gone even higher as a percentage of GDP.

S&P 500 is now up over 24.5% now.

There's been inflation before in the 4-6% range and the world/economy didn't end.

https://www.usinflationcalculator.com/inflation/historical-inflation-rates/

S&P 500 performance means nothing if your kids are hungry and refrigerator is empty.....

 

[CharlesInCharge]

Sad state of affairs when you NEED a 25% return to beat back inflation.

 

[JHZR2]

ahem.. like New Jersey?

NJ has high costs of living. High property tax for sure… The high property taxes do temper housing prices somewhat, because they erode buying power. The difference is that there aren’t a ton of places paying sky high salaries for work that would be billed much cheaper elsewhere. People in NJ tend to be more affluent overall than many other places, but it’s a different level compared to the Bay Area.

 

[Cujet]

What is our national debt today?
What was our national debt during Vietnam?

Real numbers and as a % of GDP please.

You got me thinking to search for images of: “inflation adjusted graph”. Down the rabbit hole I went!

Fascinating To a nerd like me.

 

[E365]

I saw someone in another thread suggest auto parts have gotten cheaper, so I looked up some old receipts. Sure enough, in many cases (not all) things are cheaper than they used to be.

27 Aug 2016: I bought a Saleri brand water pump for one of my MINI Coopers. $55.00 at Pelican Parts. Exact same part today at Pelican is $44.50

8 Aug 2019: Advic Brakes Pads at RockAuto: $50.79. Today, exact same price. Raybestos rotors were $49.89, today $48.79.

22 Mar 2020: MANN Cabin Filter. $12.45 at RockAuto. Today $11.83.

7 Oct 2019: Pagid Rotors at RockAuto $20.79. Today $19.52.

26 Oct 2020: Brake wear sensor $17.44 at NAPA. Today it’s $13.99

Tons more air/cabin/oil filters, belts, etc. cheaper today than anytime in the last 3-4 years.

 

[CharlesInCharge]

That's weird. Almost everything on Amazon has gone up a lot in my buying history, or it's unavailable.

I just looked and here's a sample of my Amazon account for purchases over the last few years.
Schrade Schf36 knife: 2016: $21.98. Today: $26.50 20% increase.
Schrade Sch52 knife: 2016: $30.92 Today: 35.45 13% increase.
Fiscars 15" ax: 2019: $35. Today, unavailable at Amazon. At Farm and Fleet it's $41, a 15% increase.
Sandisc 32gb micro SD card: 2019: $7 Today. $12. 42% increase in 2 years.
Fiscars 28" ax: 2020: $38. Today: $44.50. A 15% increase in 1 year.
Wire dog kennel: 2020: $58. Today: Unavailable.
Gorilla locking lug nuts: 2019: $14. Today. $16.50. A 15% increase in 2 years.
Apeman Dash Cam: 2019: $45. Today. Unavailable.
Locking gas cap: 2019: $9.50. Today. $14. A 33% increase in 2 years.
Energizer 10-pack lithium coin batteries: 2019: $4. Today: $10. A 60% increase in 2 years.
Router bits set #1: 2019: $17. Today, unavailable.
Router bits set #2: 2019: $22. Today: $32. That's a 32% increase in 2 years.
Stanley Jump Starter: 2020: $65. Today, unavailable.
PCV: 2020: $8. Today: $10. An increase of 20% in 1 year.
Picklefork tool set: 2022: $31. Today: $45. Increase of 32% in 1 year.
Serpentine belt: 2020: $21. Today: $26. An increase of 20% in 1 year.
Fuel filter: 2020: $11. Today: $14. A 32% increase in a year.
Brake fluid tester pen: 2020: $11. Today, unavailable.
Sandisk memory cards: 2020: $6. Today, unavailable.
Spark plug wire set: 2020: $26. Today: $37. A 30% increase in 1 year.
Spark plugs, each: 2021: $7. Today: $12. A 62% increase in 1 year.
Cold Steel Survivalist knife: 2020: $60. Today, unavailable.
Cold Steel SRK knife: 2020: $33. Today: $43. A 23% increase in 1 year.


Everything else I randomly sampled in my buying history in the last few years is quite close in price, but a few items went down in price;
AC Delco power ratchet was $72 in 2020 but $70 today. About 1.5% less.
Serpentine belt went down from $29 to $28 from last year, about 3%.
A PCV went down $1 from $10 to $9 in a year, for 10% difference.

In fairness, companies like Amazon have daily price swings so it's hard to hit it with precision but the trend on my Amazon account is most items are up significantly or not available.

 

[eljefino]

I saw someone in another thread suggest auto parts have gotten cheaper, so I looked up some old receipts. Sure enough, in many cases (not all) things are cheaper than they used to be.

