Are you buying some kind of specialty deodorant? I just bought 3 sticks for $9 total literally last week. Old Spice.

15-20 year ago you were firmly in the upper middle class if you were making 100-120k gross family income (whether you did it with 1 income or 2)

175-200k translated to a very nice house, and a nice new car was in the 20-25k range. Fast food means generally cost $5 per person, gas was $1.5-2 per gallon, and sending a kid to most normal colleges was a $10-20k per year financial investment.


Today houses of those same levels are 2x that, fast food is 3-4x that, gas is 2-2.5x, and college is 2-4x that. In my opinion a solid middle class family budget has risen ~2.5-3x in less than two decades.

The problem is that wages have not grown as fast. The number of families now making the necessary $250-360k to keep up is lower.

And I think wage growth situation for the bottom 20% of the population got even worse.

Bearpitbull said:

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But just to clarify, we are all rooting for good economic news right? You know, for our neighbors and all, right?

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What are you blabbering about?

Ol_Ag_02 said:

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Logos Stick said:

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If energy prices dont affect you, that's great. Please educate us on how to get around that.

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Simple don't buy, rent, or consume stuff.

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"You'll own nothing and you'll like it" policy is in effect

hph6203 said:

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I said the expectation was that housing would go deflationary next year, not on the next report. You said that wasn't possible. I explained how it was possible.

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LOl you are claiming that housing prices will DROP in 2024?

at the same time mortgage rates are supposedly going to be lowered?

so there is a massive demand now but no supply of affordable housing -

and in your mind once there is an even greater demand with lower mortgage interest rates the price of housing will then go DOWN?!?

LMCane said:

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hph6203 said:

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I said the expectation was that housing would go deflationary next year, not on the next report. You said that wasn't possible. I explained how it was possible.

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LOl you are claiming that housing prices will DROP in 2024?

at the same time mortgage rates are supposedly going to be lowered?

so there is a massive demand now but no supply of affordable housing -

and in your mind once there is an even greater demand with lower mortgage interest rates the price of housing will then go DOWN?!?

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So there are definitely competing narratives. There is a LOT of spec inventory right now that is not even reported in permitting. There is a LOT of off MLS inventory. Particularly focusing on the institutional owners of property spec built for rent - flooding the MLS is counterproductive.

Also, since there is very little transaction velocity, the large builders are able to keep the homes on their balance sheet at cost rather than adjust to market. Once we get through an audit cycle...you're going to see a lot of significant home builder stress. They're going to have to start liquidating which will lead to significant market adjustments.

Those price adjustments may be offset or they may not be. It's not unthinkable to think we could see a very large correction in housing prices even in the face of lower rates.

this should help...

August wholesale inflation rises 0.7%, hotter than expected, but core prices in check
PUBLISHED THU, SEP 14 2023 8:30 AM EDTUPDATED 29 MIN AGO

The producer price index increased a seasonally adjusted 0.7% in August, higher than the 0.4% estimate and the biggest monthly gain since June 2022.

However, excluding food and energy, core PPI rose 0.2%, in line with the estimate.

Elsewhere, retail sales climbed a higher-than-expected 0.6% in August, well above the 0.1% estimate.

Initial jobless claims nudged up to 220,000 for the week ended Sept. 9, below the 225,000 estimate.

Sims said:

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LMCane said:

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hph6203 said:

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I said the expectation was that housing would go deflationary next year, not on the next report. You said that wasn't possible. I explained how it was possible.

---

LOl you are claiming that housing prices will DROP in 2024?

at the same time mortgage rates are supposedly going to be lowered?

so there is a massive demand now but no supply of affordable housing -

and in your mind once there is an even greater demand with lower mortgage interest rates the price of housing will then go DOWN?!?

---

So there are definitely competing narratives. There is a LOT of spec inventory right now that is not even reported in permitting. There is a LOT of off MLS inventory. Particularly focusing on the institutional owners of property spec built for rent - flooding the MLS is counterproductive.

