Is Inflation Going To Cripple The Economy ?

[Kruse]

Haven't seen used car doubling in price, maybe if you're buying 1k beaters but not in the 5-10k range, those are more like 25-50%. Gas might be more like 50%, but gas prices have gone up and down independent of inflation. All real estate is local and while housing is up in some markets, it's down in others. Single families and multifamilies are in demand but not as much for condos. Rents are actually down around me as people fled the city for the suburbs.

The truth is that your numbers are way off.

 

[pghvolvo]

Just remember they just increased the benefits on the EBT cards by 25% last month, so what is the real number on inflation coming out of Washington? As far as wages and price increases go what is the number where the consumer says enough is enough we're not paying those prices and stop buying?

I saw shrinkflation last week first hand. I stopped in a Dollar General and decided to grab a bag of Ruffles Potato Chips and a container of French onion dip. While I was home eating them I just happened to notice the price and the volume on the bag. Last time I bought a bag of chips it had to be at least six months ago and I know there was 9.0 oz in that bag and it was $4.19. This new bag was now 8.5 oz and the price was $4.59. Doing the math shows in the last six months a bag of potato chips has jumped 7.4445 cents per oz or 16%.

Have any of you been paying attention to what is getting hammered in the stores around you? Flour, Sugar, Canning Supplies like Ball Jars, large bags of rice, canned meats, vegetables and canned fruit? Seen the price jump on Amazon for pressure Canning units? Someone was complaining about the cost of one so I decided to check it out myself. Locally the price of a Presto 16qt Pressure Canner is $99.99 at my local Tractor Supply and Rural King stores. On Amazon you can't get Presto 16 qt canner for under $120 and some are selling it for as high as $137 and up to $179. Even Walmart is asking $124 for that same pressure canner. Why, DEMAND?

Hummmm maybe people are seeing the writing on the wall and preparing for whats coming. Go buy a chest freezer or stand up freezer and see how long it takes for it to get delivered? Probably three, four, five, six weeks until the store can get it to you? I have seen at least three large chest freezers getting delivered to homes around me in the last few months, while driving around. I'm betting there are a whole lot more getting moved into peoples homes that I haven't seen. I couldn't tell you the last time I saw one of those appliances getting unloaded off a delivery truck. Yet in the last month or two I've seen three getting delivered? Pay $12-$14 for meat at your local grocery store or buy 1/2 a cow for $4-$5 per pound your choice.

 

[PWMDMD]

I'm towards the end of my very unique 45 year career, salaried, and I tend to be a "pleaser" type. I had a period when I believed my workplace (a few select supervisors) appreciated my devotion and extra effort. I think that has changed and the "part number" comment applies more.

I have mostly followed advice I received 2 years into my career: "Work hard to please yourself and most other aspects will fall in line. Working hard to please others almost never results in satisfaction."

Still, it is a bit numbing to accept the "part number" aspect of one's career.

As an employer, this goes both ways. My business partner and I have always gone out of our way to pay our employees well, give them an incredibly good benefits package, keep work light and fun, and while they always seem to appreciate it at the moment, sooner or later, it usually comes down to what have you done for me lately? Even when you've done quite a lot for them lately.

We used to call ourselves "a family" at work and my partner and I really thought of it that way. As time goes on my new attitude is you work, I pay you, I will continue to try and show my appreciation for you but I'm never surprised when someone's work ethic starts to fall off which is usually the first sign that they are leaving. I don't ask people to give me any more than the job requires either. It is a business transaction. If you're happy...stay. If you're not happy...go somewhere else and try and find happiness. We will replace you and be just fine without you. That's life...

 

[CharlesInCharge]

My original point was, Silicon Valley is an increible place, full of opportunity. But there is no magic.

With respect, Silicon Valley economics apply almost nowhere else in the world or in the country.

Company valuations off the charts thru, indeed, the "magic" of the microchip and other things. People that live and work there are beyond out of touch with the rest of the country and world. Few other professions return 100000% on investments in capital or work or products. That's a fact. I'm not saying that to be argumentative or rude, it's just the reality.