As a car ages its parts seem to get cheaper. Maybe the factories cranking them out have paid off their R&D or maybe there are other intellectual property reasons.

That being said, as a whole, parts are cheaper. I did my first oil change in 1999 and the Champ labs filter was $1.97. I can get them, shipped, from Rockauto for less now 22 years later!

 

[B1974]

Almost everything on Amazon has gone up

I wouldn't link inflation to Amazon prices. As more people shop on Amazon their prices will go up. I'm finding myself buying more form local stores so that they can stay in business and I have more buying options.

 

[Scott S]

I'm 51 years old, I'm living on social security, unfortunately I was made to go out of work 10 years ago due to COPD and asthma. It's getting very difficult, to live on social security , I have a lot of medications obviously they all have co-pays, social security goes up, but so does Medicare.. that's a losing battle so you don't see anything in your social security check.. I used to maintain my own vehicles for years.. I'd be lucky if I could change my own oil anymore.. with the rise in the economy, nothing goes in my bank anymore, everything just goes right out towards food, rent and bills.. every time I plan on putting brakes and rotors on my car, all I do is just put it on the back burner.. because obviously today's the 3rd, time for rent.. you think the government, would actually give people on social security an extra something every month. My car sits more than half the time, gas is at 3.40 a gallon I can't afford to put gas in it.. just very depressing.. sometimes got to use credit cards, but obviously you got to be careful with that.. because that can get you in trouble.. sorry for the rant, just everything is just very depressing these days..my health, economy... It's going to get worse before it gets better..

 

[Wolf359]

I'm 51 years old, I'm living on social security, unfortunately I was made to go out of work 10 years ago due to COPD and asthma. It's getting very difficult, to live on social security , I have a lot of medications obviously they all have co-pays, social security goes up, but so does Medicare.. that's a losing battle so you don't see anything in your social security check.. I used to maintain my own vehicles for years.. I'd be lucky if I could change my own oil anymore.. with the rise in the economy, nothing goes in my bank anymore, everything just goes right out towards food, rent and bills.. every time I plan on putting brakes and rotors on my car, all I do is just put it on the back burner.. because obviously today's the 3rd, time for rent.. you think the government, would actually give people on social security an extra something every month. My car sits more than half the time, gas is at 3.40 a gallon I can't afford to put gas in it.. just very depressing.. sometimes got to use credit cards, but obviously you got to be careful with that.. because that can get you in trouble.. sorry for the rant, just everything is just very depressing these days..my health, economy... It's going to get worse before it gets better..

I believe social security COLA will increase by 5.9% in 2022.

https://www.ssa.gov/cola/

 

[Scott S]

Thank you, yes I'm aware that..

 

[hrv]

That's weird. Almost everything on Amazon has gone up a lot in my buying history, or it's unavailable.

I just looked and here's a sample of my Amazon account for purchases over the last few years.
Schrade Schf36 knife: 2016: $21.98. Today: $26.50 20% increase.
Schrade Sch52 knife: 2016: $30.92 Today: 35.45 13% increase.
Fiscars 15" ax: 2019: $35. Today, unavailable at Amazon. At Farm and Fleet it's $41, a 15% increase.
Sandisc 32gb micro SD card: 2019: $7 Today. $12. 42% increase in 2 years.
Fiscars 28" ax: 2020: $38. Today: $44.50. A 15% increase in 1 year.
Wire dog kennel: 2020: $58. Today: Unavailable.
Gorilla locking lug nuts: 2019: $14. Today. $16.50. A 15% increase in 2 years.
Apeman Dash Cam: 2019: $45. Today. Unavailable.
Locking gas cap: 2019: $9.50. Today. $14. A 33% increase in 2 years.
Energizer 10-pack lithium coin batteries: 2019: $4. Today: $10. A 60% increase in 2 years.
Router bits set #1: 2019: $17. Today, unavailable.
Router bits set #2: 2019: $22. Today: $32. That's a 32% increase in 2 years.
Stanley Jump Starter: 2020: $65. Today, unavailable.
PCV: 2020: $8. Today: $10. An increase of 20% in 1 year.
Picklefork tool set: 2022: $31. Today: $45. Increase of 32% in 1 year.
Serpentine belt: 2020: $21. Today: $26. An increase of 20% in 1 year.
Fuel filter: 2020: $11. Today: $14. A 32% increase in a year.
Brake fluid tester pen: 2020: $11. Today, unavailable.
Sandisk memory cards: 2020: $6. Today, unavailable.
Spark plug wire set: 2020: $26. Today: $37. A 30% increase in 1 year.
Spark plugs, each: 2021: $7. Today: $12. A 62% increase in 1 year.
Cold Steel Survivalist knife: 2020: $60. Today, unavailable.
Cold Steel SRK knife: 2020: $33. Today: $43. A 23% increase in 1 year.


