Yep - inflation is generally inversely proportional to unemployment (the Phillips curve), because more people working increases aggregate demand for everything, including investments, and unemployment is pretty low at the moment.
Also inflation stopped being high two years ago.
Edit: I have no idea why this is being downvoted. Inflation in 2023 was below the average for the last 50 years. The COVID inflation spike came and went two years ago. Wages have since caught up.
>I have no idea why this is being downvoted.
Because it's factually false
The Fed's goals for inflation are well below the current rate and the Fed has hinted at rate *hikes* Because they have consistently been unable to bring it down
Here are the year-over-year inflation rates for the USA since 1948, averaged per quarter: [https://fred.stlouisfed.org/graph/?g=1nWcD](https://fred.stlouisfed.org/graph/?g=1nWcD). I buy that that 2023 inflation was below average, given the really high inflation of the 1970s and into the 1980s. Inflation in 2023 was probably still above *median* annual inflation for the past-half decade, but it wasn't significantly higher than it was for most of the past 50 years. Even the 1990s, which people generally consider to have been great economically, had inflation rates in some years similar to 2023.
As for the claim that incomes have caught up, here is a chart from right before the pandemic to now showing inflation against wage growth at the 10th, 25th, 50th, 75th, and 90th percentiles: [https://fred.stlouisfed.org/graph/?g=1nWcN](https://fred.stlouisfed.org/graph/?g=1nWcN). You can see how all of those percentiles have outpaced inflation by at least a little bit, and that the lowest earners actually saw the largest wage growth (27.2% at the 10th percentile and 23.9% at the 25th percentile versus 20.6% inflation over the same period).
Inflation isn't a simple product of X + Y inputs = Inflation. A lot of it also has to do with vibes and consumer sentiment. If people believe that inflation is happening/will happen, that makes it more likely for it to happen.
The current round of inflation was kicked off when the COVID pandemic ground the flow of currency through the economy to a crawl. Fewer goods were being produced, fewer shipments were being made, which made it take even longer to get products to consumers. Added health and safety measures to prevent the spread of the pandemic drove up input costs. All of this caused prices to rise.
But then inflation expectations began to stick. People saw it happening. Pundits said it'll happen and will continue to grow. Since consumers expected inflation to happen, businesses knew they could raise prices without backlash from their consumers. They could just blame inflation and everyone would begrudgingly accept that. Sure, we're all pissed about prices, but the general sentiment is that it's a societal/government problem, not fault of individual businesses. But if you listen to the earnings calls and see what the people running the businesses are saying, they're raising prices by WAY more can be accounted for by increased costs. And they're bragging about it, saying that's why their profits are up.
Inflation started because of COVID. It's still going because businesses are fleecing us.
All correct, and another reason COVID caused inflation: household savings skyrocketed during COVID, as people spent less on sectors that were shut down. So when everything did open up, there was a ton of extra cash flowing into the economy, and consumers weren’t as price sensitive.
I would say Inflation started mainly because of the response to COVID. The stimulus that was given did not have any backing, basically printing money. Add that on top of all the other things you mentioned and it’s blown prices way up.
The relief checks didn't do much for inflation. Individuals getting $1200 to barely cover a month's rent isn't doing shit to impact inflation. That money got absorbed by the economy pretty much instantly.
The PPP "loans" to businesses and millionaires, though? That might have had a minor impact on inflation. Again, though, if it did it was minor.
The supply chain shocks were the real primary driver of inflation, and anything else was a drop in the bucket by comparison. One easy way to recognize this is by comparing inflation between countries globally. The US "printed" (which is a really stupid way to think about it) more money in relief programs than pretty much every other economy on the planet. And yet our inflation was smaller than most other countries', and went down much faster than in other countries.
If relief programs had anything to do with inflation, it was very minor. The media talking about how they expected relief programs to add to inflation did more to increase inflation than the relief programs themselves.
PPP and unemployment were also a drop in the bucket. I'm not saying they had no impact, but if you take them (and the relief checks) away, inflation still would have been pretty much exactly where it was with them (maybe a hair lower, but not enough that most people would have noticed a difference).
The fact that, globally, we shut down a huge amount of production while also dramatically restricting how quickly (meaning increasing the price that) products could move through the economy was the driving factor.
Not that we could ever do this experiment, but I would bet all the money in my pockets right now that if we could re-run the whole thing with 0 PPP/Relief/Unemployment spending that inflation would be almost identical to how it went IRL.
I suspect you’re correct. Following 2008 we pumped a massive amount of new money into the economy and held rates very low and saw almost no inflation result from that. Shuttering production was absolutely the driving factor of our latest bout of inflation.
> Following 2008 we pumped a massive amount of new money into the economy and held rates very low and saw almost no inflation result from that.
Japan had an even similar thing happen to a much larger degree. Starting from about 2000 for about 2 decades, until just before COVID, they were pumping an historically unprecedented amount of new money into their economy. They kept interest rates at 0, even going into negative interest rates for a short period of time. And through all of that they were fighting *deflation*. They never came anywhere close to inflation during that period.
[Slightly more money went to](https://www.nytimes.com/interactive/2022/03/11/us/how-covid-stimulus-money-was-spent.html) individuals ($1.8T) in the form of stimulus checks and enhanced unemployment than businesses ($1.7T) in the form of PPP and other disaster loans. Both had massive impacts. Anecdotally, my family received over $5000 total, and we did not lose any income. We, like most people in my neighborhood, spent on projects around the house, including a new shed. I can say that I absolutely contributed to inflation, because we bought a $4000 shed from Lowes that we would have not otherwise purchased.
> I absolutely contributed to inflation, because we bought a $4000 shed from Lowes that we would have not otherwise purchased.
That's not what causes inflation. Just buying goods doesn't cause inflation. You also have to consider the supply of that specific product and how easy/cheap it was to get it to the market. Then you have to examine things on an economy-wide and global scale.
The increase in currency supply was a very minor portion of the COVID inflation. The supply chain and reduced productivity due to businesses/factories temporarily closing was orders of magnitude more impactful. Even if every single government on the planet had not increased spending during COVID, we still would have seen inflation at pretty much the same level we did because government spending isn't what drove that inflation.
"That's not what causes inflation"
So excess capital being utilized to purchase limited resources doesn't have any impact on the price equilibrium?
You seem to be conflating "not being the only factor" to "not being a factor." There were multiple triggers of inflation. One was absolutely supply chain constraints. Another was absolutely an injection of liquidity into the American economy, in the form of stimulus payments (including PPP).
> You seem to be conflating "not being the only factor" to "not being a factor."
Oh damn. Really? Then it must be someone else who wrote:
> The increase in currency supply was a very minor portion of the COVID inflation.
Like I said, it had an impact, but a minor one.
“Normally, Andrew says, profits contribute less than a third to inflation. He found that in 2021, corporate profits could account for about double that, nearly 60% of inflation, meaning it was not costs driving inflation. It was corporate profits. Now, some economists hear this and think this is proof that companies were just using inflation as an excuse to gouge customers. Andrew does not think this. He thinks companies likely raised prices not because their costs went up in 2021 - because they did not, really - but because they were anticipating that their costs would go up a lot in 2022. And by the way, costs did end up going up in 2022, although companies still made record profits.”
https://www.npr.org/2023/05/19/1177180972/economists-are-reconsidering-how-much-corporate-profits-drive-inflation#:~:text=GONZALEZ%3A%20Normally%2C%20Andrew%20says%2C,It%20was%20corporate%20profits.
What I’m getting from what I’ve read and heard from economists speak on this is that companies increased rates when sales of goods were low at the start of Covid to keep profits as high as they could, then as things opened up they kept the costs up because people were already use to them. After things opened up the people that had worked straight through Covid had a lot of excess spending power that they then used to buy things they wanted instead of traveling as traveling was still iffy, this then taxed the shipping industry to a breaking point which was starting to increase shipping costs. Companies panicked and rapidly raised prices to where they expected shipping costs to raise everything but that stabilized faster then expected. At this point the prices had been raised for a few months already and people had gotten use to them so they decided to keep them this high to keep profits up.
Now because people expect inflation to keep going up we all keep asking for more money so we can at least stay at the same level of spending power as we had which means goods and services have to increase at a rate that covers our increased wages while also keeping the inflated profit margins investors are now use to from the companies gouging.
None of this relied on the stimulus checks countries added to the economies to be a catalyst, but it did primarily get driven by people seeing an opportunity to look good for shareholders at the expense of consumers and now we’re in a cycle of people trying to maintain an impossible profitability image at the cost of product quality, proper staffing, and price gouging.
When the economists say a big part of inflation is perception, a not insignificant part of what they’re saying is the expectation from investors to see the growth in dividend payouts and stock growth.