The folks at a few key companies, Google, Tesla, Apple, etc. in that industry have become the richest folks in the world and human history, in just a couple decades of "work" ... These opportunities are very specialized and located in a very small segment of the nation.

Case in point, you've shared your hard luck rags to riches story before. From penniless to now obviously extremely wealthy with some 8 cars probably alone worth a quarter million dollars, very valuable property, and so forth. Having not gotten a degree until you were 40. That's a very unique and not common success story, made possible by hard work but also mostly luck picking an industry and timing the markets...

My point isn't to attack you. I admire the success, and I have had some myself. But the point of this is a discussion on inflation and how probably 90% of the nation's population are going to get our backs broken by inflation and reckless policies and spending driving up the costs of everything while destroying our savings.

 

[Job]

Not entirely sure what that means.

My observation is that your area is a place with obnoxious prices on housing. Taxed quite a bit, high cost of living. Then to get talent some companies have to pay obnoxious salaries that arent really commensurate with what they would command elsewhere. Meanwhile, you still have the minimum wage earners, you have an abundance of junkies and homeless, and a lot of folks who have a hard time making ends meet, or who are stuck with mortgages that they’ll never pay off, keeping up with them on the glimmer that they’ll keep going up, and thus people can cash out. Folks just hope they won’t be the folks will be left holding the bag.

Obviously it is working well enough, like many other areas with obnoxious housing prices, or obnoxious taxes, or both. Places with wealth draw more people, including those who don’t have it.

Its like Manhattan. Mega high cost for nice places, a bunch of ultra high earners, but there are still tons of regular and minimum wage folks, and lots of people commute long ways. It works for who it works for.

If you have a high salary because of high costs, it’s likely there is also more discretionary income. While relatively, taxes on say, gasoline are high in CA, or NY, the reality is that the commodity price isn’t that different. The cost of materials, of cars, computers, etc,mare trucks really that much more.

When inflation comes, high earners anywhere have more discretionary to eat the cost increases. Your area, or any other such area. Places with high income and low other costs will probably fare better, because the high earners won’t be beholden to as high of taxes and real estate costs. And the companies, which can only pay the obnoxious salaries because they can, will also need to tighten belts. Thats a harder pill to swallow when the income levels and financial obligations are further out from relaity…

Many homeowners in the wealthiest parts of the Silicon Valley are not wealthy at all. They have their prop 13 taxes, house paid for, and a small retirement. They could get some nice money and move away is their only option. Costs aren’t really any higher for food etc. Their low income kids can inherit the prop 13 tax, move in the house, which they often do, and the story goes on and on.

 

[PimTac]

Silicon Valley is a anomaly and not representative of the rest of the country.

A personal observation here, at a restaurant recently I saw on the menu a cheeseburger with fries for $16. Want bacon? That was $2 more. This restaurant was not a high class place and the food wasn’t all that great either. Pretty much a one time stop for us.

A restaurant we do go to often wants $12 for a bacon cheeseburger. That’s the reality these days.

 

[JeffKeryk]

With respect, Silicon Valley economics apply almost nowhere else in the world or in the country.

Company valuations off the charts thru, indeed, the "magic" of the microchip and other things. People that live and work there are beyond out of touch with the rest of the country and world. Few other professions return 100000% on investments in capital or work or products. That's a fact. I'm not saying that to be argumentative or rude, it's just the reality.

The folks at a few key companies, Google, Tesla, Apple, etc. in that industry have become the richest folks in the world and human history, in just a couple decades of "work" ... These opportunities are very specialized and located in a very small segment of the nation.

Case in point, you've shared your hard luck rags to riches story before. From penniless to now obviously extremely wealthy with some 8 cars probably alone worth a quarter million dollars, very valuable property, and so forth. Having not gotten a degree until you were 40. That's a very unique and not common success story, made possible by hard work but also mostly luck picking an industry and timing the markets...

