But Inflation Was Going Away!
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2023-09-14 07:00 by Karl Denninger
in Consumer , 367 references Ignore this thread
But Inflation Was Going Away!
[Comments enabled]

Uh, no it isn't.

The Consumer Price Index for All Urban Consumers (CPI-U) rose 0.6 percent in August on a seasonally adjusted basis, after increasing 0.2 percent in July, the U.S. Bureau of Labor Statistics reported today. Over the last 12 months, the all items index increased 3.7 percent before seasonal adjustment.

Uh huh.  Going away eh?  Uh, no.

The index for all items less food and energy rose 0.3 percent in August, following a 0.2-percent increase in July. Indexes which increased in August include rent, owners’ equivalent rent, motor vehicle insurance, medical care, and personal care. The indexes for lodging away from home, used cars and trucks, and recreation were among those that decreased over the month.

Stuff you have to buy went up, things you can choose to buy but don't have to went down.

If you have two nickels worth of IQ points to rub together the reason for the latter of obvious: Slack demand as a result of no money to spend on such things.  I can fix my existing car instead of buying another one and the other two are 100% discretionary.


Transportation energy (fuel oil and gasoline) was up substantially last month, as everyone has seen.  Thanks Joe.

Restaurants seem to think they can keep jacking prices too; food away from home continues to rise much faster than groceries.  I got news for those folks: There's a point where the price of a hamburger or beer isn't worth it, particularly compared to buying the same beer in a six-pack at Kroger and cooking the burger at your own place, and when that happens your income as a bar or restaurant owner goes to zero.

Are we seeing that?  Why yes, yes we are.

Both rent and OER (bah!) rose comparable and in fact aren't much different in change over the last 12 months.  OER is understated by a wild amount; between price ramps and interest rate increases anyone who thinks the cost of a house (in terms of payments) is only up 7.3% over the last year has rocks in their head.  Never mind that my experience among people I talk to who rent is that the last two years have both seen double-digit rent increases on a percentage basis.

Car insurance was up 2.1% on the month which I can believe, along with the ~20% annual rate.  That's about right.  You don't need to buy that, right?  The illegal alien doesn't bother with it, of course, he doesn't have anything to take when he hits you, and they won't jail or deport him, so he doesn't care.

Want to see a real farce?  They claim health insurance costs are down by a third over the last year, and 3.6% this month.  Suuuuurrrre it is.

What's up wildly?  Car repair, up 17%.  What did I say about people fixing rather than replacing?  Yep.  There it is.

Got a pet?  Pay 8.5% more for services, including the vet bill.

But inflation is 4%, they said.  Suuuure it is.  The food is up 8.7% too so..... yeah.

What's the cause of all of it?

Deficit spending.


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Tonythetiger 940 posts, incept 2019-01-27
2023-09-14 08:02:58

And that's only the price side of the equation.

Does the BLS even bother to try accounting for shrink-flation in their numbers?

My formerly 32 oz bottle of shampoo shrank to 30 ounces, and is now only 22.5 ounces. Assuming no change in price, I'm paying 42% more per ounce for my shampoo.

As bad as that is, something tells me we ain't seen nothin' yet.

"War is when the Government tells you who the bad guy is. Revolution is when you decide that for yourself." - Benjamin Franklin
Mrbobo 184 posts, incept 2021-12-01
2023-09-14 08:03:01

I can't tell if this is a knock on effect, but there seems to be a dearth of white label products on the shelves at the grocery store and the like.
Latviski 235 posts, incept 2008-02-22
2023-09-14 08:03:04

Insurance inflation , property taxes, food, energy - true cost of living is out of control and unsustainable.
Im contesting my property taxes (up 50% in two years), prop insurance up 20% y/o/y - I got a letter saying thanks for not having any claims but your neighbors all did so were jacking your rates
Auto insurance has been marching up significantly every year last several years. I fix my own vehicles but cant do substantial bodywork in my home garage so I carry high deductibles but even so - $$$
As Karl said, were paying for illegals and deadbeats with nothing to lose .
Kiwiapsa 45 posts, incept 2021-09-12
2023-09-14 09:06:55

House insurance premium way up this year so I switched to one with lower cost. They came out and took pictures of house and garage. Letter from company says to get rid of limbs over garage or we'll cancel. Great, because I know if they cancel it will show up on my records as to why they cancelled. Large, 80-100 ft oak tree in hard-to-reach area next to garage and power line. Cost? Over $4900.00. However, that also included smaller tree hanging over driveway and large dead limb also near driveway.