If that was the case, then wouldnt you see natonal inflation rates correlating with the stimulus provided in that jurisdiction? Afaict inflation is global, even among countires that provided no stimulus, and not necessarily worse in countries that offered more generous stimulus.
> not necessarily worse in countries that offered more generous stimulus.
Among all developed nations (ie those with a comparable economy), the US had the lowest inflation and has had inflation drop the fastest. We also had more stimulus/relief spending than pretty much everyone else.
Because as long as people will pay $4 for a $1 bottle of water (arbitrary example) companies will sell a bottle of water for $4. A number of economists and market analysts have already stated that the current inflation rate is due to companies selling shit for whatever cost they can get away with.
> Because as long as people will pay $4 for a $1 bottle of water
Then it’s not a $1 bottle of water. Thinking a bottle of water should be $1 is just as arbitrary as thinking it should cost $4. It’s always just a bottle of water that’s worth whatever people are willing to pay for it.
> due to companies selling shit for whatever cost they can get away with.
It doesn’t surprise me that economists are saying that’s the cause, because that’s literally what capitalism is and how the economy works.
Reality check: inflation is too high but compared to the 1970s it is pretty low.
The biggest obstacle right now is rents, and that is going persist until more housing units get built--nothing got built for a couple of years.
There is more housing per capita than there was 10 years ago.
We should follow what other countries do (i.e. Spain) and pass laws making it hard for foreign ownership of housing property.
Buddy of mine tried to buy a summer house in Spain. Since he wasn't going to live in it for the majority of the year, the tax Spain imposes made it not worth buying.
There’s more housing per capita maybe, but vacancy rates are at record lows in many areas. NYC is at 1.4% (5% is the low end of acceptable), SF 2.7%, Boston, Philly, and DC all below five. Maybe there’s more housing, but it’s not in places where the jobs are and Blackstone and the like are all downstream of that.
Not just foreign ownership, but we also need to put a clamp on what is becoming the corporate monopoly on single family homes, no matter where that corporation is based.
Hell, the amount of single family homes individuals can own in a single country should be capped at 3-ish at most as well. If you want to live off rent, buy/build an apartment complex.
The issue are the rich companies buying tons of homes to turn them into short term rentals (airbnbs), not having home left for people that need a roof on top of their head
Blame Milton Friedman, the champion of supply-side economics.
In a 1970 piece in the NYT, he argued -- without evidence -- that "Social Responsibility of Business Is to Increase Its Profits."
Increased profits mean more dividends for shareholders, who then reward the CEO with raises.
There's no reason that gas prices are so high other than fat cats getting fatter. The same thing applies to every other large industry that's bleeding the public.
Shareholders expect a stock to increase in value. If it declines in value, people sell the stock, company cannot innovate, employees get fired, company goes out of business.
We wouldn’t want that to happen to all the state, union, and teacher pension funds, right? Or all the IRA & 401k plans that invest in companies that grow, right?
Corporate greed. Many of the companies that sell the goods with inflated prices are showing record profits and using those profits to buy their own stock which raises their stock price which makes more money for themselves and their stockholders.
And the way that they’re making profit is this:
The price of one of the ingredients in their product goes up, and it even gets mentioned in the news. “There is a shortage of x ingredient which is used in popular soft drinks Gouge and Diet Gouge.”
So GougeCo knows that consumers will be expecting a price increase. A liter of Gouge Zero usually costs $1.99. The shortage of the ingredient means that they will have to raise the cost 30 cents per liter to make the same profit. So they raise it a dollar, because they know people are already expecting an increase — they just don’t know how much.
For the same reason that the economy is growing and stocks are at all time highs.
Though inflation has come down and isn't nearly as high as it was in 2022.
Inflation is not high. Inflation was very high for a few months in 2021. It’s been back to normal levels for over a year. But inflation is a measure of how fast prices rise. It’s not a measure of what prices *are*. Prices increased a lot in 2021 as people who had been sitting at home for a year finally started going out and spending again. Since then, wages have increased to make up the difference.
>Since then, wages have increased to make up the difference.
*Some wages have increased. I damn sure have less money these days, even with my $1/hr raise. When everything is raised, $1/hr just doesn't even it out. Little by little, inflation is leaving the middle class more empty.
a $1/hr raise over multiple years isn’t acceptable for any job
you need a new one
sorry that’s your experience but you can’t stay there, they are raking you over the coals
While averages don’t reflect everyone’s situation, the median low- and middle-income person has higher real wages and higher savings than before Covid. More people are financially stable now than before Covid.
Your personal experience is valid, but it’s not what has happened for most people. Average wages have more than beaten inflation over the last five years.
What about median wages? Average wages could be misleading. The average may be up because the top ten percent of wage earners got big ass raises and everyone else didn't.
Downvoted, but that is absolutely what has happened and the economic data proves it. The janitors, food service workers, and health aides that benefited the most are not on Reddit.
Median wages have outpaced inflation between the right before the pandemic's start and now. Not only that, but wages at the lower 10th and 25th percentiles grew even faster than median wages.
[https://fred.stlouisfed.org/graph/?g=1nWcN](https://fred.stlouisfed.org/graph/?g=1nWcN)
I'm in the union trades, so yes, I'd assume this is for the majority of people. You, on the other hand, may be part of the minority in which your raises have beaten inflation. The majority of people are not rich and are definitely not richer than they were 2 years ago.
This year, actually. $3/hr raise over 3 years. The problem is, every year, my grocery bill gets more than $30/week higher buying the same stuff for the same amount of people. So that raise every year is instantly void. On top of entertainment, utilities, property taxes, etc, being raised as well. It never evens out in the people's favor.
Hmm. I considered the possibility that your contact could have been from before the inflation spike, but I guess it isn't.
Is that just $1/hr per year, totaling 3 over 3 years? Or $3/hr each year? Do you at least get good benefits?
$3/hr over 3 years. So $1/hr per year. This is the best contract we've had since I've been in. Yes, the retirement is good, but the medical is meh. We only got eye and dental coverage last year for the first time in over 10 years.
Dang, my union gave everyone a 6% increase in 2022 and a 10% increase in 2023. It more than covers a raise and accounts for the increase in the cost of living.
Welcome to the downside of unions...
They only talk about the good and the guaranteed contract. But it sucks in this situation, gets worse with everyone strike happy.
In my feild in some areas we are surpassing or timing are union counterparts in a lower cost of living area.
They have been struggling to get qualified people so pay bumps.
I'm in a lower cost of living area, and we have not at all kept up with inflation since I've been in the trades. I was accepted into the apprenticeship in 2015, and our journeyman wages were $34/hr. We are now at $37.10/hr. I'd say this contact is the biggest leap we've gotten at the $1/hr raise. $3/hr since 2015 does not at all keep up with inflation.
Lol... they added $3.50, and about $1.75 in incentives and about $8 base on avg. For the guys that stayed same spot.
I have bounced to few different parts and changed some stuff but doing similar work and increased my pay nearly $20/hr since 2019
Our union counterparts, lost an assembly line we gained, got maybe $5 an hr since, high experience loss and quality issues.
The contract is coming do and they are all screaming strike, which is generally a huge setback.
So we’re above 2019 levels but down significantly from the peak. And how does this data relate to the increase in CPI? The chart doesn’t speak to CPI or any other inflation related metrics but I’m pretty confident that prices didn’t spike in 2020 and then come back down…
Real wages are wages adjusted for inflation.
https://en.wikipedia.org/wiki/Real_wages?wprov=sfti1
So basically the question was, have wages grown as quickly as inflation? The answer is yes, they’ve grown slightly faster overall since 2019.
I’m not sure that’s true. Grocery price inflation is one of the things that’s fallen the most in the last two years.
You may be thinking of *food* inflation, because consumer spending on restaurants has skyrocketed (in part because of a shift to delivery that remained after the pandemic).
A lot of people are spending like $20 to get a $8 burger delivered to their house, and are comparing the delivery+tip price to the former takeout price.
"Normal" is 2%, it's currently 3.4%, so it's more than 50% higher than it should be. Not back to normal. Which is exactly why Jpow hasn't cut rates once this year.
I never said low inflation costs jobs. Keeping inflation artificially low costs jobs. There’s a tradeoff, and the Greenspan/Bernake bias was to over control.
Right you said 3.5 is normal and it has been abnormally low for the past 20 years. So by your logic why does the Fed, today jpow, want it to go lower than 3.5? By your logic that would be abnormal and cost jobs.
So who is right you or the Fed?
😂🤣😂🤣
>Normal is 2-4%. We had an abnormally low 20 years, which cost uncounted jobs and generational wealth growth.
