Random thoughts and plans for the coming inflation.

[Metalcat]

Lol, it also basically amounts to "keep on keeping on".

That's why I was wondering if anyone is actually proposing anything actionable that they actually intend to do in response to this.

If no, then I just won't give it much thought, which was basically my plan all along.

There's not a lot you can do, really.   Inflation doesn't seem to matter a whole lot until it gets to about 5% or so.   Above that, businesses start to have a hard time passing costs along fast enough.  Not making money depresses stock prices. 

I personally don't think it will get to that point.  The current Federal funds rate is about 0.25%.  Interest rates could go up a lot and still be about normal compared to historical standards.

Cool.

I take shockingly little interest in the markets, despite being qualified to be a financial advisor, I am likely one of the most financially clueless people on this forum.

I read JL Collins stock series, and all of Talebs books multiple times, and basically went on to ignore the markets forevermore.

However, I pay vague attention whenever people start making "this time it's different" noises just to see if there's a consensus of tangible, actionable things that we should be doing.

So far, that has never happened, but I figure the folks here will know if/when I ever need to actually pay attention to anything that happens. Or if I should, like, check my account balances, which I haven't done in over a year.

Seriously, I just skim the thread titles here to know what the markets are doing.

[Telecaster]

Cool.

I take shockingly little interest in the markets, despite being qualified to be a financial advisor, I am likely one of the most financially clueless people on this forum.

I read JL Collins stock series, and all of Talebs books multiple times, and basically went on to ignore the markets forevermore.

However, I pay vague attention whenever people start making "this time it's different" noises just to see if there's a consensus of tangible, actionable things that we should be doing.

So far, that has never happened, but I figure the folks here will know if/when I ever need to actually pay attention to anything that happens. Or if I should, like, check my account balances, which I haven't done in over a year.

Seriously, I just skim the thread titles here to know what the markets are doing.

In  times of doubt, doing nothing is always the right course of action when it comes to stocks.   That's why I love the simple beauty of owning the index.  No one really knows what the market will do, but indexers are honest enough to admit it. 

[American GenX]

Meaning the Fed's goal is very explicitly to increase inflation, not lower it.  Inflation has been too low, and needs to average over 2% to balance out.

CPI inflation was 2.1%, 2.1%, 1.9%, 2.3%, and 1.4% in 2016, 2017, 2018, 2019, and 2020, respectively

LOL.   I only wish the prices I had to pay in recent years went up as little as those figures would suggest.   But, my personal inflation spending on the same things averaged closer to 5% each year, especially considering my largest bills like property tax and homeowner's insurance have averaged about 7% yearly increases prior to this year (despite doubling my deductible) and a 60% increase in health insurance premiums with a much worse deductible 250% of what it has been.  Big increases in state taxes, 50% increase in car registration, etc.  Latest homeowner's premium went up over 12%, with no change in deductible.  So, if inflation is going to get even worse than the high inflation I've seen for years, I definitely have concerns for the future.  I'm putting off those thoughts of relocating as it's going to be costly enough staying put with hyperinflation.  Combine this with squat returns on CDs/savings, a poor future for bonds as interest rates are sure to rise, and super-inflated stock prices which are sure to crash soon enough.  There is no escape.  Sad times indeed.  I think a lot of people are still in denial about how bad it's going to get.

[EvenSteven]

Meaning the Fed's goal is very explicitly to increase inflation, not lower it.  Inflation has been too low, and needs to average over 2% to balance out.

CPI inflation was 2.1%, 2.1%, 1.9%, 2.3%, and 1.4% in 2016, 2017, 2018, 2019, and 2020, respectively

LOL.   I only wish the prices I had to pay in recent years went up as little as those figures would suggest.   But, my personal inflation spending on the same things averaged closer to 5% each year, especially considering my largest bills like property tax and homeowner's insurance have averaged about 7% yearly increases prior to this year (despite doubling my deductible) and a 60% increase in health insurance premiums with a much worse deductible 250% of what it has been.  Big increases in state taxes, 50% increase in car registration, etc.  Latest homeowner's premium went up over 12%, with no change in deductible.  So, if inflation is going to get even worse than the high inflation I've seen for years, I definitely have concerns for the future.  I'm putting off those thoughts of relocating as it's going to be costly enough staying put with hyperinflation.  Combine this with squat returns on CDs/savings, a poor future for bonds as interest rates are sure to rise, and super-inflated stock prices which are sure to crash soon enough.  There is no escape.  Sad times indeed. I think a lot of people are still in denial about how bad it's going to get.

