A few issues with using Unemployment and GDP to get a pulse check on the economy, namely that having a job does not meaning you’re making anywhere near enough to survive even modestly and GDP is Gross Domestic Product which… just means we’re being productive?
Shit costs more, we’re being paid less, groceries are getting close to matching what I pay in rent, and I rarely feel like I can take a day off from work without getting behind financially. There is very little air to breathe. No room for mistakes.
The joke is that we used to be in a spot where sending money to Mexico made sense because they had ‘tighter margins’ and now the reverse is true. Most of us are living on a fucking thread with no ability to make real plans for the future. It’s bleak in America.
Yeah, so, anticipating that argument, I included inflation-adjusted median income in my original comment. That is, the income of an average American household after factoring in price rises due to inflation. If you ignore the spike in 2020 (which I’m pretty sure was just the COVID bailouts–and incidentally, the cause of subsequent inflation), Americans–median Americans, not the ultra-wealthy, not the 1% or the 10%, are doing better than they’ve ever done in history.
Of course, that doesn’t include rises in housing costs, education & healthcare, which by some calculations largely nullify the apparent rise in income. But overall? Mexico is not sending remittance to the US to help poor struggling Americans. In fact…
And a common misconception is that we arrived at this point due to inflation, which is not the case. Corporations have increased prices due to covid, which was fair, and have refused to lower them. This is becoming more apparent across all industries including homes where the price goes up not because of some external force but for the same reason since the dawn of capitalism.
Corporations have increased prices due to covid, which was fair, and have refused to lower them.
Corporations will always raise prices when they can, if it won’t cause a major drop in sales. That’s because they’re greedy! But also because the corporations upstream of them are also greedy and also raising prices, so their costs are also growing. When the cost of produce goes up for you, it goes up for McDonalds, too.
So here’s the thing, though. Normally, companies can’t raise prices, because people won’t buy their products at the higher price, because they’re also greedy. Or, their competitors will undercut them. But when everybody has more cash, and their accounts are nice and plump, the higher prices won’t deter them and they’ll buy anyway. If it’s only a few people who have more money, companies can’t change their prices too much, so inflation doesn’t result. But when everybody has more money, like say the government injects 5 trillion dollars into the economy, suddenly they can raise their prices and people will still pay!
We call this phenomenon inflation. And incidentally, even factoring in inflation, median worker pay is still rising.
CEOs are overpaid. But that really doesn’t have anything to do with inflation.
When the cost of produce goes up for you, it goes up for McDonalds, too.
That’s not happening at all. There has actually been deflation in inputs.
If you want to know how bad we’re being fucked, search for the PPI, the producer price index. CPI, the one we always hear about, is the measure of inflation to us, the consumer. The PPI is the measure of inflation to producers, what they pay for goods and services to produce the goods and services we buy.
The PPI has been back to “normal” for a while now. Pretty much as soon as the post COVID logistics issues were mostly ironed out. The difference between PPI and CPI changes is almost all profit.
We don’t get daily articles on the PPI though, I wonder why.
Tell people about PPI whenever you can, online or off, the more people know, the better. It’s easy enough to say inflation is just down to greed but being able to back it up by comparing two simple charts will help people really understand.
What your PPI graph shows is that it was sky high for the whole pandemic. More than 20%! That’s far higher than CPI inflation. Really, prices should’ve soared!
Also, PPI seems to be an index of raw materials for manufacturing; it’s focused on tracking costs of manufacturing inputs, not so much up the chain. In a service-oriented economy like the US, it’s not a very relevant statistic.
You really think restaurants are getting their food from some secret marketplace where everything is 90% off?
The only reason it didn’t go up 20% is you can’t get blood from a stone so they had to take a haircut on their profits. Click the food tab, you can see there has been an annualized ~5% deflation for most of a year now. That’s the point. Inputs don’t determine retail costs, they charge as much as they can.
And yes, restaurants do buy from wholesalers. The chart I liked is specifically intermediate inputs. If you’re so ignorant about the way things work that you think restaurant owners are going to the grocery store, I don’t know what to tell you.
Obviously. And always have. They have always got a good deal for buying bulk and setting up long-term contracts. But when food costs go up, wholesale costs go up too. If that weren’t the case producers would prefer to sell to customers instead, so companies would have to offer more to get the raw materials they need.
You don’t think the ‘greedy’ food production industry is gonna raise their prices for restaurants? You think Tyson Foods is giving their corporate customers 50% off the price they could be charging?