My point isn't to attack you. I admire the success, and I have had some myself. But the point of this is a discussion on inflation and how probably 90% of the nation's population are going to get our backs broken by inflation and reckless policies and spending driving up the costs of everything while destroying our savings.

My point exactly. In most of the world, my life would have been much different. I am one of the lucky ones and I know it.
Where else do you join AA at 33, get your 1st degree at 40 and go from homeless to being able to help others?

Regarding inflation, yes it is a problem that can cripple many families. I wish them luck and please keep pushing ahead. To that end, I believe with wealth comes responsibility. That's my opinion.

 

[pghvolvo]

@PWMDMD been their done that and they still never appreciate what you do for them until they leave. I'm so glad that I'm retiring next year because running a business in this environment just isn't worth the trouble anymore. I have a buddy that owns a plumbing company that's been in business since the 1940's and he's seriously looking at closing up shop in Jan 2022.

He said I can make more money working at the local McDonald's which is offering $22 and hour, full medical, 401K and a bus pass than owning this place. Same problem as everyone else is having, he can't find employees who want to work. One of his plumbing competitors was offering a $10,000 bonus to come work for them, they got ZERO applications.

I've lost seven employees since summer of 2018 and found two, to replace them. Those that left, three aren't really working anymore they're sitting at home collecting Welfare or working under the table somewhere, one went back to school, the other three are making less money than they made working for me. Six walked out with an attitude, burning their bridges, because they all thought they could make a lot more money elsewhere. The one that went back to school is the only employee of the seven that left on good terms. Reality is a real eye opener when the grass really isn't greener on the other side of the fence.

 

[JeffKeryk]

Silicon Valley is a anomaly and not representative of the rest of the country.

A personal observation here, at a restaurant recently I saw on the menu a cheeseburger with fries for $16. Want bacon? That was $2 more. This restaurant was not a high class place and the food wasn’t all that great either. Pretty much a one time stop for us.

A restaurant we do go to often wants $12 for a bacon cheeseburger. That’s the reality these days.

My point as well. While not for everyone, it is a place of incredible opportunity.
Where did you pay $16 for a burger and fries? That's simply ridiculous. I wouldn't eat there.

 

[CharlesInCharge]

Silicon Valley is a anomaly and not representative of the rest of the country.

A personal observation here, at a restaurant recently I saw on the menu a cheeseburger with fries for $16. Want bacon? That was $2 more. This restaurant was not a high class place and the food wasn’t all that great either. Pretty much a one time stop for us.

A restaurant we do go to often wants $12 for a bacon cheeseburger. That’s the reality these days.

I have always lived on a tight budget. I remember 15 years ago, I could get a good meal for $5. Now the identical meal is $15-20. Yes, that extra $10-15 is trivial but it represents the COSTS of living. That's a 300%to 400% increase in 15 years.

Another example. I was shopping for coffee filters at Walmart recently. A 100 pack used to be $1. Now the same package is $1.40. Again, a trivial 40 cents that most won't notice. But when your shopping cart is filled with $1400 of groceries today, that cost $1000 just last year, it's a back breaker. That represents a 40% increase in 1 year.

These increases are across the spectrum on all products I buy or consider buying. Milk, meat, dry goods, guns, ammunition, car parts, laundry soap, shoes, clothing, lumber, fuel, energy, etc. In fact, I buy MOST of my durable goods used, and even used prices have doubled in the last year. Used jeans used to be $5, now they're $10+. Used compact discs were 25 cents to $1 last year, now regularly $2. And on, and on, and on...

What that means is that it's gotten a LOT more expensive to live and survive and most people's wages cannot keep up.

 

[PimTac]

I have always lived on a tight budget. I remember 15 years ago, I could get a good meal for $5. Now the identical meal is $15-20. Yes, that extra $10-15 is trivial but it represents the COSTS of living. That's a 300%to 400% increase in 15 years.

Another example. I was shopping for coffee filters at Walmart recently. A 100 pack used to be $1. Now the same package is $1.40. Again, a trivial 40 cents that most won't notice. But when your shopping cart is filled with $1400 of groceries today, that cost $1000 just last year, it's a back breaker. That represents a 40% increase in 1 year.