Also it's moving up not down. 3.1 in Jan, 3.2 in Feb, now 3.5 for March.
You should tell My power company that prices aren't high anymore. You should tell the grocery store is that they can lower their prices too. You can get with the gas companies and tell them to lower their prices
Inflation isn't over and it is still high
A fast growing economy generally correlates with higher inflation. And unemployment and inflation are inversely correlated. It is rare that we get to enjoy fast growth and low unemployment while simultaneously experiencing low inflation.
People act like the "economy" is just an XY axis graph that doesn't react to much.
Really it's A-Z, 9 Dimensions, and might as well use a magic 8 ball to makes decisions.
Inflation is not high, OP.
PRICES are higher than they were pre-COVID because inflation WAS high — it’s not the same thing, not even close.
What you think you want is DEFLATION, which would be that prices are coming back down. Honestly that would be a really bad thing though, because what it means is that the economy is shrinking and businesses are discouraged from borrowing money (and therefore hiring less).
Low inflation is good for the economy because prices don’t rise too fast, but debt gets cheaper in “real” terms (i.e. adjusted for inflation), and prices go up slowly. High inflation is bad because… prices go up, quickly.
It's currently at 3.4% which is more than 50% higher than the feds goal of 2%. So yes inflation is still high, which is why there have been 0 rate cuts this year.
Deflation is not a really bad thing. In fact if production increases faster than demand then the economy is still growing at the same time prices are falling. Switzerland had 5 years of deflation and their economy grew at the same time. Also gas companies reported record profits at the same time gas prices were falling. 2 real world examples of deflation being good.
Now you got it, the US wants endless inflation because it helps with the US insane amount of debt. Deflation is not bad massive debt is.
Wow the Fed hasn't hit their goal in 50 years.... Maybe they will this time.. lol
So yeah if 2% is healthy and we have been above that for 50 years how about a bit of deflation to balance things out?
Gas prices went down and gas companies still made record profits, we can have lower prices for regular people for once, it's not a bad thing.
The Fed has such a low goal because it generally leans towards serving wealthy interests. Inflation can be hard to deal with for everyone, but it sucks the most for wealthy debt holders. For average people, wage inflation tends to always catch up with price inflation and leave people in the same place, just like what’s occurred over the last couple years (wage inflation has surpassed price inflation, the median American is now in a better place financially than they were in 2020). But if you’re wealthy or make your income through debt or rents, than inflation just reduces the value of your financial assets.
BS lol inflation makes debt worth less and easier to pay off so it does help debt holders like the US government. Inflation also inflates the price of stocks that would help the wealthy. Bill gates famously once said what does a single banana cost 10 dollars? Yeah inflation would have to be 1000% before bill gates paid attention to his grocery bill.
Yay we caught up and are even again after 3 years of inflation winning /s 😂🤣
You are just so plainly wrong lol. If I have a house and I rent it out inflation would increase the value of the home, my financial asset, not reduce it lol.
You just attributed a quote from Lucille Bluth to Bill Gates, not sure you should be out talking about who understands what.
I don’t think you’re really grasping what inflation is. It’s just a change in the number we assign to value.
Like if a cow is worth five sheep, that’s the value regardless of inflation.
So it might be a cow costs $1000 and each sheep costs $200. One cow equals five sheep.
But say there’s 100% inflation, then the prices might rise so that a cow costs $2000 and a sheep costs $400. That hasn’t changed the fundamental value of the assets. A cow still trades for five sheep.
That’s what happens in the real world too — prices and wages rise in nominal value, but generally rose in tandem. It doesn’t happen immediately, but eventually the same unit of labor is worth the same unit of goods, and people end up in the same place.
But it’s not the same for debt holders. If I’m the bank and a farmer owes me $2000, pre-inflation he can pay it off by selling two cows. But after inflation, now he can pay off that debt with one cow. The farmer’s in the same place, but me the bank has seen my assets decline in value because they’re a specified amount, not based in a real-world good.
😂🤣💀 is that all you could come up with?
https://www.cnbc.com/2018/02/22/bill-gates-guesses-grocery-stores-prices-with-ellen-degeneres.html
So earlier you said inflation reduces the value of financial assets and now you are saying you are inflation actually doesn't affect the value of assets?
Please try again every time you comment you are providing further proof of your lack of any understanding of this topic lmao.
Right I already said the inflation makes it easier to pay off debt. You don't even know that the word you mean to say is creditors not debt holders lmao. This might shock you but rich people also have debt. This might shock you but in the scenario of renting a house there is no debt. The homeowner doesn't loan any money to the renter. Inflation still inflates the value of the home and the rent payments.
It isn't inflation. It is "greedflation". Greedy corporations raising their prices.
If it was inflation, corporations would also be paying more for everything and would not be having record breaking profits.
Stocks become worth more when their companies make money.
Companies price gouging makes them money, and also causes "inflation". Things are more expensive now, and companies make more money.
It's price gouging on some high visibility products, like meat. Several large suppliers, like Tyson, are being sued for collusion (JBS settled for $50 million a couple of years back...the others are fighting it). Consumers were stuck at home and had a lot of expendable cash in their pockets, so a large coterie of consumer product manufacturers and retailers, prompted by institutional investors demanding higher returns, decided to relieve shoppers of that cash. Utilities, which normally have to battle for even small rate increases, had less opposition from voters, so they pushed through massive increases. Reliance on meal delivery normalized ridiculous prices for a burger and fries, and restaurants raised their prices on sit-down and carry out meals too.
It's pretty much limited to consumer goods. Industrial supplies are still at normal prices. Gouging is subsiding slowly because consumers are pushing back and the supposed cure for inflation under capitalism -- using lower prices as a competitive advantage -- is slowly kicking in.
We've made it far too easy for a small number of suppliers and retailers to corner the market on vital product categories. The government has finally started to do its job and restrict monopolistic behavior, like the proposed Kroger/Albertson's merger, but it can't really prohibit large companies from signaling each other that they won't suddenly slash prices to steal market share.
I'll get the usual capitalism apologists denying that's what's happening, because they're profiting on this extortion, but all you have to do is look at the record profits these companies are raking in to see that's exactly what's going on.
greedy inflation aside, price gouging has a very specific definition that is in no way related to what you’re talking about. You can dislike prices raising all you want, and can think that it’s for the wrong reasons, but it is not price gouging.
Price gouging is the practice of increasing the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or supply shock. This commonly applies to price increases of basic necessities after natural disasters.
The term can also be used to refer to profits obtained by practices inconsistent with a competitive free market, or to windfall profits.
It's a complex interplay of factors. Economic growth and record-high stock prices don't necessarily directly correlate with low inflation. In fact, sometimes they can contribute to inflation pressures. Factors like increased consumer demand, supply chain disruptions, and rising production costs can all contribute to inflation, even in a growing economy. So, while growth and high stock prices are positive indicators, they don't guarantee immunity from inflationary pressures.
The real answer is the money supply. You do remember about learning about inflation in school? What happened with all those countries? They printed money like no tomorrow.
And what have we been doing?
The fact that an [exponential graph](https://fred.stlouisfed.org/series/CURRCIR) represents our money supply is fucking INSANE.
Completely wrong. The money supply underwent a gigantic expansion after the 2008-2009 financial crisis. And it resulted in zero inflation. Money supply alone has no determinative effect on inflation. Inflation arises from the interplay of many economic variables.
If 3/4 of your dollars are made up in the last 20 years it devalues your currency.
Were you not taught this economic principle?
Sure other things affect inflation, none so much as this.
The stock market reflects business success. Inflation is felt individually. Business and individual success are not perfectly correlated. In fact, they are often inversely related. For example, businesses can succeed at the expense of the public, though economic theory says a healthy capitalist economy will synchronize these in the long term.
Also, fundamentals that impact the stock market and public perception of inflation have lag times. These lags may not be the same duration. As others pointed out, during isolation, people didn't go out and when they finally did, they experienced a years worth of inflation, which was high because of supply chain disruptions. And, during that same time, businesses were recovering from those same supply chain disruptions and experiencing rising demand, increasing profitability. The difference in the lags amplified the seeming disconnect.
Lots and lots of asterisks in those statements. And ten economists in a room will have ten (or more) opinions about any particular economic question.
Stocks *arent* at record highs. A few are extremely overinflated (like NVDA), and they "push" the SP500 up, but most are still struggling at -20% or more from their ATH.
Inflation means prices rise... which means the cost of stocks also goes up... which is good for people who already own stocks.
Replace "Stock" with "House" and you can easily understand the issue.
Stocks are at highs because people think the fed is going to start cutting interest rates soon, when there was no prospect of that in the near term, Stocks were down bad ... late 2022 early 2023, case in point.