Or are you saying that food prices have fallen (i.e. Tyson et al are charging lower prices), but that all the restaurants in America, along with all the grocery stores, are conspiring to keep prices high for consumers? And no single mom & pop shop is like, hey, we could lower our prices to our old pre-pandemic profit margin and make a fucking killing by being the cheapest store/restaurant in town? You think all the little places complaining about upstream food costs are lying? Or is there some kind of line drawn, where some small stores & restaurants get the shitty prices, but at a certain point they get the secret conspiracy pricing?
You don’t think the ‘greedy’ food production industry is gonna raise their prices for restaurants?
It doesn’t matter what I think, or what you think. The intermediate PPI I linked is what they’re paying. And what they’ve been paying has seen annualized deflation of ~5% for most of a year now. Why? I’m not sure. Maybe because we can’t stop eating but restaurants can close their doors if their profit margins disappear so their demand is more elastic. It doesn’t make sense for suppliers to drive their customers out of business. Maybe it’s something else, it doesn’t matter. They’re paying what they’re paying, and what they’re paying has been deflating at 5% annualized for a while.
Or are you saying…all the restaurants in America, along with all the grocery stores, are conspiring to keep prices high for consumers?
No need for a conspiracy when there is a lack of incentive to do anything else. Why would they ever charge less than we’ll pay?
And no single mom & pop shop is like, hey, we could lower our prices
Have you not been paying attention for the last 40 years? Small business in competition with giant corporations have to run razor thin margins to stay competitive. And if one did manage to find a little fat to cut, Walmart et al. will just run at a loss until they’re gone.
As long as we can pay, they’ll charge more. Where is the money coming from? I don’t know, maybe it’s the increased savings rate during COVID I read so much about, maybe something else. For things with inelastic demand people will deplete savings and run up credit cards. Once that money has been extracted…blood, stone, etc. The prices will come down, but not until maintaining them is literally impossible. Anything else would violate fiduciary responsibility to the shareholder.
Do you genuinely think that giving Americans a few hundred bucks caused immediate and persistent inflation? Because I’m more inclined to blame the spike on a collapse in the global supply chain due to quarantining of factory workers and container ship crews, and the subsequent increases on a combination of factors, including interest rates (or, more accurately, what caused the raise in interest rates) and corporate greed.
Every person got $1200 in the form of a relief check, plus $500 per child. That by itself would explain the sharp rise in apparent median income in 2020. Also, though, welfare was much more generous and easy to join during the pandemic. And of course there were major handouts to businesses. The government printed a
ton of money during the pandemic.
All of that extra cash (plus some supply-chain factors, sure) triggered inflation. But again: even adjusting for inflation, incomes are right where they were in 2019.
A few issues with using Unemployment and GDP to get a pulse check on the economy, namely that having a job does not meaning you’re making anywhere near enough to survive even modestly and GDP is Gross Domestic Product which… just means we’re being productive?
Shit costs more, we’re being paid less, groceries are getting close to matching what I pay in rent, and I rarely feel like I can take a day off from work without getting behind financially. There is very little air to breathe. No room for mistakes.
The joke is that we used to be in a spot where sending money to Mexico made sense because they had ‘tighter margins’ and now the reverse is true. Most of us are living on a fucking thread with no ability to make real plans for the future. It’s bleak in America.
Yeah, so, anticipating that argument, I included inflation-adjusted median income in my original comment. That is, the income of an average American household after factoring in price rises due to inflation. If you ignore the spike in 2020 (which I’m pretty sure was just the COVID bailouts–and incidentally, the cause of subsequent inflation), Americans–median Americans, not the ultra-wealthy, not the 1% or the 10%, are doing better than they’ve ever done in history.
Of course, that doesn’t include rises in housing costs, education & healthcare, which by some calculations largely nullify the apparent rise in income. But overall? Mexico is not sending remittance to the US to help poor struggling Americans. In fact…
And a common misconception is that we arrived at this point due to inflation, which is not the case. Corporations have increased prices due to covid, which was fair, and have refused to lower them. This is becoming more apparent across all industries including homes where the price goes up not because of some external force but for the same reason since the dawn of capitalism.
Fucking greed.
I know that’s not as convincing as graphs so allow me to procure one I find more relevant.
Corporations will always raise prices when they can, if it won’t cause a major drop in sales. That’s because they’re greedy! But also because the corporations upstream of them are also greedy and also raising prices, so their costs are also growing. When the cost of produce goes up for you, it goes up for McDonalds, too.
So here’s the thing, though. Normally, companies can’t raise prices, because people won’t buy their products at the higher price, because they’re also greedy. Or, their competitors will undercut them. But when everybody has more cash, and their accounts are nice and plump, the higher prices won’t deter them and they’ll buy anyway. If it’s only a few people who have more money, companies can’t change their prices too much, so inflation doesn’t result. But when everybody has more money, like say the government injects 5 trillion dollars into the economy, suddenly they can raise their prices and people will still pay!