What that means is that it's gotten a LOT more expensive to live and survive and most people's wages cannot keep up.

And you see that kind of inflation pretty much across the board now so the idea that it is 5.4% is ridiculous.

A year ago we could buy Maruchan instant ramen at five for $1. It is now three for $1.

Now if you think things are expensive now, wait until you have to pay for all this stuff being handed out. (Taxes). As I said in another thread, nothing is free.

Finally, I had a talk with my financial advisor a couple of months back and the number one topic by far from investors is ,,,,,inflation.

 

[CharlesInCharge]

I moved to a new area into a "short term" rental, with a goal of watching the market and finding a place I would ultimately buy.

House prices jumped in 1 year by an average of 50% to 100%, due to shortages but also inflation and also low interest rates which have been dropped to keep the economy moving.

What that means is that it moves every home that was previously in my grasp, to way beyond my grasp. And severe downward pressure and decreases in quality of new constructs as builders cut corners b/c of too-much demand. So everyone basically moves "down" a few tiers from their prior purchase ability.

People formerly looking at $1 million homes, now looking at $600k houses valued at $1 million.
People formerly looking at $300,000 homes, now eating up all the $200,000 homes.
Folks who might have been able to buy a $200k house, now renting in lower middle class neighborhoods.

The downward pressure is staggering. Elsewhere, home materials prices have soared as people fix up houses, and I've heard that junk yards are being picked clean of anything useful as people repair and keep cars maintained rather than new... it's not all inflation, some of it is due to handouts, some is due to shortages, etc. But whatever it's called, it's a back breaker for the working and middle and lower classes.

 

[Dave Hess]

@PWMDMD been their done that and they still never appreciate what you do for them until they leave. I'm so glad that I'm retiring next year because running a business in this environment just isn't worth the trouble anymore. I have a buddy that owns a plumbing company that's been in business since the 1940's and he's seriously looking at closing up shop in Jan 2022.

He said I can make more money working at the local McDonald's which is offering $22 and hour, full medical, 401K and a bus pass than owning this place. Same problem as everyone else is having, he can't find employees who want to work. One of his plumbing competitors was offering a $10,000 bonus to come work for them, they got ZERO applications.

I've lost seven employees since summer of 2018 and found two, to replace them. Those that left, three aren't really working anymore they're sitting at home collecting Welfare or working under the table somewhere, one went back to school, the other three are making less money than they made working for me. Six walked out with an attitude, burning their bridges, because they all thought they could make a lot more money elsewhere. The one that went back to school is the only employee of the seven that left on good terms. Reality is a real eye opener when the grass really isn't greener on the other side of the fence.

Owning a business is very difficult if your employees don’t want to work..... not to mention all the regulations, taxes, debt, overhead, stress, aggravation and never ending problems.

I own a very small LLC.

.

 

[CharlesInCharge]

I need one of those "slave labor" NFL starting running back positions. A lowly $8 million per year.... lol

Just pointing out there's a large segment of society that is just so glaringly out of touch with reality.

 

[GMFan]

I'm towards the end of my very unique 45 year career, salaried, and I tend to be a "pleaser" type. I had a period when I believed my workplace (a few select supervisors) appreciated my devotion and extra effort. I think that has changed and the "part number" comment applies more.

I have mostly followed advice I received 2 years into my career: "Work hard to please yourself and most other aspects will fall in line. Working hard to please others almost never results in satisfaction."

Still, it is a bit numbing to accept the "part number" aspect of one's career.

Morale at most jobs seems to be bad right now. The "do more with less and the beatings will continue until morale improves" mentality is quite pervasive right now - hence strikes, walkouts, etc. My wife is in healthcare and what is going on right now in that industry is downright scary - people in healthcare are quitting left and right. When times are bad employees are told they are lucky to have a job and when money pours in we are told its to save the company money for a rainy day or blame on a virus which doesn't seem to hamper lines out the door of customers.

