The State of the Economy Thread - “Falling inflation, rising growth give U.S. the world’s best recovery”

[Califan007 The Constipated]

13 minutes ago, tshile said:

I helped start a business that sells services and goods to the public. 
 

im keenly aware of the running of the business and have/have had input, but it’s a bit easier when you don’t actually have skin the game. 
 

how many giant corporations have you run?

 

Did I ask anyone if they ran a giant corporation? No. So why are you asking me if I have?

 

For the record, I ran my own management services business for about 3 years, had a little over $2M a year in contracts.

[tshile]

4 minutes ago, Califan007 The Constipated said:

Did I ask anyone if they ran a giant corporation? No. So why are you asking me if I have?

Because the complaint isn’t against “business owners”

 

the complaint is against mega corporations that are abusing their power over the economy to get record profits, and they’re doing it during a world wide crisis. 
 

why medium and small business owners feel the need to throw around this business ownership thing, as if you’re the one under attack with this, or as if being a small/medium business owner somehow allows you to relate to the executives as Exxon, or Walmart, or any of the companies that are really the focus of the conversation… is beyond me. 
 

as far as I can tell it sucks to be a small/med sized business if you aren’t running on government contracts. 
 

i see my business’s issues but I also see all (well, many) of my clients issues due to my role. It’s sucks. It’s sucked for a while. Top to bottom. Supplies to run your office. Keeping your good employees happy (cause you’ve been leaning on them hard for going on 3 years now). Figuring out what to do with your not good employees. Figuring out how to attract people. Dealing with wages. If you’re in services, dealing with contracts being canceled; things you were just waiting for a signature on yo be put on pause; future client pool drying up as everyone halts spending and reexamines how to move forward. 
 

I think most people with a brain understand that. If you work for a business in any meaningful way you definitely are seeing some of this, at least. 
 

owning a business has nothing to do with this. Owning a mega corporation does. That’s why I asked. 

[steve09ru]

Theres a mixture of everything currently and y’all have pretty much all mentioned.  Demand, supply (or lack of due to both demand and manufacturing/shipping constraints which is why demand is higher), labor needs/competition (driving wages and operating costs up), corporate greed (probably some but those indirect costs and shortages start with the manufacturers which again goes back to demand).  Anytime costs go up (regardless of why), can be considered inflation.  There’s so many links in the chain that can drive prices one way or another

[Califan007 The Constipated]

3 minutes ago, tshile said:

Because the complaint isn’t against “business owners”

 

the complaint is against mega corporations that are abusing their power over the economy to get record profits, and they’re doing it during a world wide crisis. 
 

 

So?

 

I asked because I was curious what everyone's work/business experience was in association with their viewpoints on inflation.

[tshile]

10 minutes ago, Califan007 The Constipated said:

 

So?

 

I asked because I was curious what everyone's work/business experience was in association with their viewpoints on inflation.

Completely misunderstood your intentions. I apologize, my bad

[Larry]

1 hour ago, Califan007 The Constipated said:

How many on this thread have owned their own business? Did your business deal in selling goods to the public? I'm just curious.

 

1 hour ago, CousinsCowgirl84 said:

For 15 years….

During those 15 years, how many times have you raised your prices because your customers demanded it?  

[Califan007 The Constipated]

33 minutes ago, tshile said:

Completely misunderstood your intentions. I apologize, my bad

 

I thought my "I'm just curious" and the lack of "lols" would be enough lol....

[Larry]

2 hours ago, PeterMP said:

CPI is based on rents (not home prices) and rents have gone up a lot in the last 2 years and are a large part of the increase in inflation, but I don't think there has been a large increase in the demand to rent living space.

 

In fact, I'm pretty sure the amount of rental living space is up

At least here where I am (small college town in Florida - may not represent the US), there's been a TON of construction of apartments. And at least the ones I see, are targeted on the rich college students. (Which are not all college students. But that's who they're after.) 

 

And rents, all over town are going up. A lot. 
 

Friend of mine on disability income lives in a cluster of tiny 1BR units. HER rent has gone up, I think from $600 to $800/mo. (I try not to pry into her finances. But she vents occasionally.)  But management has been fancy-Ft-ing the units with fancy appliances and granite counters. And charging a LOT more than she's paying for her in-remodeled unit. 
 

