evan_aggie said:

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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.

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Quinn said:

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I get the feeling that you should trust this Scimitar guy when it comes to agricultural commodities..

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Scimitar said:

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evan_aggie said:

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Yeah, maybe in 6 months I won't pay $5.99/lb for brisket, but I'm not sure if I'll see $2.89 again in the foreseeable future.

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I'm gonna start a new inflation gauge and call it the CPB index. Consumer Price (of) Brisket

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ABATTBQ11 said:

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evan_aggie said:

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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.

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Chipotle and McDonald's don't have $15 starting wages. Average? Yes (at corporate stores). Starting? No.

Lumber back down to $200? What decade do you live in? Lumber hasn't been at $200 for a long time. Try $350-$400 as a realistic average. Lows around $250, but saying back down to $200 is just asinine. It's at <$600 now after almost hitting $1700 just 2 months ago.

The sky is not falling.

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If businesses and/or labor participants build in inflation expectations higher than others, I believe we will see innovation, automation, ingenuity, and even good old hustle, step in to fill the gap. Of course it won't be instant, but it will happen.

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Deputy Travis Junior said:

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I get your point, and agree that a lot of this inflation was caused by government action, but does the distinction really matter? If I'm a small business and my payroll just increased 10-20%, I would argue that it is unimportant, at least to me, whether the increase was caused by a market-wide decline in confidence in the USD or my government meddling with my potential labor pool via stimulus checks to low income workers.

This is doubly true given the stickiness of wages. Once all these stimulus measures disappear - and there's a healthy debate to be had over what will even expire and what will be made permanent, but that's another thread - do you see employers giving a bunch of workers a bunch of $3-5/hour paycuts? My guess is that this will be the new normal and all those costs will end up flowing through to the price of many goods.

This isn't runaway, economy-ruining inflation but I wouldn't say it's the insignificant speed bump that you seem to think it is either. It is a very real shock that devalues savings, screws with budgets, and does everything else that inflation does.

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Scimitar said:

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I've said it before elsewhere, but last year's "recession" was actually a government-induced shutdown. So, by extension, the higher prices were seeing now, with some exceptions, are also government-induced (particularly in labor with unemployment "kickers" that pay you more to stay home, and also reflecting tax policy fleeing high tax apartment cities to low tax home ownership suburbs).

Good article in this weekend's Barron's On the Crisis and Inflation that draw parallels from coming out of WWII rationing (and increased spending and inflation fears)with coming out of this pandemic. Remember, similar and identical are two different words. The idea is we apply some principles of the past to inform the present and future. For example,

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Despite the inflation fears shared by Holden and other economy watchers, these unspent funds didn't finance a postwar consumption boom

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Even Milton Friedman wrote in 1980 that

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The reported price increases in 1946 and 1947 were not really inflation, but merely "the unveiling of price increases that had occurred earlier.

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Investors really fear higher interest rates because technology development will get more expensive. But, I'd argue technology is actually deflationary. As we continue to automate, and get more efficient, it eventually brings costs down.

In the interim, you could look at companies that have a long history of increasing their dividends and whose yields outpace inflation. Like a few others, I like deep value stocks here too.

The one caveat in the article, with which I agree, is

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Perhaps instead of worrying about a temporary uptick in inflation after the pandemic ends, Americans should focus more on the danger posed by weak consumer recoveries abroad that could hit U.S. exporters and widen the trade gap.

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Keep in mind that people have been fearing runaway inflation since 2008.

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Casey TableTennis said:

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evan_aggie said:

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Covid sickness closing down meat packing plants - higher brisket cost has nothing to do with actual inflation

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If I'm a business, and I care about my bottom-line, I'm going to start jacking my prices because the belief in inflation is almost as strong as any theoretical/fundamental you can dream of. I read a couple of articles about the last bout of inflation, and some of it is self-fulfilling as much as it is anything else.

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I was writing about this just last night in an economic brief I am penning and am increasingly viewing the worry over inflation becoming a momentum building factor. However, just because it may become self-fulfilling, doesn't mean it will become self-fulfilling. Case in point, the worry really expectation of hyper-inflation coming out of the credit crisis was an order of magnitude greater than inflation worries today, yet never came to be.

The economy and labor markets are increasingly complete. Where a gap exists, opportunity exists. If businesses and/or labor participants build in inflation expectations higher than others, I believe we will see innovation, automation, ingenuity, and even good old hustle, step in to fill the gap. Of course it won't be instant, but it will happen. We are already seeing an affordable housing movement with various solutions. Price stickiness is real, but so are substitution effects and they moderate inflation like clockwork, albeit on a delay.

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SteveBott said:

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Another Fed Chairman saying this is temporary or 'transitory'.

https://www.cnbc.com/2021/07/15/yellen-sees-several-more-months-of-rapid-inflation-worries-about-impact-on-home-buyers.html?utm_source=facebook&utm_medium=news_tab&utm_content=algorithm

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"We will have several more months of rapid inflation," Yellen told Sara Eisenduring a "Closing Bell" interview. "So I'm not saying that this is a one-month phenomenon. But I think over the medium term, we'll see inflation decline back toward normal levels. But, of course, we have to keep a careful eye on it."

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SteveBott said:

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I see nothing wrong with that statement. That is exactly what I'm doing. I'm watching the market but have done that anyway for 18 years.

How many Covid checks did folks get? One and when it gone it's gone. Those funds will go through they system and we are back to pre checks.

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My point is that she has no idea if it's transitory. She's hedging.

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Scimitar said:

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My point is that she has no idea if it's transitory. She's hedging.

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You do realize that analysis isn't absolute, right? Even disregarding analysis is taking a stance.

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Scimitar said:

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My point is that she has no idea if it's transitory. She's hedging.

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You do realize that analysis isn't absolute, right? Even disregarding analysis is taking a stance.

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