Bonus: Photo of tree marked near driveway was read incorrectly by arborist and they cut down wrong tree (which I actually would like to have down) and when I pointed that out, they admitted it was their mistake. No charge. Additionally, area where large oak was will be turned into veggie garden.

Point being, though the house is paid for, home ownership is expensive, especially when you can't DIY something, and insurance companies are looking for ways to cut inflationary costs by taking pre-emptive moves to avoid future payouts. The arborist told me that they're seeing a lot of homeowners having to remove limbs and trees or the insurance provider will drop them. This may be standard procedure in high-risk parts of the country, but this is in a relatively low-risk area.
Prof_dilligaf 552 posts, incept 2021-09-02
2023-09-14 09:07:12

As the bars and bistros price themselves right out of the sagging market, the boys and girls at the BLS must be sweatin' bullets tryin' to figure how they're gonna hide all those waitress and bartender jobs going up in smoke.

On the other hand, maybe Muricans will finally start to shed some of those "extra" pounds they all seem so keen on carrying with them everywhere.
Orangecrush 178 posts, incept 2018-09-29
2023-09-14 09:07:22

I happened to hear the Fox Business Report on my morning commute today. The announcer reported on these inflation numbers with great sorrow in his voice (as if they were SHOCKED because no one could have foreseen that inflation was not "going away"). Their summary was that the Fed is now going to have to deal with the fact this will feed into higher inflation at least for the next few months (no duh!)
Dingleberry 831 posts, incept 2011-11-06
2023-09-14 09:07:31

Inflation is deficit spending.

(M)asses vote for (or at least acquiesce) for freebies today.....and offspring pay tomorrow. EBT, Ukraine, obammycare, illegals....er, "kids in cages", bailouts top of the food chain to bottom, woke and "green" madness....the list is endless. And growing.

Inflation is the tax we pay now....with the added "bonus" of the debt still being on the books, seemingly forever in the form of "national debt" which apparently doesn't matter anymore, and hasn't in decades.

Whatever happened to the "bond vigilante"?

Oh well. Print baby, print!

Inflation over the past 3 years is easily 2x the "official" rates, gotta keep those COLAs and other inflation-adjusted expenses down now, don't we?

I read the Fed is taking "losses" as it trickles the shit off of their books, not sure how or what that means, but I suspect it ain't good. Most likely offloading another worthless expense on the backs of the (m)asses.

The pain will continue until sanity and discipline return. I suspect that it will take a lot more pain for us to get there.

The inflationary lies and obfuscations will continue, as they must. And so will our standard of living.

This is what happens when thieving becomes normalized, from top to bottom.

78rpm 20 posts, incept 2023-08-07
2023-09-14 09:07:47

Over the last few years my average bill has gone from $60 to $140. I'm going to cut back on things I have enjoyed for decades. $13/lb rib eye on sale, $2 avocado, 80 cent lemons. Restaurants are going to get $0.

We won't be able to afford another hamburger in 2024. Vote ...

Good election bumper sticker?
Flappingeagle 5k posts, incept 2011-04-14
2023-09-14 09:07:56

The lesson that I remember from the 70's is that inflation is like a patch of weeds in your garden. You have to fight it harder and longer than you initially think to stop it and keep it from popping back up.


Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
No sign that housing, equities, or farmland are in a bubble- Yellen 11/14/13
Trying to leave
Invisiblesun 836 posts, incept 2020-04-08
2023-09-14 09:08:00

It's not just that prices of restaurants and services are going up fast, it is that the service quality is collapsing.

I see the future of commerce and it is faceless and impersonal and sucks.
Iou 1k posts, incept 2009-03-16
2023-09-14 10:10:44

The Free Shit Army and their Ruling Elites are destroying this country. It won't be long before we all join the deadbeats. Their goal is to destroy the American middle class and acquire all its wealth.