At least for me, it's more of a case of hearing this same thing for decades, and coming to the realization that you don't actually know the future.

[Bloop Bloop Reloaded]

I'm doing my bit by trying to avoid buying phones, computers, furniture, cars etc - big ticket items which I think are strongly overpriced atm due to easy consumer money/credit floating around.

I think we have a duty to vote with our wallets and I choose to not shop at times where I believe retailers are taking advantage of consumers.

[ender]

Our personal inflation this year is going to be more than 2%.

[Mrs. Burning Bush]

Though I will admit I am irritated by the author's digs at the Biden administration, the below article encapsulates my concern about future inflation. 

In recent history Great Britain, then Japan, then China were the largest holders of U.S. Treasuries.  Now the U.S. Federal Reserve Bank is holder, and shows no sign of abating their purchases.  We are in a dangerous cycle of the Treasury issuing new, mostly short term debt, with the printer of money buying up the new debt with newly created money.  The Treasury is "invests" the newly created dollars by sprinkling them into our bank accounts and to aid their pet projects and favorite constituents.  The U.S. Fed is now by far, the largest holder of U.S. debt, and foreign holders are selling at a rapid pace - I wonder what they might see?

Deflation to me seems like a long way off and a relatively easy problem to solve.  Inflation and loss of confidence in the dollar seem to me to be happening before our eyes.  Again, this will not be the first time I have been wrong when predicting inflation, and I HOPE I am wrong this time.

P.S.  I respect the heck out of several of you (ChpBstrd, MustacheAndaHalf, bwall, and others too numerous to mention) and the depth and breadth of your financial acumen, and I have been reading posts from several of you for years - and I truly hope you are correct this time.  But I'd love to hear you take the other side and recommend your strategies for inflation.

https://lawliberty.org/u-s-fiscal-profligacy-and-the-impending-crisis/

[BicycleB]

Having read most of the posts here, I'd say there are three things being proposed:

1) There's not much we can do other than avoid putting too much money in long term bonds, so buckle up and enjoy the ride.

2) Take out long term low interest rate non-callable debt (e.g. take out a mortgage on ones house) and invest the money. 

3) Move investment money into gold/commodities.

My personal view of the three strategies is:

#1 is good if we have inflation, perhaps bad if there is a big stock market crash without inflation.

#2 is good if we have inflation, perhaps bad if we have a real estate crash and/or significant deflation.

#3 is good if we have inflation, bad in most other scenarios since the long term expected inflation adjusted return on investments in commodities/gold is zero, or even negative for commodities with significant storage costs.

Did I miss stuff others have proposed?

You missed my favorite one so far:

Remember, being Frugal, whether you use a capitol F or not, means buying less stuff. Which is an excellent defense against inflation.

I think that covers all the suggestions so far!

We should include skills, though. Badassity. Jacob's "web of skills" from ERE. Building relationships and communities, especially uplifting ones. These all overlap with frugality, but they each give a different angle on resilience that works in both inflationary and non-inflationary scenarios.

They're the behavioral version a financial safety margin.

PS. No one explicitly said "safety margin", either. That's a good thing to have too. I have the idea that when MMM wrote that article on "Position of Strength", he meant to combine all of these factors.

Fwiw, I also think diversification even in assets is also a way of building resilience. Like the behavioral things, it can help in a variety of situations.

[theolympians]

Inflation is hare as previous posters wrote. It is here for the foreseeable future. A lot of money is being pumped into the system. Gov't spending is on steroids. Gov't debt will not be a serious issue anymore. "Paying it off" is impossible.