We call this phenomenon inflation. And incidentally, even factoring in inflation, median worker pay is still rising.
CEOs are overpaid. But that really doesn’t have anything to do with inflation.
That’s not happening at all. There has actually been deflation in inputs.
If you want to know how bad we’re being fucked, search for the PPI, the producer price index. CPI, the one we always hear about, is the measure of inflation to us, the consumer. The PPI is the measure of inflation to producers, what they pay for goods and services to produce the goods and services we buy.
The PPI has been back to “normal” for a while now. Pretty much as soon as the post COVID logistics issues were mostly ironed out. The difference between PPI and CPI changes is almost all profit.
We don’t get daily articles on the PPI though, I wonder why.
Tell people about PPI whenever you can, online or off, the more people know, the better. It’s easy enough to say inflation is just down to greed but being able to back it up by comparing two simple charts will help people really understand.
PPI
CPI
What your PPI graph shows is that it was sky high for the whole pandemic. More than 20%! That’s far higher than CPI inflation. Really, prices should’ve soared!
Also, PPI seems to be an index of raw materials for manufacturing; it’s focused on tracking costs of manufacturing inputs, not so much up the chain. In a service-oriented economy like the US, it’s not a very relevant statistic.
You really think restaurants are getting their food from some secret marketplace where everything is 90% off?
The only reason it didn’t go up 20% is you can’t get blood from a stone so they had to take a haircut on their profits. Click the food tab, you can see there has been an annualized ~5% deflation for most of a year now. That’s the point. Inputs don’t determine retail costs, they charge as much as they can.
And yes, restaurants do buy from wholesalers. The chart I liked is specifically intermediate inputs. If you’re so ignorant about the way things work that you think restaurant owners are going to the grocery store, I don’t know what to tell you.
Obviously. And always have. They have always got a good deal for buying bulk and setting up long-term contracts. But when food costs go up, wholesale costs go up too. If that weren’t the case producers would prefer to sell to customers instead, so companies would have to offer more to get the raw materials they need.
You don’t think the ‘greedy’ food production industry is gonna raise their prices for restaurants? You think Tyson Foods is giving their corporate customers 50% off the price they could be charging?
Or are you saying that food prices have fallen (i.e. Tyson et al are charging lower prices), but that all the restaurants in America, along with all the grocery stores, are conspiring to keep prices high for consumers? And no single mom & pop shop is like, hey, we could lower our prices to our old pre-pandemic profit margin and make a fucking killing by being the cheapest store/restaurant in town? You think all the little places complaining about upstream food costs are lying? Or is there some kind of line drawn, where some small stores & restaurants get the shitty prices, but at a certain point they get the secret conspiracy pricing?
It doesn’t matter what I think, or what you think. The intermediate PPI I linked is what they’re paying. And what they’ve been paying has seen annualized deflation of ~5% for most of a year now. Why? I’m not sure. Maybe because we can’t stop eating but restaurants can close their doors if their profit margins disappear so their demand is more elastic. It doesn’t make sense for suppliers to drive their customers out of business. Maybe it’s something else, it doesn’t matter. They’re paying what they’re paying, and what they’re paying has been deflating at 5% annualized for a while.
No need for a conspiracy when there is a lack of incentive to do anything else. Why would they ever charge less than we’ll pay?
Have you not been paying attention for the last 40 years? Small business in competition with giant corporations have to run razor thin margins to stay competitive. And if one did manage to find a little fat to cut, Walmart et al. will just run at a loss until they’re gone.
As long as we can pay, they’ll charge more. Where is the money coming from? I don’t know, maybe it’s the increased savings rate during COVID I read so much about, maybe something else. For things with inelastic demand people will deplete savings and run up credit cards. Once that money has been extracted…blood, stone, etc. The prices will come down, but not until maintaining them is literally impossible. Anything else would violate fiduciary responsibility to the shareholder.
Do you genuinely think that giving Americans a few hundred bucks caused immediate and persistent inflation? Because I’m more inclined to blame the spike on a collapse in the global supply chain due to quarantining of factory workers and container ship crews, and the subsequent increases on a combination of factors, including interest rates (or, more accurately, what caused the raise in interest rates) and corporate greed.
I do think that injecting almost 5 trillion dollars into an economy can trigger inflation, yes.
Every person got $1200 in the form of a relief check, plus $500 per child. That by itself would explain the sharp rise in apparent median income in 2020. Also, though, welfare was much more generous and easy to join during the pandemic. And of course there were major handouts to businesses. The government printed a ton of money during the pandemic.
All of that extra cash (plus some supply-chain factors, sure) triggered inflation. But again: even adjusting for inflation, incomes are right where they were in 2019.