Did you read my article? Explained there.

And see my post as well

CPI expected early Tuesday. Recall May was .6, with the last 3 months at 2% and last 12 months at 5%.

I'm calling .8%, last 3 months at 2.2% and last 12 at 5.6%. Analysts are predicting .5%.

Well you were wrong!

It was 0.9% increase over last month, even higher than you were estimating. Annual was 5.4% I can't readily find last 3 months.

Wow! They revised down some prior months, but last 3 months is at 2.3%.

https://www.bls.gov/news.release/cpi.nr0.htm

You're right obviously that a lot of this is transitory. If you suppress demand for a year and then lift restrictions, you're going to see a hefty demand spike that temporarily drives up prices. But, in the last month, we've gone from "it's all transitory and it will be gone soon" to "actually, slightly elevated inflation is going to linger another 18-24 months." And oh by the way the executive branch is pushing lavish new trillion dollar programs that would be annoying to finance at higher rates (and as we know, increasing rates is an important tool to combating inflation).

Not saying the world's ending, but it's something to keep an eye on. And we sure as hell don't need to be worrying about deflation right now.

Well, most of that (spending) has been the inflation hawk call since 2008. No doubt, at some point, we'll see real, non-government-driven (sorta) inflation and the "I was early but I was right" hawks will come out in full force.

That said, things like labor costs are sticky. I actually think it was a brilliant move by the Democrats to back-door in a minimum wage increase with the federal unemployment "kicker" that let people stay at home and make more than when working.

And for yet another side, tech is deflationary and will also drive down...or stagnate,.. those higher labor costs in the aggregate (less workers needed can offset cost per worker).

Scimitar said:

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Well, most of that (spending) has been the inflation hawk call since 2008. No doubt, at some point, we'll see real, non-government-driven (sorta) inflation and the "I was early but I was right" hawks will come out in full force.

That said, things like labor costs are sticky. I actually think it was a brilliant move by the Democrats to back-door in a minimum wage increase with the federal unemployment "kicker" that let people stay at home and make more than when working.

And for yet another side, tech is deflationary and will also drive down...or stagnate,.. those higher labor costs in the aggregate (less workers needed can offset cost per worker).

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Tech is deflationary, except for microchips and everything that depends on them apparently.

Are REE's and our inability to mine and process them while relying on China also deflationary?

mazag08 said:

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Scimitar said:

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Well, most of that (spending) has been the inflation hawk call since 2008. No doubt, at some point, we'll see real, non-government-driven (sorta) inflation and the "I was early but I was right" hawks will come out in full force.

That said, things like labor costs are sticky. I actually think it was a brilliant move by the Democrats to back-door in a minimum wage increase with the federal unemployment "kicker" that let people stay at home and make more than when working.

And for yet another side, tech is deflationary and will also drive down...or stagnate,.. those higher labor costs in the aggregate (less workers needed can offset cost per worker).

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Tech is deflationary, except for microchips and everything that depends on them apparently.

Are REE's and our inability to mine and process them while relying on China also deflationary?

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Disagree

Look at flat screen TVs....what "old" plasmas cost vs. the latest 5K UHD (or whatever it is now) cost...when each came out and within a few years after

As for REEs, I'll point to the oil sands of Canada back in the day. No one cared about them when oil was $10.

The market has a pesky habit of curing high prices with high prices

Even though I maintain YoY (2020 vs 2021) isn't an appropriate look, here's a good look at inflation Feb 2020-Jun 2021, in terms of sector contribution to overall CPI

Jabin said:

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How is housing classified as a negative contribution?

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Exactly. I don't need hard data to say that is a load of crap.

https://www.washingtonpost.com/opinions/2021/07/12/rent-prices-are-surging-thats-ominous-news-inflation-rates/

Quote:

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That makes the recent rise in rents, which comprises about a third of the total market basket, crucial to the future inflation rate. One- and two-bedroom apartment rents were up roughly 5 percent from a year ago in June, even though rents since then had plummeted in some of the nation's largest cities as residents left during lockdowns to pursue jobs elsewhere or telecommute from cheaper regions. Rents for single-family detached homes, the type most people own, were up even more 7.9 percent in April. The consumer price index, however, only reported annual rental inflation of a bit more than 2 percent in May. These larger hikes are going to start to impact the CPI as soon as existing homeowners figure out that their neighbors are getting more for their homes and start giving higher rent figures to BLS pollsters.

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You just quoted how it can be net down in a 16 month period

Edit for clarity

Yeah, we must be reading two different articles.

You do realize how these comparisons work right? There's this month this year vs this month last year and then there's the total amount of change from this point in time to that point in time.