[shinn497]

I highly doubt inflation will be this way. Yellen already said rates will go up. Inflation is more about employment than anything. I don't think we will see 5-10%. more like 2.5-3% for the next 5 years, if that. I can manage that. If you have your portfolio diversified you'll be fine.

I think the next 5 years we just won't see high stock appreciation, esp. after rates go up. But I am ok with that. I'm investing for a longer time horizon, and I am diversified for the whole us market, across market factors, and internationally.

[Roland of Gilead]

Inflation is already above 5% this year and based on demand will probably stay that high for the next several years.  The official inflation doesn't count a lot of things that they don't consider important, like food, housing, heat...you know, things you can do without...

[Roland of Gilead]

Inflation is already above 5% this year and based on demand will probably stay that high for the next several years.  The official inflation doesn't count a lot of things that they don't consider important, like food, housing, heat...you know, things you can do without...

Inflation so far this year has been 0.3% in January, 0.4% in February, and 0.6% in March. (We should get April numbers next week). That's just slightly over 1.3% once you take into account compounding. Those numbers do, in fact, include changes in the price of food, rent, and fuel. In March, the cost of energy was up 5% and food was up 0.1%.

There is indeed separately reported "core" CPI which doesn't include food and fuel*, but even that one still includes rent.

*The argument is that food and fuel prices fluctuation more and add noise to the numbers, but I agree it's much better to look at inflation across all the things we buy.

Don't use rent, use housing costs.  The cost to buy a house is up 20% this year.   Similar or higher to build a new house.  Fuel is up way more than 1.3% since the start of the year.   Raw materials such as copper have doubled...copper is over $4.70 a pound now and was under $3 in January.  I mean you just have to walk into a store...

[Michael in ABQ]

Sure feels like inflation based on our household spending. Definitely more than 2%.

Rent: Up 1.5% from last year (had locked in rent on an initial 18-month lease and negotiated a lower increase in the middle of the pandemic)
Utilities: Up 8.4% '20 to '21 (comparing same first 4 months of the year)
Private School Tuition: up 4.1% last year, will rise 10% for next year
Groceries: '20 to '21 up 4.9%

[Roland of Gilead]

Inflation so far this year has been 0.3% in January, 0.4% in February, and 0.6% in March. (We should get April numbers next week). That's just slightly over 1.3% once you take into account compounding. Those numbers do, in fact, include changes in the price of food, rent, and fuel. In March, the cost of energy was up 5% and food was up 0.1%.

There is indeed separately reported "core" CPI which doesn't include food and fuel*, but even that one still includes rent.

*The argument is that food and fuel prices fluctuation more and add noise to the numbers, but I agree it's much better to look at inflation across all the things we buy.

Don't use rent, use housing costs.  The cost to buy a house is up 20% this year.   Similar or higher to build a new house.  Fuel is up way more than 1.3% since the start of the year.   Raw materials such as copper have doubled...copper is over $4.70 a pound now and was under $3 in January.  I mean you just have to walk into a store...

Yes that's the nature of an aggregate number. Some things go up more, some things go up less, so the aggregate isn't going to apply to each individual component. In this case we can even dig into the energy subcomponent of the CPI and see it is up 12.8% since the start of the year well more than the overall index which is up only 1.3%.

Although given that in my post that you quoted, I already pulled out energy as being up 5% in March alone, I don't see why you're arguing against energy being up only 1.3% for the year. In this, you, I, and the good folks who calculate the CPI are all in agreement.

But the CPI says shelter is only up a fraction of one percent since the start of the year and we know housing costs have skyrocketed.  It is a hard statistic to believe.   I wonder if the current eviction moratorium is causing rent stagnation and suppressing that figure in the CPI.

[Roland of Gilead]

It sounds like you now agree that inflation includes food, heat and (one way of thinking about the price of) housing, and your remaining concern is that if you were designing a metric for inflation you would represent housing using a different metric (cost of buying a house) than the one the CPI uses (cost of renting a house/apartment), so I'd say that's enough agreement to aim to achieve for tonight.