The neighborhood where I live is small single family units built in the 50's. A LOT of them are rented, either to struggling families, or to 2-3 college students. And rich investors are buying all the houses. For a while there, I was getting 1-2 phone calls a week from telemarketers trying to talk me into selling them my house over the phone. 
 

I assume the plan is to turn what used to be affordable entry-level homes, into rental homes. (Not sure I like the implications of that, for society). 
 

The market where I am sure seems to have a LOT of money being invested, by people who think there's going to be a huge increase in renters, AND a huge increase in rents. 

[CousinsCowgirl84]

1 hour ago, Larry said:

 

During those 15 years, how many times have you raised your prices because your customers demanded it?  

Many many times. Four times in the past two years.   Basically over the past year my prices have doubled. My costs maybe went up 15 percent.

Edited February 10, 2022 by CousinsCowgirl84

[PeterMP]

3 hours ago, CousinsCowgirl84 said:

yes, and too be clear I wasn’t arguing that. I am arguing just that the reason price has gone up is because of demand.

 

 

I get that which is why I didn't respond that to you.

 

But again, I think at least in some cases you are wrong.  Fossil fuels prices are up and a heavy driver of the inflation we are seeing because SUPPLY is still well below pre-pandemic levels.  Just like in the 1970s a lot of the inflation was due to OPEC altering SUPPLY.

 

Rents are up.  I don't believe there is a large increase in demand to rent.

[Larry]

She is using "demand" to mean "well, they didn't stop buying when I gouged them. Therefore, they are to blame for the decision which I, and I alone, made and carried out."

Edited February 10, 2022 by Larry

[method man]

2 hours ago, Larry said:

At least here where I am (small college town in Florida - may not represent the US), there's been a TON of construction of apartments. And at least the ones I see, are targeted on the rich college students. (Which are not all college students. But that's who they're after.) 

 

And rents, all over town are going up. A lot. 
 

Friend of mine on disability income lives in a cluster of tiny 1BR units. HER rent has gone up, I think from $600 to $800/mo. (I try not to pry into her finances. But she vents occasionally.)  But management has been fancy-Ft-ing the units with fancy appliances and granite counters. And charging a LOT more than she's paying for her in-remodeled unit. 
 

The neighborhood where I live is small single family units built in the 50's. A LOT of them are rented, either to struggling families, or to 2-3 college students. And rich investors are buying all the houses. For a while there, I was getting 1-2 phone calls a week from telemarketers trying to talk me into selling them my house over the phone. 
 

I assume the plan is to turn what used to be affordable entry-level homes, into rental homes. (Not sure I like the implications of that, for society). 
 

The market where I am sure seems to have a LOT of money being invested, by people who think there's going to be a huge increase in renters, AND a huge increase in rents. 

 

I am a multifamily investor. Bottom line is we are short 3-5 million units in this country and housing prices going up mean more renters as well. Rents going up are justified because 1) the cost to operate apartments have gone up and 2) the prices we are paying for multifamily these days mean that we have to push up rents significantly in order to meet our debt payments.

[CousinsCowgirl84]

27 minutes ago, Larry said:

She is using "demand" to mean "well, they didn't stop buying when I gouged them. Therefore, they are to blame for the decision which I, and I alone, made and carried out."

Nope. I have competition. Raising prices isn’t price gauging.  I offer something, they choose (or not) to buy it.  Your version of reality where I can charge what ever I want and people will still pay doesn’t exist. Which is a shame because I would love to work one day a year.
 
 

Maybe start a business and create something and you’ll get it. 

 

Edited February 10, 2022 by CousinsCowgirl84

[CousinsCowgirl84]

47 minutes ago, PeterMP said:

 

I get that which is why I didn't respond that to you.

 

But again, I think at least in some cases you are wrong.  Fossil fuels prices are up and a heavy driver of the inflation we are seeing because SUPPLY is still well below pre-pandemic levels.  Just like in the 1970s a lot of the inflation was due to OPEC altering SUPPLY.

 

Rents are up.  I don't believe there is a large increase in demand to rent.