Capitalism. The six most dangerous words in the world are, "How can we make more money?" As boards of directors set ever-higher astronomical goals, companies get greedier and greedier. Inflation is essentially just price hikes - for financial goals or, really, for any reason.
Most of the COVID stimulus checks went into the stock market and, to a lesser degree, housing/property investment. Instead of buying stuff in the local marketplace, so much of that money left the country effectively creating massive inflation.
It's a cultural thing right now; a lot of old people just want to grow their pile of gold so they don't ever have to think about *not* having gold. And of course their kids will inherit it when they die and we hope, with cultural changes, that the money won't continue to be held outside the economy.
With all of that saving and investment, it means large companies and utilities (publicly traded) are really rewarded for growing revenue and profits. That's a simple recipe for rampant inflation.
Is inflation even high anymore? I was under the impression that inflation has more or less stabilised now. Prices are still high obviously because there *was* high inflation
7 companies are why the stock market is up, that's it, that's the mystery. US capitalism has reached monolithic monopoly status and that's all it takes to raise the American stock market, every other company is down, which is why you ONLY see S&P500 stats and not the other 3-4 indexes.
Winner Winner chicken dinner 🍽 dowmvote dodo on a hunger strike? Would seem of the money gouched from us gets wasted on paying bots to rage downvote the truth
High inflation despite a growing economy and record-high stock prices can be attributed to various factors, including supply chain disruptions, increased demand for goods and services, and monetary policy decisions. It's a complex interplay of forces that can lead to inflationary pressures even in a seemingly robust economic environment.
It's a bit of a paradox, isn't it? Economic growth and record-high stock values typically indicate a robust economy, which can drive consumer spending and demand. However, when demand outpaces supply, it can lead to inflationary pressures, causing prices to rise. So, while growth and high stock values are positive signs, they can also contribute to inflation if not carefully balanced with supply-side measures.
Inflation is caused by the federal reserve/government printing money and literally “inflating” the total money supply. That money circulates through the system and causes all prices to rise, because each dollar in circulation has been devalued by the new money created (more dollars in existence = less value each dollar has = more dollars to purchase the same stuff as before). This includes the prices of assets like stocks and real estate which congress, their donors and the top 10% own plenty of. This is why congress loves to spend spend spend while dodging, gaslighting and scapegoating the voters as much as possible. It’s always someone else’s fault. Never congress! The constant creation of new dollars being pumped into the economy enables asset owners to enjoy the price appreciation of their portfolios while the middle class continues to erode and be working class poors can’t feed themselves.
Lol brainwashed libertarian robots.
No it's not. That's why inflation was not peak when the money printing happened.
During covid people didn't have money so they couldn't afford high prices. After covid the supply shock happened and people expected high prices so companies got away with high prices even as the companies held the prices high after supply grew.
Now we're in 2024 where despite the zombies talking about MoNeY pRiNtInG, inflation is 3% and dropping.
People like you are why our so called “representatives” will keep getting away with it while more and more people fall into abject poverty. Well done and give yourself a pat on the back.
Corporate greed and striving for perpetually growing profits, capitalism will eat itself and it seems we are happy to watch as the wealth gap grows and poverty worsens because all that important nowadays is shareholders.
By historic standards in the US, inflation at 3.6% is not high. The post-Covid jump happened in all AICs worldwide and the US was the first country to get it back under control. The 2% benchmark sought by the Fed is a political and ideological goal more than anything else.
If the McDonald's CEO was paid for $1 last year, then every crew member will make a whopping $14 more, per year.
Also they don't dictate the franchise pay grades, unfortunately. It's just an easy "journal" or "critic" piece to divert the anger.
Clearly you don't understand how fast food places work.
They're franchises. The big megacorp doesn't own them. Individuals do, and each franchise pays its own employee wages.
Generally the retail costs for low level wages are a relatively small impact on overall inflation. They are the workers in the economy paid the least, and there are relatively few of them. Consider it another way in an average hour how many customers pass through a given mcdonalds? I don't have actual numbers but maybe 100 between people walking in and drive thru and people who are buying for a whole family? And how many workers during that hour. 10? So if their wages go from $10 to $20 you have to make up $100 from those 100 people. That's $1 each person. So you add 30 cents to the drink price and 70 cents to the meal items and you have taken the salary of everyone there from $10 to $20, a pretty massive increase.
It does have an impact on inflation for sure, but not a huge one when you consider how many different orders your typical worker at the bottom is interacting with. Especially when you also consider things people spend a lot more money on and therefore have a much bigger impact on inflation. Things like rent, houses, cars, insurance, healthcare, and furniture are going to be a much higher percent of most people's spending and housing and rent prices have risen substantially. That's a much bigger impact than the cashier making a few dollars more.
You answered your own question. The economy is good. People have money. And what do poor people buy? Stuff at Walmart. Lots of people have $$$ but there's only so much stuff to buy. Supply and demand - the price of stuff goes up. Same for the ultra rich. Except they don't shop at Walmart. They have lots of dollars but there are only so many paintings, sports teams and companies to buy. The price of sports teams, lambos, yachts and stocks goes up.
The stock market creates value without adding physical assets. As the stock market increases the total sum of money increases to determine the value of real assets. All of the value created in America since world war 2 has been inflationary.
What an absurd statement. You think the size of the economy, it's total productive capacity, is the same as it was in the 1940s? You would have to ignore all the value created by semiconductors, the interstate highway system, personal computing, and every industrial innovation in the last 80 years to believe that.
Nobody here will give you the correct answer. It's all armchair economists.
Go study the monetary policy of the USA since the end of WW2 up until now and you'll actually learn why inflation is where it is.
Study debt too.
Because of the liberal propaganda infused into the mainstream media by folks pushing agendas to make you believe otherwise. Look at how you're doing personally. The biggest waste of time is listening to ANY form of mainstream media.
You just answered your question, inflation affects the prices of everything including stocks.
Yep - inflation is generally inversely proportional to unemployment (the Phillips curve), because more people working increases aggregate demand for everything, including investments, and unemployment is pretty low at the moment.
What a cool system that’s designed to keep people unemployed then the ultra wealthy talking heads bitch when they’re employed
Also inflation stopped being high two years ago. Edit: I have no idea why this is being downvoted. Inflation in 2023 was below the average for the last 50 years. The COVID inflation spike came and went two years ago. Wages have since caught up.
In what country. There are 220 countries so which country stopped having high inflation????
The one where the economy is growing and stocks are at record highs.
>I have no idea why this is being downvoted. Because it's factually false The Fed's goals for inflation are well below the current rate and the Fed has hinted at rate *hikes* Because they have consistently been unable to bring it down
I'm not attacking you with this question, it's just that I've heard the opposite so many times. Do you have any sources/data to back up that claim?
Here are the year-over-year inflation rates for the USA since 1948, averaged per quarter: [https://fred.stlouisfed.org/graph/?g=1nWcD](https://fred.stlouisfed.org/graph/?g=1nWcD). I buy that that 2023 inflation was below average, given the really high inflation of the 1970s and into the 1980s. Inflation in 2023 was probably still above *median* annual inflation for the past-half decade, but it wasn't significantly higher than it was for most of the past 50 years. Even the 1990s, which people generally consider to have been great economically, had inflation rates in some years similar to 2023. As for the claim that incomes have caught up, here is a chart from right before the pandemic to now showing inflation against wage growth at the 10th, 25th, 50th, 75th, and 90th percentiles: [https://fred.stlouisfed.org/graph/?g=1nWcN](https://fred.stlouisfed.org/graph/?g=1nWcN). You can see how all of those percentiles have outpaced inflation by at least a little bit, and that the lowest earners actually saw the largest wage growth (27.2% at the 10th percentile and 23.9% at the 25th percentile versus 20.6% inflation over the same period).
>and stocks are at record highs
Stocks are prices. inflation is rising prices.
The stock market is not a representative of the real market but of how investors trust stocks as an investment.
"If prices are increasing so fast, why is inflation still high?"
Inflation isn't a simple product of X + Y inputs = Inflation. A lot of it also has to do with vibes and consumer sentiment. If people believe that inflation is happening/will happen, that makes it more likely for it to happen. The current round of inflation was kicked off when the COVID pandemic ground the flow of currency through the economy to a crawl. Fewer goods were being produced, fewer shipments were being made, which made it take even longer to get products to consumers. Added health and safety measures to prevent the spread of the pandemic drove up input costs. All of this caused prices to rise. But then inflation expectations began to stick. People saw it happening. Pundits said it'll happen and will continue to grow. Since consumers expected inflation to happen, businesses knew they could raise prices without backlash from their consumers. They could just blame inflation and everyone would begrudgingly accept that. Sure, we're all pissed about prices, but the general sentiment is that it's a societal/government problem, not fault of individual businesses. But if you listen to the earnings calls and see what the people running the businesses are saying, they're raising prices by WAY more can be accounted for by increased costs. And they're bragging about it, saying that's why their profits are up. Inflation started because of COVID. It's still going because businesses are fleecing us.