Everything else I randomly sampled in my buying history in the last few years is quite close in price, but a few items went down in price;
AC Delco power ratchet was $72 in 2020 but $70 today. About 1.5% less.
Serpentine belt went down from $29 to $28 from last year, about 3%.
A PCV went down $1 from $10 to $9 in a year, for 10% difference.

In fairness, companies like Amazon have daily price swings so it's hard to hit it with precision but the trend on my Amazon account is most items are up significantly or not available.

That's weird. Almost everything on Amazon has gone up a lot in my buying history, or it's unavailable.

I just looked and here's a sample of my Amazon account for purchases over the last few years.
Schrade Schf36 knife: 2016: $21.98. Today: $26.50 20% increase.
Schrade Sch52 knife: 2016: $30.92 Today: 35.45 13% increase.
Fiscars 15" ax: 2019: $35. Today, unavailable at Amazon. At Farm and Fleet it's $41, a 15% increase.
Sandisc 32gb micro SD card: 2019: $7 Today. $12. 42% increase in 2 years.
Fiscars 28" ax: 2020: $38. Today: $44.50. A 15% increase in 1 year.
Wire dog kennel: 2020: $58. Today: Unavailable.
Gorilla locking lug nuts: 2019: $14. Today. $16.50. A 15% increase in 2 years.
Apeman Dash Cam: 2019: $45. Today. Unavailable.
Locking gas cap: 2019: $9.50. Today. $14. A 33% increase in 2 years.
Energizer 10-pack lithium coin batteries: 2019: $4. Today: $10. A 60% increase in 2 years.
Router bits set #1: 2019: $17. Today, unavailable.
Router bits set #2: 2019: $22. Today: $32. That's a 32% increase in 2 years.
Stanley Jump Starter: 2020: $65. Today, unavailable.
PCV: 2020: $8. Today: $10. An increase of 20% in 1 year.
Picklefork tool set: 2022: $31. Today: $45. Increase of 32% in 1 year.
Serpentine belt: 2020: $21. Today: $26. An increase of 20% in 1 year.
Fuel filter: 2020: $11. Today: $14. A 32% increase in a year.
Brake fluid tester pen: 2020: $11. Today, unavailable.
Sandisk memory cards: 2020: $6. Today, unavailable.
Spark plug wire set: 2020: $26. Today: $37. A 30% increase in 1 year.
Spark plugs, each: 2021: $7. Today: $12. A 62% increase in 1 year.
Cold Steel Survivalist knife: 2020: $60. Today, unavailable.
Cold Steel SRK knife: 2020: $33. Today: $43. A 23% increase in 1 year.


Everything else I randomly sampled in my buying history in the last few years is quite close in price, but a few items went down in price;
AC Delco power ratchet was $72 in 2020 but $70 today. About 1.5% less.
Serpentine belt went down from $29 to $28 from last year, about 3%.
A PCV went down $1 from $10 to $9 in a year, for 10% difference.

In fairness, companies like Amazon have daily price swings so it's hard to hit it with precision but the trend on my Amazon account is most items are up significantly or not available.

I believe social security COLA will increase by 5.9% in 2022.

https://www.ssa.gov/cola/

 

[hrv]

I believe social security COLA will increase by 5.9% in 2022.

https://www.ssa.gov/cola/

That is fine but all that is to keep you above water. Inflation gas gone up more than that. I am 67 and on SS and am thankful for it but some people I have seen online think of this as a pay raise..it is not it is because of inflation just in the past year and I agree it is going to get a lot worse before it gets better...

 

[wpod]

I believe social security COLA will increase by 5.9% in 2022.

https://www.ssa.gov/cola/

That is like a minimum wage worker thinking $15.00 per hour will allow more tat money even though the cost of everything is sky rocketing.

 

[alarmguy]

Is inflation and the lack of supply going to cripple the economy. It looks like prices of everything are going up and companys continue to raise wages and offer bonuses to get people to work. Thoughts.

Its an interesting subject for sure, after all there isnt much to compare what took place around the world in the last 2 years.

My thoughts are supply and demand rules, demand is off the charts for products and companies are unable to supply their own products, especially electronics. Good god, I was just "looking" at maybe replacing the AVR in our home theater set up for no other reason then "because" it has been a while. I was shocked to see out of stock on multiple brands and their respective company websites. I didnt know the "chip shortage" affected them, its not only cars.
Anyway, I look at this as a good sign, inflation, strong consumer demand and possibly even higher inflation to come without products to meet that demand. Interest rates will rise but already are way too low anyway so I could care less. If rates go through the roof the stock market will come down from its fairy tail levels as well.