You don’t think the increase in direct stimulus, the increase in consumer debt, the increase in travel bookings, ect are a symptom of increased demand?

 

I could have sworn there was a consumer demand index to go along with consumer confidence, but now I can’t seem to find it.

 

This is an index I was able to find for groceries

 

https://indices.iriworldwide.com/covid19/?i=0

 

Shows increasing demand in all categories...

Edited February 10, 2022 by CousinsCowgirl84

[PeterMP]

35 minutes ago, method man said:

 

I am a multifamily investor. Bottom line is we are short 3-5 million units in this country and housing prices going up mean more renters as well. Rents going up are justified because 1) the cost to operate apartments have gone up and 2) the prices we are paying for multifamily these days mean that we have to push up rents significantly in order to meet our debt payments.

 

But the relationship between rent and home prices aren't disconnected with larger companies buying homes to rent.

 

https://www.cnbc.com/2018/09/11/single-family-rental-companies-finally-click-with-investors-a-decade-after-financial-crisis.html

 

(Which is partially the result of a change in the law during the great recession to help the housing market recover.)

 

Home prices are up partly because large companies are buying them and then renting them.  And the nature of larger companies is often they can afford to take less of a profit (for short periods of time) if they don't get what they want.

 

Every place you buy is a place a family can't buy forcing them to pay your higher rents.

Edited February 10, 2022 by PeterMP

[PeterMP]

14 minutes ago, CousinsCowgirl84 said:

You don’t think the increase in direct stimulus, the increase in consumer debt, the increase in travel bookings, ect are a symptom of increased demand?

 

I think in some cases the inflation is likely due to an increase in demand.  But a lot of the inflation is due to increases in gas prices and other fossil fuel prices.  That's partially a supply issue where supply has not returned to pre-pandemic levels.

 

The Feb. business inventory report also shows that businesses inventories for many retail goods are up.  Which again suggest that for those things that demand isn't an the issue.  Companies are warehousing things instead of selling them because they think they can better prices (later).  That's a supply issue.

 

https://cepr.net/marketplace-radio-gives-us-the-latest-bad-news-on-the-economy-a-glut-of-retail-goods/

 

The prices of everything don't need to be going up for the same reason.  But there is plenty of evidence that the problem for many goods is not demand but supply.

 

I'm not sure, but I don't think the rent increases is a demand issue.  I think it is a market consolidation issue.

Edited February 10, 2022 by PeterMP

[CousinsCowgirl84]

11 minutes ago, PeterMP said:

 

 

The Feb. business inventory report also shows that businesses inventories for many retail goods are up.  Which again suggest that for those things that demand isn't an the issue.  Companies are warehousing things instead of selling them because they think they can better prices (later).  That's a supply issue.

 

https://cepr.net/marketplace-radio-gives-us-the-latest-bad-news-on-the-economy-a-glut-of-retail-goods/

 

 

 

did you read the article that that article linked to?  The article is suggesting is the reason that inventories was up was because of decreased demand in December and shipping delays which resulted in some seasonal items missing their peak sales season (eg, Christmas decorations). Not that companies are saving the stuff to sell at a higher price later. In fact, your own article explains how warehouse rents are going up making it more costly to store stuff. The conclusion you made doesn’t make a lot of sense.

 

finally, one month of data isn’t very useful when we are talking about sustained inflation over the period of year.  At most, I’d argue that the only insight we can make from your article is that it is possible we have reached the peak of this economic cycle and that consumers are beginning to balk at prices in a meaningful way. But again, it’s one month. Hard to say.

 

Edited February 10, 2022 by CousinsCowgirl84

[steve09ru]

37 minutes ago, CousinsCowgirl84 said:

Nope. I have competition. Raising prices isn’t price gauging.  I offer something, they choose (or not) to buy it.  Your version of reality where I can charge what ever I want and people will still pay doesn’t exist. Which is a shame because I would love to work one day a year.
 
 

Maybe start a business and create something and you’ll get it. 

 

 

1 hour ago, Larry said:

She is using "demand" to mean "well, they didn't stop buying when I gouged them. Therefore, they are to blame for the decision which I, and I alone, made and carried out."