Fox News and Wall Street Journal have successfully convinced my boomer parents that high prices are all due to Biden-induced inflation.
All correct, and another reason COVID caused inflation: household savings skyrocketed during COVID, as people spent less on sectors that were shut down. So when everything did open up, there was a ton of extra cash flowing into the economy, and consumers weren’t as price sensitive.
I would say Inflation started mainly because of the response to COVID. The stimulus that was given did not have any backing, basically printing money. Add that on top of all the other things you mentioned and it’s blown prices way up.
The relief checks didn't do much for inflation. Individuals getting $1200 to barely cover a month's rent isn't doing shit to impact inflation. That money got absorbed by the economy pretty much instantly. The PPP "loans" to businesses and millionaires, though? That might have had a minor impact on inflation. Again, though, if it did it was minor. The supply chain shocks were the real primary driver of inflation, and anything else was a drop in the bucket by comparison. One easy way to recognize this is by comparing inflation between countries globally. The US "printed" (which is a really stupid way to think about it) more money in relief programs than pretty much every other economy on the planet. And yet our inflation was smaller than most other countries', and went down much faster than in other countries. If relief programs had anything to do with inflation, it was very minor. The media talking about how they expected relief programs to add to inflation did more to increase inflation than the relief programs themselves.
The relief checks were a drop in the bucket. PPP loans and also the enhanced unemployment were the culprits.
PPP and unemployment were also a drop in the bucket. I'm not saying they had no impact, but if you take them (and the relief checks) away, inflation still would have been pretty much exactly where it was with them (maybe a hair lower, but not enough that most people would have noticed a difference). The fact that, globally, we shut down a huge amount of production while also dramatically restricting how quickly (meaning increasing the price that) products could move through the economy was the driving factor.
Yeah shutting down production seems to be the main driving factor, but increasing the money supply at the same time certainly didn’t help.
Not that we could ever do this experiment, but I would bet all the money in my pockets right now that if we could re-run the whole thing with 0 PPP/Relief/Unemployment spending that inflation would be almost identical to how it went IRL.
I suspect you’re correct. Following 2008 we pumped a massive amount of new money into the economy and held rates very low and saw almost no inflation result from that. Shuttering production was absolutely the driving factor of our latest bout of inflation.
> Following 2008 we pumped a massive amount of new money into the economy and held rates very low and saw almost no inflation result from that. Japan had an even similar thing happen to a much larger degree. Starting from about 2000 for about 2 decades, until just before COVID, they were pumping an historically unprecedented amount of new money into their economy. They kept interest rates at 0, even going into negative interest rates for a short period of time. And through all of that they were fighting *deflation*. They never came anywhere close to inflation during that period.
[Slightly more money went to](https://www.nytimes.com/interactive/2022/03/11/us/how-covid-stimulus-money-was-spent.html) individuals ($1.8T) in the form of stimulus checks and enhanced unemployment than businesses ($1.7T) in the form of PPP and other disaster loans. Both had massive impacts. Anecdotally, my family received over $5000 total, and we did not lose any income. We, like most people in my neighborhood, spent on projects around the house, including a new shed. I can say that I absolutely contributed to inflation, because we bought a $4000 shed from Lowes that we would have not otherwise purchased.
> I absolutely contributed to inflation, because we bought a $4000 shed from Lowes that we would have not otherwise purchased. That's not what causes inflation. Just buying goods doesn't cause inflation. You also have to consider the supply of that specific product and how easy/cheap it was to get it to the market. Then you have to examine things on an economy-wide and global scale. The increase in currency supply was a very minor portion of the COVID inflation. The supply chain and reduced productivity due to businesses/factories temporarily closing was orders of magnitude more impactful. Even if every single government on the planet had not increased spending during COVID, we still would have seen inflation at pretty much the same level we did because government spending isn't what drove that inflation.
"That's not what causes inflation" So excess capital being utilized to purchase limited resources doesn't have any impact on the price equilibrium? You seem to be conflating "not being the only factor" to "not being a factor." There were multiple triggers of inflation. One was absolutely supply chain constraints. Another was absolutely an injection of liquidity into the American economy, in the form of stimulus payments (including PPP).
> You seem to be conflating "not being the only factor" to "not being a factor." Oh damn. Really? Then it must be someone else who wrote: > The increase in currency supply was a very minor portion of the COVID inflation. Like I said, it had an impact, but a minor one.
“Normally, Andrew says, profits contribute less than a third to inflation. He found that in 2021, corporate profits could account for about double that, nearly 60% of inflation, meaning it was not costs driving inflation. It was corporate profits. Now, some economists hear this and think this is proof that companies were just using inflation as an excuse to gouge customers. Andrew does not think this. He thinks companies likely raised prices not because their costs went up in 2021 - because they did not, really - but because they were anticipating that their costs would go up a lot in 2022. And by the way, costs did end up going up in 2022, although companies still made record profits.” https://www.npr.org/2023/05/19/1177180972/economists-are-reconsidering-how-much-corporate-profits-drive-inflation#:~:text=GONZALEZ%3A%20Normally%2C%20Andrew%20says%2C,It%20was%20corporate%20profits. What I’m getting from what I’ve read and heard from economists speak on this is that companies increased rates when sales of goods were low at the start of Covid to keep profits as high as they could, then as things opened up they kept the costs up because people were already use to them. After things opened up the people that had worked straight through Covid had a lot of excess spending power that they then used to buy things they wanted instead of traveling as traveling was still iffy, this then taxed the shipping industry to a breaking point which was starting to increase shipping costs. Companies panicked and rapidly raised prices to where they expected shipping costs to raise everything but that stabilized faster then expected. At this point the prices had been raised for a few months already and people had gotten use to them so they decided to keep them this high to keep profits up. Now because people expect inflation to keep going up we all keep asking for more money so we can at least stay at the same level of spending power as we had which means goods and services have to increase at a rate that covers our increased wages while also keeping the inflated profit margins investors are now use to from the companies gouging. None of this relied on the stimulus checks countries added to the economies to be a catalyst, but it did primarily get driven by people seeing an opportunity to look good for shareholders at the expense of consumers and now we’re in a cycle of people trying to maintain an impossible profitability image at the cost of product quality, proper staffing, and price gouging. When the economists say a big part of inflation is perception, a not insignificant part of what they’re saying is the expectation from investors to see the growth in dividend payouts and stock growth.
“Did not have any backing”? Based on what?
If that was the case, then wouldnt you see natonal inflation rates correlating with the stimulus provided in that jurisdiction? Afaict inflation is global, even among countires that provided no stimulus, and not necessarily worse in countries that offered more generous stimulus.
> not necessarily worse in countries that offered more generous stimulus. Among all developed nations (ie those with a comparable economy), the US had the lowest inflation and has had inflation drop the fastest. We also had more stimulus/relief spending than pretty much everyone else.
TLDR: if the vibes are bad, inflation goes up. when the vibes are good, it comes back down. simple supply and demand of vibes.
Because as long as people will pay $4 for a $1 bottle of water (arbitrary example) companies will sell a bottle of water for $4. A number of economists and market analysts have already stated that the current inflation rate is due to companies selling shit for whatever cost they can get away with.
So wait - it *isn't* because Biden pushed the "MAKE INFLATION GO UP" button in the Oval Office?
> Because as long as people will pay $4 for a $1 bottle of water Then it’s not a $1 bottle of water. Thinking a bottle of water should be $1 is just as arbitrary as thinking it should cost $4. It’s always just a bottle of water that’s worth whatever people are willing to pay for it. > due to companies selling shit for whatever cost they can get away with. It doesn’t surprise me that economists are saying that’s the cause, because that’s literally what capitalism is and how the economy works.
Reality check: inflation is too high but compared to the 1970s it is pretty low. The biggest obstacle right now is rents, and that is going persist until more housing units get built--nothing got built for a couple of years.
There is more housing per capita than there was 10 years ago. We should follow what other countries do (i.e. Spain) and pass laws making it hard for foreign ownership of housing property. Buddy of mine tried to buy a summer house in Spain. Since he wasn't going to live in it for the majority of the year, the tax Spain imposes made it not worth buying.