This sounds like maybe we are closer in agreement than disagreement.   You are saying the official figures are pretty much correct at about 1.3% overall and I think the real figure is more like 5%.   If we tweak housing figures to adjust for the eviction moratorium and also perhaps note that healthcare costs may have been suppressed because of COVID (I don't think the massive money the government has paid the healthcare industry is counted in the inflation figures and people have not been getting checkups and treatments in the past year out of fear), I bet we can get closer to a real figure.

Time will tell right?   Lets come back to this thread next year and see who was correct about inflation.


I was kind of sort of right last year in Feb, 2020 when I posted this:

"I placed a small wager on a local maxima.  I purchased 100 SPY $325 puts for $3.40 today, expiring March 20
Essentially controlling $3,250,000 of stock with $34,000.
Just on a gut feeling that the economic impact from the virus hasn't been priced in (yeah I know everything is priced in, except when it isn't).
I am probably out at a 5% dip in the market, which would make about $70,000 profit."


Now I ended up selling out too soon, and the market dropped a lot more than 5% (If I had held the puts, it would have been worth over $1,000,000 on expiration) but it was sort of a early bird warning back then.

[Simpleton]

You are saying the official figures are pretty much correct at about 1.3% overall and I think the real figure is more like 5%.   If we tweak housing figures to adjust for the eviction moratorium and also perhaps note that healthcare costs may have been suppressed because of COVID (I don't think the massive money the government has paid the healthcare industry is counted in the inflation figures and people have not been getting checkups and treatments in the past year out of fear), I bet we can get closer to a real figure.

Time will tell right?   Lets come back to this thread next year and see who was correct about inflation.

I think we may be talking a bit past each other, so to clarify:

You said that inflation was already 5% this year. We're about four months into the year, so that'd imply a full year inflation rate of 15.8% if the trend holds. Was that your intended meaning?

I said that cumulative reported inflation in the first three months was just over 1.3%. That'd imply a full year inflation rate of 5.3% if the trend in the official figures holds.

Where are you getting these numbers?

I do not doubt them one bit but I do not think I have seen any official data indicating this 5%+ level.

As a side note, I do manage two retail pharmacy locations in Canada with about $28M in annual sales (2020). I do have a lot of Data about those sales and a very interesting fact is that our average basket price (dollars spent per transaction) has increased by 38% in 2020, while the number of items in that basket increased by only 22%. Part of these trends can be attributed to people limiting trips and buying more at each visit. Even still, assuming the mix of items is constant, the price per item is up substantially. All of this happened despite the fact that our cosmetics department (higher priced items) was essentially devastated last year.

[BicycleB]

But the CPI says shelter is only up a fraction of one percent since the start of the year and we know housing costs have skyrocketed.  It is a hard statistic to believe.   I wonder if the current eviction moratorium is causing rent stagnation and suppressing that figure in the CPI.

That's a really insightful idea! That could easily be exactly what's happening.

PS. I remember your timing call in Feb, the puts, and noticed the "early" profit taking at the time. It was one of the early times I've noticed live reasonable people do such a thing. Well done fwiw.

[Roland of Gilead]

PS. I remember your timing call in Feb, the puts, and noticed the "early" profit taking at the time. It was one of the early times I've noticed live reasonable people do such a thing. Well done fwiw.

Thanks.  Yes, I *only* made out with a few $10 thousand because even I didn't really believe the virus would spread much beyond China.  But on the flipside, I also did not know the government would bail everything out quite so much and the market would quickly go to astounding new highs.   Nobody knows nuthin is a good thing to remember.

I have zero idea what kind of play can be made even knowing that inflation is being under-reported.   There just isn't much you can do about it imo.

[Simpleton]

Have any of you seen this graph? Venezuela has!

https://fred.stlouisfed.org/series/M1SL

[chuckster]

Just remember, even if the Fed is not explicitly converted over to MMT, they're absolutely at a minimum using the language of MMT to define the terms they are using. In an MMT environment, they can, in theory, prevent inflation from crossing the 4-5% barrier and keep it at the desired 2-3%.

There may be a lot of things that would signal "Inflation is coming!!!" in the Keynesian or other schools, but, under MMT, those can be short-circuited before they trigger rampant inflation.