Jim Quinn wrote..
As we have debated various issues on this site for the last couple years my understanding of our economic system has changed. Ive come to the conclusion that the middle class of this country has been caught in a pincer movement by two armies. My definition of the Middle Class is households making between $50,000 and $150,000 per year. The Free Shit Army is attacking us on the left. The middle class has been the backbone of the country, doing the heavy lifting in this country. They get up every morning and trudge off to work to support their families. The Free Shit Army sleeps in. They have chosen to not educate themselves in order to advance in our society. Politicians have enabled them to stay in poverty by providing welfare, disability, food stamps, and tax incentives that make their lives just comfortable enough to not work. If you provide money to people who are classified as disabled, you get more disabled. The Free Shit Army has 50% more disabled than the general population. If you pay people for not working, why should they work? The middle class works and pays their taxes. These taxes are then redistributed to the Free Shit Army.

The second pincer movement on the middle class has been conducted by a stealthier army. This army has experts in propaganda, misinformation and obfuscation. I call them the Ruling Elite Army. The generals are the ultra-wealthy CEOs of Wall Street banks and mega-corporations. Their armor divisions are manned by the corporate mainstream media. They are excellent at laying down a great smoke screen before blasting away. The infantry is manned by 535 Congressional officers with thousands of corporate lobbyist foot soldiers. This army has been given the mission to capture the supplies of the middle class.

"When plunder becomes a way of life for a group of men living together in society, they create for themselves, in the course of time, a legal system that authorizes it and a moral code that glorifies
Forever_young 398 posts, incept 2022-11-22
2023-09-14 10:11:23

And not even approached in this ticker but has been discussed before, if we stop inflation today (yeah right) the increased costs are now baked in. Try and increase wages to catch up and what does that do, hmmmm?

We're 100% fucked. Our choice is continued inflation or recession/depression. This is decades in the making.

And as a younger adult, I won't accept blame of those decisions made in the past but don't let us off the hook either. My generation cries for their free shit just as much as their parents and grandparents. The suck will hurt and everyone over the age of 18 deserves their kick in the ass, some a few more than that.

But suck it must. Maybe my children will be able to build from the wreckage.
Joeh 21 posts, incept 2023-02-10
2023-09-14 10:11:34

6 Month Treasuries are yielding over 5.5%. 2-year yield over 5%. 30-year yield 4.35%. I don't see an economic uptick on the horizon. Any insight as to how we can commit to 4.35% for 30 years without being able to inflate the currency? War? (unlikely) Reduced SS and Medicare outlays? (lower life expectancy?) Something else?
Marathon345 26 posts, incept 2021-05-20
2023-09-14 10:11:43

Our host predicted right after the current budget was passed that we would not feel the pain of inflation till the end of the year. Right on cue we see inflation heating up again. And it will get worse.
My wife and I eat out quite a lot. The restaurants and breweries that we visit are no where near as busy as they were six months ago. Places where it was hard to get a table at peak dining hours have plenty of tables available. Especially on week nights.
My auto insurance has gone from $340 for six months to $540 over the last year and a half for two cars.
Karl thank you for sharing your knowledge and wisdom with us.
Andrew 238 posts, incept 2014-09-24
2023-09-14 10:11:57

Somewhat on topic.

With the inflated real estate market, I got a love letter from Franklin County (Ohio) that "property taxes are being re-evaluated".
But not to worry, because it won't be as high a raise as the "new" property values, of course, pinky swear.

Their online math program is horrific so all I can tell is, "I'm going to have a larger Rent bill to the State."
Is it going to be big, or bigger, or bigger-er?
I'll get to find out in December or January.

Chemman 415 posts, incept 2021-05-03
2023-09-14 10:12:14

"They claim health insurance costs are down by a third over the last year, and 3.6% this month"

I'll claim bs on that. My wife's supplemental policy is up 15% from last year.
Dingleberry 831 posts, incept 2011-11-06
2023-09-14 10:12:23


100% correct, and it's not just restaurants.

"We" are in a pickle. Still way too much tightness in the job market, and peeps either quit for another 50 cents an hour across the street, leave the workforce entirely (early retirement, "disability", etc.) or coast until they reach it, regress to mommy's basement, couch surf, etc.