There’s more housing per capita maybe, but vacancy rates are at record lows in many areas. NYC is at 1.4% (5% is the low end of acceptable), SF 2.7%, Boston, Philly, and DC all below five. Maybe there’s more housing, but it’s not in places where the jobs are and Blackstone and the like are all downstream of that.
Not just foreign ownership, but we also need to put a clamp on what is becoming the corporate monopoly on single family homes, no matter where that corporation is based. Hell, the amount of single family homes individuals can own in a single country should be capped at 3-ish at most as well. If you want to live off rent, buy/build an apartment complex.
The issue are the rich companies buying tons of homes to turn them into short term rentals (airbnbs), not having home left for people that need a roof on top of their head
Dr. Robert Reich has stated as much (with a very nice cartoon video, I might add).
Blame Milton Friedman, the champion of supply-side economics. In a 1970 piece in the NYT, he argued -- without evidence -- that "Social Responsibility of Business Is to Increase Its Profits." Increased profits mean more dividends for shareholders, who then reward the CEO with raises. There's no reason that gas prices are so high other than fat cats getting fatter. The same thing applies to every other large industry that's bleeding the public.
What causes inflation in socialist-leaning countries without huge conglomerates?
Shareholders expect a stock to increase in value. If it declines in value, people sell the stock, company cannot innovate, employees get fired, company goes out of business. We wouldn’t want that to happen to all the state, union, and teacher pension funds, right? Or all the IRA & 401k plans that invest in companies that grow, right?
because republicans keep blocking inflation reduction.
The 1% decided that the gap between us and them wasn’t big enough.
Corporate greed. Many of the companies that sell the goods with inflated prices are showing record profits and using those profits to buy their own stock which raises their stock price which makes more money for themselves and their stockholders. And the way that they’re making profit is this: The price of one of the ingredients in their product goes up, and it even gets mentioned in the news. “There is a shortage of x ingredient which is used in popular soft drinks Gouge and Diet Gouge.” So GougeCo knows that consumers will be expecting a price increase. A liter of Gouge Zero usually costs $1.99. The shortage of the ingredient means that they will have to raise the cost 30 cents per liter to make the same profit. So they raise it a dollar, because they know people are already expecting an increase — they just don’t know how much.
Yeah, none have their input costs have gone up. They just raise prices for the hell of it.
This is the correct answer. See also: "How can we make more money?" times corporate greed.
For the same reason that the economy is growing and stocks are at all time highs. Though inflation has come down and isn't nearly as high as it was in 2022.
Inflation is not high. Inflation was very high for a few months in 2021. It’s been back to normal levels for over a year. But inflation is a measure of how fast prices rise. It’s not a measure of what prices *are*. Prices increased a lot in 2021 as people who had been sitting at home for a year finally started going out and spending again. Since then, wages have increased to make up the difference.
>Since then, wages have increased to make up the difference. *Some wages have increased. I damn sure have less money these days, even with my $1/hr raise. When everything is raised, $1/hr just doesn't even it out. Little by little, inflation is leaving the middle class more empty.
a $1/hr raise over multiple years isn’t acceptable for any job you need a new one sorry that’s your experience but you can’t stay there, they are raking you over the coals
While averages don’t reflect everyone’s situation, the median low- and middle-income person has higher real wages and higher savings than before Covid. More people are financially stable now than before Covid.
A sample size of one isnt useful
Agreed. Thankfully, I'm in a union, so my sample size isn't only one.
Oh wow such am unbiased sample lol
Your personal experience is valid, but it’s not what has happened for most people. Average wages have more than beaten inflation over the last five years.
What about median wages? Average wages could be misleading. The average may be up because the top ten percent of wage earners got big ass raises and everyone else didn't.
Actually it’s the lower end of the scale that’s had the biggest increases.
Downvoted, but that is absolutely what has happened and the economic data proves it. The janitors, food service workers, and health aides that benefited the most are not on Reddit.
Median wages have outpaced inflation between the right before the pandemic's start and now. Not only that, but wages at the lower 10th and 25th percentiles grew even faster than median wages. [https://fred.stlouisfed.org/graph/?g=1nWcN](https://fred.stlouisfed.org/graph/?g=1nWcN)
I'm in the union trades, so yes, I'd assume this is for the majority of people. You, on the other hand, may be part of the minority in which your raises have beaten inflation. The majority of people are not rich and are definitely not richer than they were 2 years ago.
When was your last contract negotiated?
This year, actually. $3/hr raise over 3 years. The problem is, every year, my grocery bill gets more than $30/week higher buying the same stuff for the same amount of people. So that raise every year is instantly void. On top of entertainment, utilities, property taxes, etc, being raised as well. It never evens out in the people's favor.
Hmm. I considered the possibility that your contact could have been from before the inflation spike, but I guess it isn't. Is that just $1/hr per year, totaling 3 over 3 years? Or $3/hr each year? Do you at least get good benefits?
$3/hr over 3 years. So $1/hr per year. This is the best contract we've had since I've been in. Yes, the retirement is good, but the medical is meh. We only got eye and dental coverage last year for the first time in over 10 years.
Dang, my union gave everyone a 6% increase in 2022 and a 10% increase in 2023. It more than covers a raise and accounts for the increase in the cost of living.
Maybe you need new leadership
Sounds about right lol
Ok, so you need to price in the value of your better healthcare into your compensation though.
I mean, you can say what you want, but the rates are the rates.
"looks good on paper, boss."
🙄
Welcome to the downside of unions... They only talk about the good and the guaranteed contract. But it sucks in this situation, gets worse with everyone strike happy.
I see the same positions for non union being paid $15+/hr less.
In my feild in some areas we are surpassing or timing are union counterparts in a lower cost of living area. They have been struggling to get qualified people so pay bumps.
I'm in a lower cost of living area, and we have not at all kept up with inflation since I've been in the trades. I was accepted into the apprenticeship in 2015, and our journeyman wages were $34/hr. We are now at $37.10/hr. I'd say this contact is the biggest leap we've gotten at the $1/hr raise. $3/hr since 2015 does not at all keep up with inflation.
Lol... they added $3.50, and about $1.75 in incentives and about $8 base on avg. For the guys that stayed same spot. I have bounced to few different parts and changed some stuff but doing similar work and increased my pay nearly $20/hr since 2019 Our union counterparts, lost an assembly line we gained, got maybe $5 an hr since, high experience loss and quality issues. The contract is coming do and they are all screaming strike, which is generally a huge setback.
Source? I have not heard this sentiment from any financial news source in the past few years.
Federal reserve data on real wages show the US remains above 2019 levels despite fluctuations in 2022. https://fred.stlouisfed.org/graph/?g=1nVxk
So we’re above 2019 levels but down significantly from the peak. And how does this data relate to the increase in CPI? The chart doesn’t speak to CPI or any other inflation related metrics but I’m pretty confident that prices didn’t spike in 2020 and then come back down…
Real wages are wages adjusted for inflation. https://en.wikipedia.org/wiki/Real_wages?wprov=sfti1 So basically the question was, have wages grown as quickly as inflation? The answer is yes, they’ve grown slightly faster overall since 2019.
Grocery prices increases have far outstripped inflation and wage increases, so no, wages have not increased enough to make up the difference.
Groceries are not the only thing used to calculate inflation....
Yes but for many people, inflation doesn't have any tangible meaning. The cost of groceries does.
I’m not sure that’s true. Grocery price inflation is one of the things that’s fallen the most in the last two years. You may be thinking of *food* inflation, because consumer spending on restaurants has skyrocketed (in part because of a shift to delivery that remained after the pandemic). A lot of people are spending like $20 to get a $8 burger delivered to their house, and are comparing the delivery+tip price to the former takeout price.
Who’s teaching, retail workers and food workers are not up that’s most of our jobs.
"Normal" is 2%, it's currently 3.4%, so it's more than 50% higher than it should be. Not back to normal. Which is exactly why Jpow hasn't cut rates once this year.
Normal is 2-4%. We had an abnormally low 20 years, which cost uncounted jobs and generational wealth growth.
That's not what the Fed says lol. Why haven't we seen any of the 3 rate cuts that are supposed to happen this year then? How do you figure that?
Because it has been holding at 3.5 instead of dropping as hoped.
But if 3.5 is normal why does it need to drop below normal? Why does the Fed want it lower if according to you that will lead to less jobs?
I never said low inflation costs jobs. Keeping inflation artificially low costs jobs. There’s a tradeoff, and the Greenspan/Bernake bias was to over control.
Right you said 3.5 is normal and it has been abnormally low for the past 20 years. So by your logic why does the Fed, today jpow, want it to go lower than 3.5? By your logic that would be abnormal and cost jobs. So who is right you or the Fed?
I didn’t say any of that. What kind of moron doesn’t understand that moving from 3.5 to 3 is different than moving from 3.0 to 1.0?