[Simpleton]

Just remember, even if the Fed is not explicitly converted over to MMT, they're absolutely at a minimum using the language of MMT to define the terms they are using. In an MMT environment, they can, in theory, prevent inflation from crossing the 4-5% barrier and keep it at the desired 2-3%.

There may be a lot of things that would signal "Inflation is coming!!!" in the Keynesian or other schools, but, under MMT, those can be short-circuited before they trigger rampant inflation.

Every bubble starts with people saying "this time is different". Maybe it is, but money printing through history has had predictable results.

MMT argues that we can spend as much money as we want, as long as we also raise taxes to draw the money out eventually. That is essentially advocating for paying off your debts eventually- maybe I could get behind that theory, but not the reality of it.

If anyone thinks any government will raise taxes enough pay for all this, I have a bridge to sell you. In fact, I think Biden is literally looking to sell you a bunch of bridges with all this new spending proposed. To actually raise taxes enough he would have to put a real hurt on the middle class because there is simply not enough to tax from the rich - I don't see it happening politically.

It all too conveniently aligns with big spending agenda. Free money now, no consequences, tax the rich!

Good politics, poor economic policy IMO.

[Wrenchturner]

Eat televisions?

I think we've been inflating at least since the 70s.  Luckily there was a lot of growth and technological deflation in the 20th century, due to the development of North America and industrialization generally.  But I fear that growth and tech deflation are both waning and the inflation won't hide anymore.  All this easy credit that's intended to produce innovation and jobs and growth is going into assets and the other usual suspects. 

[Telecaster]

And in general, it is good that wages increase faster than inflation.  That means our standard of living is increasing. 

[Simpleton]

This popped up on Hacker News (discussion) just now...

The Ultimate Guide to Inflation

This was a fantastic article.

Thank you!

[max9505672]

Post to follow

[American GenX]

This popped up on Hacker News (discussion) just now...

The Ultimate Guide to Inflation

Thanks.

https://www.lynalden.com/wp-content/uploads/inflation-article-select-prices-3.png

[Wrenchturner]

The two sides of this aren't actually independent of each other though. As technological progress has increased productivity a lot in some sectors of the economy (bringing prices down) it also increases the value, and hence cost, of human labor which drives UP costs in sectors of the economy which haven't seen productivity gains like healthcare and education. Baumol's cost disease. It's the same reason a concert cellist makes much more money than they did a century ago, despite the productivity per hour of concert cellists not changing at all in that time frame.

While that may be the case, it is widely regarded that wages have barely kept up with inflation in the last forty years, so to whatever degree that effect is pushing up wages, it hasn't been the main driver of them.  The Lyn Alden article posted mentions this several times.  The 90th percentile American has seen 41% wage growth since 1979 and the 50th percentile American has only seen 8.8%:
https://fas.org/sgp/crs/misc/R45090.pdf  page 9.

Some people like Steve Keen are suggesting the likelihood of a debt jubilee.  That seems like the only other option other than inflating away debt, but I haven't looked into it much. 

[ender]

This popped up on Hacker News (discussion) just now...

The Ultimate Guide to Inflation

This is one of the best articles I've seen on inflation out there.

[Roland of Gilead]

This popped up on Hacker News (discussion) just now...

The Ultimate Guide to Inflation

This is one of the best articles I've seen on inflation out there.

Indeed, that was a good article.  Opened my eyes to a few things.

The author did mention in the article that things like house buying vs renting were hard to reconcile in a inflation statistic, which was what I suspected.  I thought the Big Mac inflation meter was pretty spot on...what an easy indicator to use lol.

[ender]

This popped up on Hacker News (discussion) just now...

The Ultimate Guide to Inflation

This is one of the best articles I've seen on inflation out there.

Indeed, that was a good article.  Opened my eyes to a few things.

The author did mention in the article that things like house buying vs renting were hard to reconcile in a inflation statistic, which was what I suspected.  I thought the Big Mac inflation meter was pretty spot on...what an easy indicator to use lol.