Also this,

"Housing units are not in the CPI market basket. Like most other economic series, the CPI views housing units as capital (or investment) goods and not as consumption items. Spending to purchase and improve houses and other housing units is investment and not consumption. Shelter, the service the housing units provide, is the relevant consumption item for the CPI. The cost of shelter for renter- occupied housing is rent. For an owner-occupied unit, the cost of shelter is the implicit rent that owner occupants would have to pay if they were renting their homes."


https://www.bls.gov/cpi/factsheets/owners-equivalent-rent-and-rent.pdf

Do you think rent prices are going up or down in the next 6-12 months?

Do you think the average rent price in the US will be at its highest level within 12 months?

Depends where

Probably not... depends where

But selective short-term increases makes inflation not

Mas89 said:

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Yes. But I'm not buying into " transitory ". Not when all the products are so inflated. I see it daily. No way all these different material prices go back to where they were. I'm sure we will continue massive stimulus packages and money printing going into the 22 and 24 elections but in my opinion, there are lots of balloons that will bust eventually.
Edit to add that steel and lumber prices and many related products are up 200-400 percent. Petroleum products and plastics 30-40 percent.
These are materials we purchase regularly. But I'll be glad if they all magically go back to pre COVID prices. Or should I say pre-Biden?

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Lumber has crashed back down to earth recently if you haven't noticed. It's at $600/thousand BF. Steel is still way up, but it may be leveling off. There is sky high demand, but some of that may be because commercial projects and probably a lot of goods production was slowed or postponed in 2020 and you're now seeing it happening on top of what would have happened in 2021 anyway. Look at steel production worldwide. It increased for 5 years straight (16% total) until it slipped 1% in 2020. The world is playing catchup.

There was a supply/demand shock, but people looking at the "return" to earth are missing the fact that long term forecasts show lumber materials +40-50% higher than they've been for the last decade.

I went to HEB and a damn packet brisket was $5.99 a lb! do you know how many briskets I cooked early in the pandemic for $2.89 a lb?

bmks270 said:

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Rents are sky rocketing most places.

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How much of this is white collar workers fleeing high COL cities on the coasts for areas with limited rental supply?

Also, per my earlier comment, this isn't worrisome because it is a manifestation of runaway inflation but instead a further bifurcation of the economy. We're well on our way to a Work From Anywhere (WFA) class and a blue collar / gig class that exists solely to provide comfort and convenience to members of the WFA class.

jh0400 said:

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We're well on our way to a Work From Anywhere (WFA) class and a blue collar / gig class that exists solely to provide comfort and convenience to members of the WFA class.

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Just tweeted out that quote...well said.

evan_aggie said:

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There was a supply/demand shock, but people looking at the "return" to earth are missing the fact that long term forecasts show lumber materials +40-50% higher than they've been for the last decade.

I went to HEB and a damn packet brisket was $5.99 a lb! do you know how many briskets I cooked early in the pandemic for $2.89 a lb?

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Forecasts are merely prognostications. They're not guarantees. All prices could just as easily, and I would argue will, return to what they would have been anyway once supply chains and demand are settled and back to normal.

In the world of time series forecasting, covid is arguably known as something called a shock event. They cause immediate and lasting disruption to auto correlation and moving averages within systems, but their effects fade over time. Covid is without a doubt an utterly massive shock event, but that doesn't mean its effects won't eventually fade and leave us right back on track just like any other. It has unbalanced many things, and they are currently funding their at back to equilibrium. It will take longer than after other shock events, but I have a lot of confidence it will happen.

And some of the smartest guys in the room say it's temporary

https://www.cnbc.com/2021/07/14/powell-says-the-fed-is-still-a-ways-off-from-altering-policy-expects-inflation-to-moderate.html?utm_source=facebook&utm_medium=news_tab&utm_content=algorithm

That type of increase isn't just inflation. That type of increase signals supply/demand issues at a production-level, distribution-level, geography-based, etc.

Starting wages for McDonalds and Chipotle aren't going to return back to less than $15/hr.

Lumber isn't dropping back down to $200.

Pre Covid lumber was not 200. More like 245. And there was not a retail company in my city paying minimum before Covid. Minimum was 10 but many offered 11

Scimitar said:

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We really need to add economics to primary and secondary school education

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SteveBott said:

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Pre Covid lumber was not 200. More like 245. And there was not a retail company in my city paying minimum before Covid. Minimum was 10 but many offered 11

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And are they offering $11 today or more?

I dont know. I changed my eating habits in Covid and rarely eat fast food anymore. They all had signs up before the virus.