Incentives matter. Right now there is no incentive to work, unless you want to get robbed even more by taxes both overt (IRS) and covert (inflation). But is it truly robbery when thieves steal from thieves?

Prices are not really falling, aside from perhaps a bit off the top of already massively overpriced assets like RE and cars. Services and repairs sure as fuck aren't. I got the receipts.

Going Galt is looking better by the day. If one can afford to do so. Or mooch.

Synopsis 107 posts, incept 2010-02-05
2023-09-14 10:18:42

A lot of people have been calling the top on interest rates hikesoh, pretty much since the Fed began raising them. I think many have bet on rate cuts and began buying bonds since the Fed funds hit 2.5 to 3%. Now those bets are well under water.

Onething@atime 138 posts, incept 2020-04-25
2023-09-14 10:28:06

Kiwiapsa wrote..
area where large oak was
Oh, it pains me to read that. We have a big old oak in front of our house. A few of these on our block have been taken down by crews over the last several years. It's always sad to see such a great tree go away. But sometimes it has to happen. I hope it doesn't have to happen with ours.
Blanca 574 posts, incept 2020-07-25
2023-09-14 10:31:03

I keep very detailed financial records. In the last year or so, I have the following personal inflation:
1. Property taxes, up by 1/3 over the previous homeowner.
2. Homeowner's insurance, up 25%
3. Car insurance, up 37%
4. Food - at least 20%
5. Restaurants - up 25%, standard tipping is now expected to be 20% at the LOW end.
6. Medical - who knows - I can't figure out medical billing and my insurance costs are hidden by my employer. I do know that almost nothing is covered and I am seeing increases.
7. Landscaping, up 15%
8. New roof - over $60K - probably could have had one for half that just a few years ago.

I don't believe the government statistics on CPI. Their "hedonic" adjustments are now just a joke. Also not reflected in the CPI is the fact that it is nearly impossible to have work done correctly the first time and that even though I pay someone to manage his workers, he doesn't do it. In some cases I become so exasperated I kick the workers out of my house and finish the job on my own.
Tickerguy 198k posts, incept 2007-06-26
2023-09-14 10:30:44

When people plant or build trees they damn well ought to pay attention to where the fall line might be 10, 20, 50 years hence. If that's a problem then you top the tree at the ~10 year point.

Its ALSO the root system spread and potential impact on the foundation and, depending on where your underground lines are, power, water, gas and sewer. ESPECIALLY sewer.

NONE of those are fun to have to excavate and if the root system fucks with the foundation then you got REAL trouble money-wise.

"Anyone wearing a mask will be presumed to be intending armed robbery and immediately shot in the face. Govern yourself accordingly."
Onething@atime 138 posts, incept 2020-04-25
2023-09-14 10:37:15

This past weekend we had a tree removed right next to our house, for those reasons. It grew very fast (not an oak).

Now I remember that we cut down a tree next to the back fence because it was dropping branches onto the neighbor's yard. They asked the previous owner to do something about it, but apparently he "preferred the arboreal look."

We cut it down the first month and they were quite grateful. The tree guys said we could trim the neighbor's side but then the tree would be lopsided. We had a hurricane pass through the neighborhood not long after that, so the pain of the $900 bill passed relatively quickly.

We don't miss the tree, but we do miss the neighbors. They were replaced by more vibrant people. With execrable musical tastes, if you know what I mean.

Flappingeagle 5k posts, incept 2011-04-14
2023-09-14 10:52:46

Let me add to what TG says about trees. If you are planning on planting a tree or have one already. Do some homework/looking around for what a mature full-sized version of the tree looks like.

Look at how far the limbs stretch out and then realize that the roots go out about twice as far as the limbs. That is how far out they can effect things like sewer lines.


Here are my predictions for everyone to see:
S&P 500 at 320, DOW at 2200, Gold $300/oz, and Corn $2/bu.
No sign that housing, equities, or farmland are in a bubble- Yellen 11/14/13
Trying to leave
Abelardlindsey 2k posts, incept 2021-03-26
2023-09-14 10:52:57

This is the kind of shit that is the root of the problem:


Its all in the mitochondria
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