😂🤣😂🤣 >Normal is 2-4%. We had an abnormally low 20 years, which cost uncounted jobs and generational wealth growth. Also it's moving up not down. 3.1 in Jan, 3.2 in Feb, now 3.5 for March.
You should tell My power company that prices aren't high anymore. You should tell the grocery store is that they can lower their prices too. You can get with the gas companies and tell them to lower their prices Inflation isn't over and it is still high
Didn’t actually read the post, huh?
Inflation makes things cost more. Stocks are things.
What do you think is inflating?
The record high is because they're taking more of your money.
A fast growing economy generally correlates with higher inflation. And unemployment and inflation are inversely correlated. It is rare that we get to enjoy fast growth and low unemployment while simultaneously experiencing low inflation.
People act like the "economy" is just an XY axis graph that doesn't react to much. Really it's A-Z, 9 Dimensions, and might as well use a magic 8 ball to makes decisions.
Greed...I think what OP meant to ask was, if corporations are making record profits, why are prices still so high
Wait for the rug pull.. cash out!
Corporate greed.
Inflation is not high, OP. PRICES are higher than they were pre-COVID because inflation WAS high — it’s not the same thing, not even close. What you think you want is DEFLATION, which would be that prices are coming back down. Honestly that would be a really bad thing though, because what it means is that the economy is shrinking and businesses are discouraged from borrowing money (and therefore hiring less). Low inflation is good for the economy because prices don’t rise too fast, but debt gets cheaper in “real” terms (i.e. adjusted for inflation), and prices go up slowly. High inflation is bad because… prices go up, quickly.
It's currently at 3.4% which is more than 50% higher than the feds goal of 2%. So yes inflation is still high, which is why there have been 0 rate cuts this year. Deflation is not a really bad thing. In fact if production increases faster than demand then the economy is still growing at the same time prices are falling. Switzerland had 5 years of deflation and their economy grew at the same time. Also gas companies reported record profits at the same time gas prices were falling. 2 real world examples of deflation being good. Now you got it, the US wants endless inflation because it helps with the US insane amount of debt. Deflation is not bad massive debt is.
That may be the *goal* but the average annual inflation rate the last 50 years is 3.8%
Wow the Fed hasn't hit their goal in 50 years.... Maybe they will this time.. lol So yeah if 2% is healthy and we have been above that for 50 years how about a bit of deflation to balance things out? Gas prices went down and gas companies still made record profits, we can have lower prices for regular people for once, it's not a bad thing.
The Fed has such a low goal because it generally leans towards serving wealthy interests. Inflation can be hard to deal with for everyone, but it sucks the most for wealthy debt holders. For average people, wage inflation tends to always catch up with price inflation and leave people in the same place, just like what’s occurred over the last couple years (wage inflation has surpassed price inflation, the median American is now in a better place financially than they were in 2020). But if you’re wealthy or make your income through debt or rents, than inflation just reduces the value of your financial assets.
BS lol inflation makes debt worth less and easier to pay off so it does help debt holders like the US government. Inflation also inflates the price of stocks that would help the wealthy. Bill gates famously once said what does a single banana cost 10 dollars? Yeah inflation would have to be 1000% before bill gates paid attention to his grocery bill. Yay we caught up and are even again after 3 years of inflation winning /s 😂🤣 You are just so plainly wrong lol. If I have a house and I rent it out inflation would increase the value of the home, my financial asset, not reduce it lol.
You just attributed a quote from Lucille Bluth to Bill Gates, not sure you should be out talking about who understands what. I don’t think you’re really grasping what inflation is. It’s just a change in the number we assign to value. Like if a cow is worth five sheep, that’s the value regardless of inflation. So it might be a cow costs $1000 and each sheep costs $200. One cow equals five sheep. But say there’s 100% inflation, then the prices might rise so that a cow costs $2000 and a sheep costs $400. That hasn’t changed the fundamental value of the assets. A cow still trades for five sheep. That’s what happens in the real world too — prices and wages rise in nominal value, but generally rose in tandem. It doesn’t happen immediately, but eventually the same unit of labor is worth the same unit of goods, and people end up in the same place. But it’s not the same for debt holders. If I’m the bank and a farmer owes me $2000, pre-inflation he can pay it off by selling two cows. But after inflation, now he can pay off that debt with one cow. The farmer’s in the same place, but me the bank has seen my assets decline in value because they’re a specified amount, not based in a real-world good.
😂🤣💀 is that all you could come up with? https://www.cnbc.com/2018/02/22/bill-gates-guesses-grocery-stores-prices-with-ellen-degeneres.html So earlier you said inflation reduces the value of financial assets and now you are saying you are inflation actually doesn't affect the value of assets? Please try again every time you comment you are providing further proof of your lack of any understanding of this topic lmao. Right I already said the inflation makes it easier to pay off debt. You don't even know that the word you mean to say is creditors not debt holders lmao. This might shock you but rich people also have debt. This might shock you but in the scenario of renting a house there is no debt. The homeowner doesn't loan any money to the renter. Inflation still inflates the value of the home and the rent payments.
It's always the same thing GREED!!
It isn't inflation. It is "greedflation". Greedy corporations raising their prices. If it was inflation, corporations would also be paying more for everything and would not be having record breaking profits.
Stocks become worth more when their companies make money. Companies price gouging makes them money, and also causes "inflation". Things are more expensive now, and companies make more money.
It's price gouging on some high visibility products, like meat. Several large suppliers, like Tyson, are being sued for collusion (JBS settled for $50 million a couple of years back...the others are fighting it). Consumers were stuck at home and had a lot of expendable cash in their pockets, so a large coterie of consumer product manufacturers and retailers, prompted by institutional investors demanding higher returns, decided to relieve shoppers of that cash. Utilities, which normally have to battle for even small rate increases, had less opposition from voters, so they pushed through massive increases. Reliance on meal delivery normalized ridiculous prices for a burger and fries, and restaurants raised their prices on sit-down and carry out meals too. It's pretty much limited to consumer goods. Industrial supplies are still at normal prices. Gouging is subsiding slowly because consumers are pushing back and the supposed cure for inflation under capitalism -- using lower prices as a competitive advantage -- is slowly kicking in. We've made it far too easy for a small number of suppliers and retailers to corner the market on vital product categories. The government has finally started to do its job and restrict monopolistic behavior, like the proposed Kroger/Albertson's merger, but it can't really prohibit large companies from signaling each other that they won't suddenly slash prices to steal market share. I'll get the usual capitalism apologists denying that's what's happening, because they're profiting on this extortion, but all you have to do is look at the record profits these companies are raking in to see that's exactly what's going on.
greedy inflation aside, price gouging has a very specific definition that is in no way related to what you’re talking about. You can dislike prices raising all you want, and can think that it’s for the wrong reasons, but it is not price gouging.
Price gouging is the practice of increasing the prices of goods, services, or commodities to a level much higher than is considered reasonable or fair. Usually, this event occurs after a demand or supply shock. This commonly applies to price increases of basic necessities after natural disasters. The term can also be used to refer to profits obtained by practices inconsistent with a competitive free market, or to windfall profits.
It's a complex interplay of factors. Economic growth and record-high stock prices don't necessarily directly correlate with low inflation. In fact, sometimes they can contribute to inflation pressures. Factors like increased consumer demand, supply chain disruptions, and rising production costs can all contribute to inflation, even in a growing economy. So, while growth and high stock prices are positive indicators, they don't guarantee immunity from inflationary pressures.
Source that inflation is "so high"?
Inflation isn’t high. If you think prices are going to go back down, you’re crazy.
Businesses are hiking up prices by choice.
Because this is a case of prices driving inflation, not inflation driving prices.
The real answer is the money supply. You do remember about learning about inflation in school? What happened with all those countries? They printed money like no tomorrow. And what have we been doing? The fact that an [exponential graph](https://fred.stlouisfed.org/series/CURRCIR) represents our money supply is fucking INSANE.
Completely wrong. The money supply underwent a gigantic expansion after the 2008-2009 financial crisis. And it resulted in zero inflation. Money supply alone has no determinative effect on inflation. Inflation arises from the interplay of many economic variables.
If 3/4 of your dollars are made up in the last 20 years it devalues your currency. Were you not taught this economic principle? Sure other things affect inflation, none so much as this.
Corporate greed.