Im babbling on, my answer is, the economy is crippled and why prices are rising, products scarce and entry level workers unwilling to work unless double the minimum wage and 35 to 40K income making latte's in Starbucks.
We need higher prices, higher interest rates and people to start understanding/ starving if you will to learn life is about hard work and taking charge of your own life to make it happen. Too much government interference around the world printing phony money to placate the young, sooner or later the phony money will be realized for what it is, worthless.

Ahhhh ... back to supply and demand, the basics of life on this planet will always return to its nest no matter how much the public demands "governments" do something about it. You can't artificially control something forever and its REALLY gone to an extreme.
As people starve and cant afford basic food and water, prices will settle down, people will be willing to work for less, people who save money the old fashion way, saving in a savings account or likewise will be rewarded vs fairytale land controlled by governments to keep the people happy, it cant go on forever.

(this is not a political position simply a world wide issue, lets keep it general because it really is world wide)

 

[alarmguy]

That is fine but all that is to keep you above water. Inflation gas gone up more than that. I am 67 and on SS and am thankful for it but some people I have seen online think of this as a pay raise..it is not it is because of inflation just in the past year and I agree it is going to get a lot worse before it gets better...

I think 5.9% increase is correct and the same formula is always used, if inflation continues the next increase is only 12 months away. I think it is also very easy for someone who has planned a retirement to cut 6% out of a household budget if they wish but that's my thoughts. We are soooooo wasteful in our spending.

The problem many people seem to have, at least reading some posts in here (not yours) people look to Social Security as their main source of income when it was never, ever designed for that purpose. Its a supplement and that is it.

The young need to be educated when in High School about managing money so they understand they are responsible for their own self being and no one else. With every paycheck from a young age, money needs to be set aside for their own future security.

 

[BlueOvalFitter]

Is inflation and the lack of supply going to cripple the economy. It looks like prices of everything are going up and companys continue to raise wages and offer bonuses to get people to work. Thoughts.

I would truly get a permanent vacation from here if I were to give my answer.

 

[hrv]

Its an interesting subject for sure, after all there isnt much to compare what took place around the world in the last 2 years.

My thoughts are supply and demand rules, demand is off the charts for products and companies are unable to supply their own products, especially electronics. Good god, I was just "looking" at maybe replacing the AVR in our home theater set up for no other reason then "because" it has been a while. I was shocked to see out of stock on multiple brands and their respective company websites. I didnt know the "chip shortage" affected them, its not only cars.
Anyway, I look at this as a good sign, inflation, strong consumer demand and possibly even higher inflation to come without products to meet that demand. Interest rates will rise but already are way too low anyway so I could care less. If rates go through the roof the stock market will come down from its fairy tail levels as well.

Im babbling on, my answer is, the economy is crippled and why prices are rising, products scarce and entry level workers unwilling to work unless double the minimum wage and 35 to 40K income making latte's in Starbucks.
We need higher prices, higher interest rates and people to start understanding/ starving if you will to learn life is about hard work and taking charge of your own life to make it happen. Too much government interference around the world printing phony money to placate the young, sooner or later the phony money will be realized for what it is, worthless.

Ahhhh ... back to supply and demand, the basics of life on this planet will always return to its nest no matter how much the public demands "governments" do something about it. You can't artificially control something forever and its REALLY gone to an extreme.
As people starve and cant afford basic food and water, prices will settle down, people will be willing to work for less, people who save money the old fashion way, saving in a savings account or likewise will be rewarded vs fairytale land controlled by governments to keep the people happy, it cant go on forever.

(this is not a political position simply a world wide issue, lets keep it general because it really is world wide)

But this is not what I dont understand.. Today on the radio they said that gas has gone up 42 percent since last year and the current admin. will be talking to opec and russia about increasing production....but this same admin stopped the pipeline in the northern US and have stop oil exploration in the US....I dont get it last year we were producing all the oil we need in the US and now we have to go to OPEC...also I see that natural gas has just gone up a bunch also...I dont get it...The line are you better of this year vs last year moneywise....Hell no...

 

[PimTac]

I think 5.9% increase is correct and the same formula is always used, if inflation continues the next increase is only 12 months away. I think it is also very easy for someone who has planned a retirement to cut 6% out of a household budget if they wish but that's my thoughts. We are soooooo wasteful in our spending.

Times like this will force people to look at their spending habits sooner or later. Some have been raised in a protective environment sheltered from bad news and mollycoddled all their lives. Suddenly they cannot but their favorite brand of whatever and they panic.

Starting back in the sixties we were taught two questions.

Do you really need it?

Do you absolutely have to have it?

Along with driving less, eating cheaper, and conserving energy we made it through a long and tough period in this country.