Also, since there is very little transaction velocity, the large builders are able to keep the homes on their balance sheet at cost rather than adjust to market. Once we get through an audit cycle...you're going to see a lot of significant home builder stress. They're going to have to start liquidating which will lead to significant market adjustments.

Those price adjustments may be offset or they may not be. It's not unthinkable to think we could see a very large correction in housing prices even in the face of lower rates.

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so what you are stating is that to buy NEW homes from the builders the prices will drop because they need to get the properties off their books..

but what about pre-owned homes?

isn't the pre-owned home market much larger than the new home market?

I hope you are correct though as I want to buy a new home in Florida.

UAW asking for 40% increase to cover inflation over the last 4 years. So 8%-9% compounded, but Bidenomics says < 15% in 2 years?

Nothing really happens in a bubble - if you see significant drops in new home prices, the mexican standoff in existing home sales (pricing) will be impacted.

Housing is priced at the margins, each new transaction resets the pricing for everything still for sale (to some degree).

So for existing homes, if someone has to sell because of a layoff or death or whatever, they'll be competing with new homes for sale that may be significantly under their price point for a like home - they'll have to make the choice of lowering their price or not selling.

You're taking an alternate conclusion (that rates will reduce next year) and backing it into a statement I made about what the SF Fed said with respect to shelter inflation. I misquoted them in that post, as there was a 2-week gap between when I initially read the article and when I responded and misstated it as would instead of could (correction made before you replied).

The point of the discussion is that the OP believes that further rate hikes are necessary in order for inflation to come down (a point you seem to believe won't be necessary as you're saying you believe rates will fall). I said they weren't because a large proportion of the current inflation is in shelter and it is expected to fall and could go negative next year. He said that shelter inflation could not go negative as interest rates just rose, and I responded by saying that interest rates did not just rise, they have been elevated to near current levels for 12 months, and have been rising for 18 months and starting now into next year is where you have rates at a similar level as 12 months prior.

Reducing rates also does not necessitate home prices rising. You have prices set based upon 2 years of interest rates in the sub 3.5% range, and as low as 2.5% in a generally low supply environment that rapidly shifted into 6-7% interest rates making owners reconsider selling and maintaining that low supply. If you remove that friction by making selling less painful (i.e. owners don't have to switch from 2.75% to 7.5%) it can result in a better realization of values than the current low supply market. I wouldn't expect that, but it's not impossible. Even if the Fed reduces rates next year as expected, it doesn't mean that there is going to be a significant reduction in mortgage rates as the 10-year is significantly inverted to the Fed rate. So we may end up with 6% mortgage rates through a large portion of 2024.

Anyway, the main point was that shelter inflation should reduce from 7.3% on the most recent report without additional rate hikes. Certainly none of any significance.

evan_aggie said:

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UAW asking for 40% increase to cover inflation over the last 4 years. So 8%-9% compounded, but Bidenomics says < 15% in 2 years?

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Inflation is their argument, their real reasoning is present leverage and dwindling leverage over time. This is their best opportunity to get as much as possible.

The UAW is asking for as much as they can right now because the legacy auto manufacturers are caught between producing gas/hybrid vehicles and transitioning to electric vehicle production. That's a two-sided issue as the auto manufacturers are facing competition from companies that are more vertically integrated, which facilitates iterating their designs faster, and is more rapidly reducing their costs than they're capable of with their current business practice of using suppliers for around half or more of their final product. They are also beholden to their dealer networks who make up a significant proportion of their profits through services and electric vehicles require less regular service. Profits taken from suppliers, dealers and now the union workers want their share competing against non-unionized vertically integrated manufacturers with no dealer network.

The other side of the equation is that the UAW recognizes that if electric vehicles are the future their members will become less and less necessary as the labor requirements of assembling them are significantly less (estimates by the union and Ford's CEO are around 40% less labor) so this is possibly their last big opportunity to get a significant raise.