Someone elsewhere did a historical analysis on mortgage costs of median home prices vs median incomes.

Mortgage rates have a massive impact on this and people never remember that when they look back in time to see what houses used to cost 10+ years ago. "My parents first house was $50k!" (but also a 17% interest rate)

[pecunia]

I read a lot of the preceding posts and don't know if I saw this.

Money Lenders to Uncle Sam, "Sam you owe us a lot of money.  It's going to be a real challenge for you to pay it off."

Uncle Sam goes off into the Rocky Mountains and thinks for a while.  He wonders how he is going to pay this big pile of debt off.  He looks at all of the stuff he has got behind on including stuff like high speed rail, fixing roads and bridges.  He thinks maybe he should have listened to Ross Perot years ago.

Then Sam remembers a period of Carter and Reagan.  Well, all that old debt he used to worry about didn't go away but kind of disappeared.  How did that happen?  He remembers when hamburger was 39 cents a lb and cars cost a thousand dollars.  Sam slaps himself on the side of his head.  I know what I'm going to do.  It's a win win too.  It'll help people and help me.

So Sam pulls the printing press out of the basement in Denver, gets some of the special paper and ink.  He rolls up his sleeve and goes to work.  He begins printing money like he never has before.

He starts handing out money to all the folks out of a job.  They stay home and don't spread the virus.  The shots are manufactured, sane people get their shots and the virus becomes lessened.  Folks get jobs in the new Federal programs to update America.  Research once again takes place in America producing new products.  All that money is going to work.  It is priming the pump of the American economy.  Sam even thinks he spies Animal Spirits.

Then Sam sits back and lets all that money go to work.  There are lumber and chip shortages.  The price of oil goes back up.  The people notice that the prices do not come back down.  All those dollars Sam printed make money worth less.  His big bills are not so bad.  Future generations of Americans won't suffer as bad as some folks said. 

Sam smiles and leaves flowers on Milton Friedman's grave.

[BicycleB]

^ LOL! Well done, @pecunia. Really enjoyed reading that. :)

[Simpleton]

That gives me three months of data: 0.3% in January, 0.4% in February, and 0.6% in March. I can multiply those together: 1.003 * 1.004 * 1.006 = 1.013 to get the total inflation over that three month period (1.3%). If we assume the remaining 3/4ths of the year will have inflation at the same rate as the first 1/4th of the year (first three months) then annual inflation would be 1.013^4 or 5.3%.

April CPI numbers came out this morning. 0.8% inflation this month.

So 1.003 * 1.004 * 1.006 * 1.008 = 2.1% inflation in the first four months of 2021. Extending that rate out the last four months of inflation to a full year works out to a projected 1.021^3 = 6.4% annual inflation.

Yes, yoy is over 4% inflation in April, highest in 13 years.

It's accelerating, much more upside to come is my bet.

[JLee]

This popped up on Hacker News (discussion) just now...

The Ultimate Guide to Inflation

This is one of the best articles I've seen on inflation out there.

Indeed, that was a good article.  Opened my eyes to a few things.

The author did mention in the article that things like house buying vs renting were hard to reconcile in a inflation statistic, which was what I suspected.  I thought the Big Mac inflation meter was pretty spot on...what an easy indicator to use lol.

Someone elsewhere did a historical analysis on mortgage costs of median home prices vs median incomes.

Mortgage rates have a massive impact on this and people never remember that when they look back in time to see what houses used to cost 10+ years ago. "My parents first house was $50k!" (but also a 17% interest rate)

Ehhhhh.

I bought my first house in Phoenix in 2013 for $140k at 3.75%.  Today it's worth ~$340k. Rates aren't that much better..

[ChpBstrd]

It's always good to see what professional money managers are doing. To second-guess them is kind of like stock picking after reading one annual report for one company and thinking Wall Street must have underpriced that company. Likewise, if our expectations for inflation are way out of line with the people who have major money on the line, it's probably we who are wrong.