Perhaps people have realized a lot of material junk isn't worth both parents working and you can be happier without junk that a 2nd career may provide. You can't put a price on spending more time on family.

I predict labor shortages to continue and wages to rise - but only for those entering the work force or switching jobs. Wage increases will not nearly be enough to keep up with the inflation. If you're in a crummy job the time to get out is now. Quality of life for the average working family will drop, and many people will decide to go deeper into debt to keep up their quality of life. I'll just cut my quality of life as necessary to avoid any form of debt and just deal with it.

When I go to a restaurant and they have a sign saying "please be patient as we have a worker shortage" I walk out. Don't blame your lack of decent pay or loyalty to your employees for poor service. When the shutdowns happened, the good employers kept their staff and sacrificed and retained those workers (loyalty) and now they can operate normally. Those employers who dumped employees like a rented mule are now dealing with not being able to hire back. You reap what you sow. Loyalty goes both ways.

 

[PandaBear]

Many homeowners in the wealthiest parts of the Silicon Valley are not wealthy at all. They have their prop 13 taxes, house paid for, and a small retirement. They could get some nice money and move away is their only option. Costs aren’t really any higher for food etc. Their low income kids can inherit the prop 13 tax, move in the house, which they often do, and the story goes on and on.

Prop 13 is a rent control of property tax. Nothing more nothing less. People in the past ask for it as the home price increase leads to people not able to afford the property tax and the state gov refuse to lower the percentage or cap it. It was a "small government thing" to do and in the end we cannot take it away like any other handouts or tax cut once given (despite it is a small gov voter base asking for a big gov policy that benefits them). Human nature is human nature.

This is why you see a lot of people sitting on 3M home they bought in 1980s for 120k and are now paying a 120k + inflation (i.e. 3-5% increase per year) property tax on a valuation today of 300k instead of 3M. They do not have the incentive to sell their home and move somewhere cheaper, and people who wants to move in would need to pay an arm and a leg to motivate the sales.

I am sure you know those wealth are nothing more than luck, and you cannot predict the future, and one of the main reason why it is expensive to live here and people get paid a lot here.

 

[PandaBear]

I need one of those "slave labor" NFL starting running back positions. A lowly $8 million per year.... lol

Just pointing out there's a large segment of society that is just so glaringly out of touch with reality.

Is it really out of touch though? The rest of the world has high housing cost and high fuel cost, and people are not expecting the US lifestyle of guns and ammos with rural housing and driving $50k crewcab pickup with 20mpg everywhere. Who is out of touch depends on who you are comparing to and what you are used to.

How much do you want to pay people? How much do you want to make? If you didn't get the offer or get laid off, or if you cannot find suitable people to work for you for long term, the it is out of touch with reality.

As to why NFL guy gets 8M, do you think they would make 8M if nobody wants to watch him pay? Would a high school running back be able to get 8M + profitable return on viewership and product advertisement?

 

[Chris142]

Where did you pay $16 for a burger and fries? That's simply ridiculous. I wouldn't eat there.

Pretty common here. With the cost of food,wages,gas etc sky high a restaurant can't serve quality food for less. You can buy a burger made from a nasty pre made patty for a little less

 

[ripcord]

I'm convinced that a lot of the labor market problem is largely cultural. The availability and immediacy of entertainment media today compared with a generation ago is flabbergasting and also massively addicting. With a majority of the country staying home for a year binge watching whatever suits their fancy and stoking the flames of their internet addictions (subsidized by the government) its amazing to me that we don't have an even bigger labor shortage.

It's hard to go to an 8 hour a day job stocking shelves or driving a delivery truck when you've got the attention span of a flea due to your TikTok addiction. Plus it's hard to deal with your sucky life when everybody you know is having such a great time (as seen on their social media accounts).

 

[Kruse]

I heard on the radio this morning that, compared to 12 months ago, the average family is paying $180 more per month for basic necessities. The announcer said this figure was taken from government stats and was for basic needs only, no housing or car costs figured in.
On average, wages are not keeping up, folks.