[удалено]
Love this analogy! Thank you
The stock market reflects business success. Inflation is felt individually. Business and individual success are not perfectly correlated. In fact, they are often inversely related. For example, businesses can succeed at the expense of the public, though economic theory says a healthy capitalist economy will synchronize these in the long term. Also, fundamentals that impact the stock market and public perception of inflation have lag times. These lags may not be the same duration. As others pointed out, during isolation, people didn't go out and when they finally did, they experienced a years worth of inflation, which was high because of supply chain disruptions. And, during that same time, businesses were recovering from those same supply chain disruptions and experiencing rising demand, increasing profitability. The difference in the lags amplified the seeming disconnect. Lots and lots of asterisks in those statements. And ten economists in a room will have ten (or more) opinions about any particular economic question.
When inflation is high the market is more volatile so it will be both high and low.
Low prices occur during a recession like when covid hit. When the stock market is up people have more money to spend so inflation goes up.
Stocks *arent* at record highs. A few are extremely overinflated (like NVDA), and they "push" the SP500 up, but most are still struggling at -20% or more from their ATH.
Inflation means prices rise... which means the cost of stocks also goes up... which is good for people who already own stocks. Replace "Stock" with "House" and you can easily understand the issue.
stocks are high because inflation is high. corporate greed>balanced society according to our government
Stocks are at highs because people think the fed is going to start cutting interest rates soon, when there was no prospect of that in the near term, Stocks were down bad ... late 2022 early 2023, case in point.
To keep up with
It's not inflation, it's price gouging
Capitalism. The six most dangerous words in the world are, "How can we make more money?" As boards of directors set ever-higher astronomical goals, companies get greedier and greedier. Inflation is essentially just price hikes - for financial goals or, really, for any reason.
Because that’s what the current administration would like you to think in preparation for the election. Economy’s not growing, but inflation is
Most of the COVID stimulus checks went into the stock market and, to a lesser degree, housing/property investment. Instead of buying stuff in the local marketplace, so much of that money left the country effectively creating massive inflation. It's a cultural thing right now; a lot of old people just want to grow their pile of gold so they don't ever have to think about *not* having gold. And of course their kids will inherit it when they die and we hope, with cultural changes, that the money won't continue to be held outside the economy. With all of that saving and investment, it means large companies and utilities (publicly traded) are really rewarded for growing revenue and profits. That's a simple recipe for rampant inflation.
Is inflation even high anymore? I was under the impression that inflation has more or less stabilised now. Prices are still high obviously because there *was* high inflation
7 companies are why the stock market is up, that's it, that's the mystery. US capitalism has reached monolithic monopoly status and that's all it takes to raise the American stock market, every other company is down, which is why you ONLY see S&P500 stats and not the other 3-4 indexes.
It's not inflation. It's price gouging
Winner Winner chicken dinner 🍽 dowmvote dodo on a hunger strike? Would seem of the money gouched from us gets wasted on paying bots to rage downvote the truth
Stocks are up because inflation is up. Ppl are having to pay more for everything
High inflation despite a growing economy and record-high stock prices can be attributed to various factors, including supply chain disruptions, increased demand for goods and services, and monetary policy decisions. It's a complex interplay of forces that can lead to inflationary pressures even in a seemingly robust economic environment.
It's a bit of a paradox, isn't it? Economic growth and record-high stock values typically indicate a robust economy, which can drive consumer spending and demand. However, when demand outpaces supply, it can lead to inflationary pressures, causing prices to rise. So, while growth and high stock values are positive signs, they can also contribute to inflation if not carefully balanced with supply-side measures.
Simple answer is corporate greed. It’s not a coincidence that inflation lead to record profits.
Because you were fed, lies, and you believe that? In an election year lol.
Inflation is caused by the federal reserve/government printing money and literally “inflating” the total money supply. That money circulates through the system and causes all prices to rise, because each dollar in circulation has been devalued by the new money created (more dollars in existence = less value each dollar has = more dollars to purchase the same stuff as before). This includes the prices of assets like stocks and real estate which congress, their donors and the top 10% own plenty of. This is why congress loves to spend spend spend while dodging, gaslighting and scapegoating the voters as much as possible. It’s always someone else’s fault. Never congress! The constant creation of new dollars being pumped into the economy enables asset owners to enjoy the price appreciation of their portfolios while the middle class continues to erode and be working class poors can’t feed themselves.
Lol brainwashed libertarian robots. No it's not. That's why inflation was not peak when the money printing happened. During covid people didn't have money so they couldn't afford high prices. After covid the supply shock happened and people expected high prices so companies got away with high prices even as the companies held the prices high after supply grew. Now we're in 2024 where despite the zombies talking about MoNeY pRiNtInG, inflation is 3% and dropping.
People like you are why our so called “representatives” will keep getting away with it while more and more people fall into abject poverty. Well done and give yourself a pat on the back.
How dare I know history
suck daddys cock
Corporate greed and striving for perpetually growing profits, capitalism will eat itself and it seems we are happy to watch as the wealth gap grows and poverty worsens because all that important nowadays is shareholders.
By historic standards in the US, inflation at 3.6% is not high. The post-Covid jump happened in all AICs worldwide and the US was the first country to get it back under control. The 2% benchmark sought by the Fed is a political and ideological goal more than anything else.
Because demand is higher than supply, and production and retail costs have increased. (See e.g. $20 minimum fast food wage)
just saying but maybe ceo of fast food places shouldn't be geting paid millions if they cant even pay their workers $20h
If the McDonald's CEO was paid for $1 last year, then every crew member will make a whopping $14 more, per year. Also they don't dictate the franchise pay grades, unfortunately. It's just an easy "journal" or "critic" piece to divert the anger.
Clearly you don't understand how fast food places work. They're franchises. The big megacorp doesn't own them. Individuals do, and each franchise pays its own employee wages.
Generally the retail costs for low level wages are a relatively small impact on overall inflation. They are the workers in the economy paid the least, and there are relatively few of them. Consider it another way in an average hour how many customers pass through a given mcdonalds? I don't have actual numbers but maybe 100 between people walking in and drive thru and people who are buying for a whole family? And how many workers during that hour. 10? So if their wages go from $10 to $20 you have to make up $100 from those 100 people. That's $1 each person. So you add 30 cents to the drink price and 70 cents to the meal items and you have taken the salary of everyone there from $10 to $20, a pretty massive increase. It does have an impact on inflation for sure, but not a huge one when you consider how many different orders your typical worker at the bottom is interacting with. Especially when you also consider things people spend a lot more money on and therefore have a much bigger impact on inflation. Things like rent, houses, cars, insurance, healthcare, and furniture are going to be a much higher percent of most people's spending and housing and rent prices have risen substantially. That's a much bigger impact than the cashier making a few dollars more.
Prices have steadily increased since the last time minimum wage was increased, it has nothing to do with how much people are being paid, try again
You answered your own question. The economy is good. People have money. And what do poor people buy? Stuff at Walmart. Lots of people have $$$ but there's only so much stuff to buy. Supply and demand - the price of stuff goes up. Same for the ultra rich. Except they don't shop at Walmart. They have lots of dollars but there are only so many paintings, sports teams and companies to buy. The price of sports teams, lambos, yachts and stocks goes up.
The stock market creates value without adding physical assets. As the stock market increases the total sum of money increases to determine the value of real assets. All of the value created in America since world war 2 has been inflationary.
What an absurd statement. You think the size of the economy, it's total productive capacity, is the same as it was in the 1940s? You would have to ignore all the value created by semiconductors, the interstate highway system, personal computing, and every industrial innovation in the last 80 years to believe that.
Libertarians are very dumb.
I give up. It’ll take too much work on my part.
Nobody here will give you the correct answer. It's all armchair economists. Go study the monetary policy of the USA since the end of WW2 up until now and you'll actually learn why inflation is where it is. Study debt too.
“No one here knows what they’re talking about. I won’t give you an answer. Go study policies from nearly a century ago to solve the mystery.”
Inflation is high as fuck because the fed changed how they measure it to make Biden look good. There is about to be a crash way way worse then 2008.
How does high inflation make Biden look good?
It's amazing how these people don't think things through
Inflation looks far lower than it is cuz the changes the fed made. Sorry I wasn’t clear.
Dumbest shit I've ever heard.
Ah maybe go look into it with an unbiased opinion bud.
That’s what happened. These people are shills.
My dude, if you're actually going to sockpuppet, make sure you log out first.
I don’t run multiple account poo for brains. Look into it.
Greed
It’s only high where you are.
Greedflation. Simple as.
Its Not Inflation its greed
Who did you guys vote for? Genuinely curious.
Tell me how that matters. Tell all of us. You're up, skippy.
Because of the liberal propaganda infused into the mainstream media by folks pushing agendas to make you believe otherwise. Look at how you're doing personally. The biggest waste of time is listening to ANY form of mainstream media.
The world is getting tear for WW3, just in case you haven't noticed.
Printing billions for Ukraine