Let's look at the 5-year Breakeven Inflation Rate, derived from what investors are paying for treasuries vs. TIPS, each with 5 year average durations. Yes, inflation expectations are rising. They were up to 2.68% as of yesterday. (You may panic now.)

https://fred.stlouisfed.org/series/T5YIE

The 10-year Breakeven Inflation Rate is a little lower at 2.53%. (Hoard SPAM now.)

https://fred.stlouisfed.org/series/T10YIE

Meanwhile the Federal Reserve's forecast for inflation in 2021 was 2.4%, and by 2023 2.1%. That happened to be right at where the market's expectations were at the time, and the two things are probably the same number. (So both the Fed AND the worldwide ecosystem of investors are in cahoots! Lol)

https://www.marketwatch.com/story/fed-officials-split-on-outlook-for-inflation-11617820245

These are truly breathtaking and mind-boggling numbers. 2.4%! 2.68%! What if we hit 3%? How will we survive? (Till up the yard to plant crops? Buy mason jars?)

Seriously though, one commonality I'm seeing in the financial media / dignified clickbait, which I should be avoiding like a plague but you all made me look, is that they all start out with a series of anecdotes about the specific things that went up the most since the low point of the deflation of April/May 2020, and one has to read down below the teaser language and get through their paywall to get any nuanced information, if it even exists. A recent WSJ article quoted an economist talking about the price of microbrewery beer going up, but failed to mention the inflation breakeven rate, recent projections, etc.

Nobody is averaging inflation across the last TWO years to smooth out the anomalies in 2Q 2020. The one year CPI growth rate is: 4.1%. The two year average is 2.25%/y. The five year average is 2.3%/y.

Last year at this time there were several good reasons to sell - an exponentially expanding pandemic with no vaccine in sight, inept leadership at a federal level, shortages of food and toilet paper, negative oil prices, riots in the streets, and a collapse in every economic metric that came faster and harder than the numbers heralding the Great Depression. But if anyone is going to hide in TIPS or gold or real estate or crypto because they fear inflation going from two-point-dirt-percent to 3% - the number many economists consider to be ideal for economic growth - then the problem may be the media/social media panic machine, not the economy.

Welcome to the attention economy, where the more attention you sell the poorer you get.

[jeromedawg]

Unemployment isn't going to improve if there's a growing trend for unemployment payments to be higher than many minimum wage and low paying jobs.

[GuitarStv]

Holy fuck.  Why does the US undervalue teachers so much?

[djadziadax]

That is pre-school teachers, and it does not account for cost of living differences. K-12 teachers in public schools are paid well once they have tenure, are in a union, do not work summers, and get extemely generous pensions after 20 years, to the tune of 70K a year.

[jeromedawg]

That is pre-school teachers, and it does not account for cost of living differences. K-12 teachers in public schools are paid well once they have tenure, are in a union, do not work summers, and get extemely generous pensions after 20 years, to the tune of 70K a year.

Yea, that graph is based on the Pennsylvania area and includes estimates for preschool teachers not K-12. K-12 is a different ballgame I think. Here in CA, if you're a tenured teacher, you get paid quite well. My mom is a retired teacher/admin up in the Bay Area and collects a nice pension. She can't stop working though so she's working up to the max she can earn in retirement "for her sanity".

[BicycleB]

Re pre-school, anything with very small children tends to be underpaid, I guess bc of sexism / belief that some women will do it for the love of the children.

Re 70k for teachers - sounds like a high dollar state with strong unions; in many parts of the country, teachers don't make close to 70k period, let alone get a pension like that. My sister in TX started at 18k gross (40k in today's terms?) and retired recently at I believe low 60s peak salary with master's and 25+ years experience as expert teacher grades K12. Her pension after 29 years roughly 40k gross. Varies widely among different states.

[pecunia]

Re pre-school, anything with very small children tends to be underpaid, I guess bc of sexism / belief that some women will do it for the love of the children.

Re 70k for teachers - sounds like a high dollar state with strong unions; in many parts of the country, teachers don't make close to 70k period, let alone get a pension like that. My sister in TX started at 18k gross (40k in today's terms?) and retired recently at I believe low 60s peak salary with master's and 25+ years experience as expert teacher grades K12. Her pension after 29 years roughly 40k gross. Varies widely among different states.