Here’s a good article on why meats are so high right now.  I’m sure this expands across a number of different goods and services as well.

 

https://www.cnbc.com/2021/11/18/why-have-beef-prices-gone-up.html

[PeterMP]

1 minute ago, CousinsCowgirl84 said:

 

 

did you read the article that that article linked to?  The article is suggesting is the reason that inventories was up was because of decreased demand in December and shipping delays which resulted in some seasonal items missing their peak sales season (eg, Christmas decorations). Not that companies are saving the stuff to sell at a higher price later. In fact, your own article explains how warehouse rents are going up making it more costly to store stuff. The conclusion you made doesn’t make a lot of sense.

 

finally, one month of data isn’t very useful when we are talking about sustained inflation over the period of year.  At most, I’d argue that the only insight we can make from your article is that it is possible we have reached the peak of this economic cycle and that consumers are beginning to balk at prices in a meaningful ways. But again, it’s one month. Hard to say.

 

 

The piece doesn't suggest that only seasonal items are the reason that inventory is up.  They are suggesting seasonal items are part of the reason.

 

And it isn't just one month.  They've been going up;

 

Sept: https://www.reuters.com/article/usa-economy-inventories/u-s-business-inventories-rise-solidly-in-september-idUSL1N2S61UH

Oct. https://www.reuters.com/markets/us/us-business-inventories-increase-strongly-october-2021-12-15/

Nov: https://www.forexlive.com/news/us-business-inventories-for-november-13-20220114/

 

It was EXTREMLY notable in Jan because normally they go DOWN.  For them to go up in Jan is abnormal.  But inventories have been going up for months now.

 

Their "peak sales seasons" means what?  Peak price season.

 

We have a pretty old worn out artificial Christmas tree.  The lights on it don't even work.  If I saw a nice new artificial tree for cheap on a post-Christmas sale, I'd be very tempted to buy it.

 

Through the years, I've bought a lot of Christmas decorations on post-Christmas sales.

 

But companies aren't selling them (cheap) on post-Christmas sales.  They're warehousing them.

 

Why?

 

So they can sell them later and make more money.  Which means they at least think they will make the money back that they are paying to warehouse them.

 

Same thing for winter coats.  Especially when my kids were young and you could count on them to grow a size.  We'd always buy winter coats for the next winter in end of season sales if we could actually find a good sale.

 

In general, if retail sales fell in Dec. (which the piece also says), it is hard to argue that the largest issue with inflation in Dec and Jan was demand.  

[CousinsCowgirl84]

4 minutes ago, PeterMP said:

 

The piece doesn't suggest that only seasonal items are the reason that inventory is up.  They are suggesting seasonal items are part of the reason.

 

And it isn't just one month.  They've been going up;

 

Sept: https://www.reuters.com/article/usa-economy-inventories/u-s-business-inventories-rise-solidly-in-september-idUSL1N2S61UH

Oct. https://www.reuters.com/markets/us/us-business-inventories-increase-strongly-october-2021-12-15/

Nov: https://www.forexlive.com/news/us-business-inventories-for-november-13-20220114/

 

It was EXTREMLY notable in Jan because normally they go DOWN.  For them to go up in Jan is abnormal.  But inventories have been going up for months now.

 

Their "peak sales seasons" means what?  Peak price season.

 

We have a pretty old worn out artificial Christmas tree.  The lights on it don't even work.  If I saw a nice new artificial tree for cheap on a post-Christmas sale, I'd be very tempted to buy it.

 

Through the years, I've bought a lot of Christmas decorations on post-Christmas sales.

 

But companies aren't selling them (cheap) on post-Christmas sales.  They're warehousing them.

 

Why?

 

So they can sell them later and make more money.  Which means they at least think they will make the money back that they are paying to warehouse them.

 

Same thing for winter coats.  Especially when my kids were young and you could count on them to grow a size.  We'd always buy winter coats for the next winter in end of season sales if we could actually find a good sale.

 

Did you read the article though? Im not sure I’m following your logic…. It certainly isn’t supported by anything in the article.

 

4 minutes ago, PeterMP said:

 

In general, if retail sales fell in Dec. (which the piece also says), it is hard to argue that the largest issue with inflation in Dec and Jan was demand.  

This is weak.  We aren’t talking about one month. You can’t reach a conclusion about inflation over the past year based on inventory numbers from one month.

Edited February 10, 2022 by CousinsCowgirl84

[PeterMP]

14 minutes ago, steve09ru said:

 

Here’s a good article on why meats are so high right now.  I’m sure this expands across a number of different goods and services as well.

 

https://www.cnbc.com/2021/11/18/why-have-beef-prices-gone-up.html

 

Beef is another place where there is actually evidence that a lot of the price increase is at least partly the result of consolidation:

 

https://www.nytimes.com/2021/12/27/business/beef-prices-cattle-ranchers.html

 

2 minutes ago, CousinsCowgirl84 said:

Did you read the article though?

 

Yes.

Edited February 10, 2022 by PeterMP

[PeterMP]

42 minutes ago, CousinsCowgirl84 said:

 

Did you read the article though? Im not sure I’m following your logic…. It certainly isn’t supported by anything in the article.

 

This is weak.  We aren’t talking about one month. You can’t reach a conclusion about inflation over the past year based on inventory numbers from one month.

 

Early on, inflation was the result of increases in demand as compared to the available supply.  In the beginning of the pandemic companies cut their labor force and drew down on their inventory to survive.  All through the supply chain (at every step) essentially nobody had any inventory.

 

As inventories were drawn down and the pandemic went on, companies raised prices.

 

For the last 1/2 year, business inventories have increased (I've given you through Sept but even last spring inventories were increasing).

 

Rather than sell things at lower prices which would decrease inflation companies have warehoused things and maintained higher prices.

 

(Now this doesn't apply to all things.  For somethings there are real shortages still due to supply not being where it was pre-pandemic (fossil fuels).  It is also possible for somethings (especially travel related things) I could see demand being high (higher than pre-pandemic levels).)

 

It is supported by the piece.  They focus on Jan because it is a big deal that inventories were up in Jan.  But they've been climbing for months.  The piece also supports that instead of selling things for less money, businesses are warehousing things.

 

If they'll warehouse a winter coat until next fall for a better price certainly they'll warehouse other things.

Edited February 10, 2022 by PeterMP

[PeterMP]

I'll also point out that in some cases "inflation" is the result of prices going back to pre-pandemic levels.  The price of some clothes actually fell during the pandemic.  Now prices have gone back up.  But that ends up looking like high inflation.

 

In this case, there doesn't appear to be a one size solution to what has caused the inflation.

Edited February 10, 2022 by PeterMP

[LD0506]

Well this thread got more entertaining........<insert derisive smirk here>

[tshile]

11 hours ago, method man said:

Rents going up are justified because 1) the cost to operate apartments have gone up and 2) the prices we are paying for multifamily these days mean that we have to push up rents significantly in order to meet our debt payments

I have ties to this industry. 
 

they got screwed over hard during the pandemic. People cheer about evictions being blocked but they don’t know what this means. Not every landlord is a giant conglomerate with tons of money to shift around. Many are small timers who managed to find themselves in the industry, investing their life savings and working their ass off to get by on a potentially life altering move. 
 

so when rent stopped getting paid, and there was no government bailout, and the government barred them from evicting anyone (the standard way to deal with non payment) they had to do other things. 
 

like cut their staff to a minimum. Including maintenance. I know regional VP’s who spent the last 2 years fixing toilet clogs, leaking sinks, etc. because they now have one maintenance person and they can’t kee up. And of course the people living there think it’s because everyone running it is just an asshole - they cannot connect the dots of: no income means no staff means no fixing your issues. 
 

of all the industries it’s hard to think of one more screwed up by the pandemic in the sense that they got hit very hard, and were barred from doing anything about it by the government. 
 

i don’t know that they’re a great example to compare to everyone else. Has the government gone to any other industry, identified the one thing hurting them the most, and said “you can’t do anything about it”?

 

We thought giving people money to get by was a great idea. But. They didn’t use ut to pay their rent. We made a huge mess here. The industry is still struggling with how to get out of it. Eviction is a lengthy and expensive process. Pausing it for two years and creating a huge backlog with no plan made it significantly worse.