I'll bet the teachers in Texas are taught year after year about the evils of unions and then pass it on to the kids they teach.  Unionized people laugh all the way to the bank.

[American GenX]

Holy fuck.  Why does the US undervalue teachers so much?

I'm in the U.S., and public teachers near me get paid something like $80K per year working just 9 months per year, and after working those 20 years just 9 months per year, they get a pension of about $80K that goes up yearly faster than inflation.

Considering they work only 9 months per year and get such a great pension after working only 20 years, looks like they are overvalued and overpaid with too generous of benefits in some areas.   It's not the same across the entire country.

[American GenX]

Unemployment isn't going to improve if there's a growing trend for unemployment payments to be higher than many minimum wage and low paying jobs.

Hell, we spoke off the record with one of our furloughed guys who had been making $30/hr working an easy tech job, and he said he would rather just stay at home and take advantage of the unemployment benefits, and that's what he did.  He wasn't concerned about when they eventually end because he's 66 and collect SS when the free generous unemployment benefits run out.  So, I can't imagine too many of those minimum wage workers who have crappy jobs wanting to go back to work when they can live off the taxpayer dime sitting on their a$$es.  They need to put an end to those extra benefits (and they are in some states).

[JLee]

Holy fuck.  Why does the US undervalue teachers so much?

I'm in the U.S., and public teachers near me get paid something like $80K per year working just 9 months per year, and after working those 20 years just 9 months per year, they get a pension of about $80K that goes up yearly faster than inflation.

Considering they work only 9 months per year and get such a great pension after working only 20 years, looks like they are overvalued and overpaid with too generous of benefits in some areas.   It's not the same across the entire country.

It's not the same even in the same areas.  I have a friend who's a teacher and two schools ~20 minutes apart pay ~50k and 80-90k for the same position.

[American GenX]

Yes, yoy is over 4% inflation in April, highest in 13 years.

It's accelerating, much more upside to come is my bet.

The stock market agrees with you today.  It will be interesting to see how bad it gets.

[EvenSteven]

Unemployment isn't going to improve if there's a growing trend for unemployment payments to be higher than many minimum wage and low paying jobs.

Hell, we spoke off the record with one of our furloughed guys who had been making $30/hr working an easy tech job, and he said he would rather just stay at home and take advantage of the unemployment benefits, and that's what he did.  He wasn't concerned about when they eventually end because he's 66 and collect SS when the free generous unemployment benefits run out.  So, I can't imagine too many of those minimum wage workers who have crappy jobs wanting to go back to work when they can live off the taxpayer dime sitting on their a$$es.  They need to put an end to those extra benefits (and they are in some states).

My God, a 66 year old retiring? This is a moral outrage, and we need to demand that everyone must work until 80. What forum am I on again?

[JLee]

Yes, yoy is over 4% inflation in April, highest in 13 years.

It's accelerating, much more upside to come is my bet.

The stock market agrees with you today.  It will be interesting to see how bad it gets.

Truly a shocking spectacle to behold.

[RWD]

Why are you seeing VTSAX down 0.72% when VTI is down 2.25%?

May 11th vs May 12th

[JLee]

Why are you seeing VTSAX down 0.72% when VTI is down 2.25%?

May 11th vs May 12th

Indeed.

Why are you seeing VTSAX down 0.72% when VTI is down 2.25%?

My point is a teeny little blip in the stock market is not some terrible event that genx seems to imply it is.

[jeromedawg]

Unemployment isn't going to improve if there's a growing trend for unemployment payments to be higher than many minimum wage and low paying jobs.

Hell, we spoke off the record with one of our furloughed guys who had been making $30/hr working an easy tech job, and he said he would rather just stay at home and take advantage of the unemployment benefits, and that's what he did.  He wasn't concerned about when they eventually end because he's 66 and collect SS when the free generous unemployment benefits run out.  So, I can't imagine too many of those minimum wage workers who have crappy jobs wanting to go back to work when they can live off the taxpayer dime sitting on their a$$es.  They need to put an end to those extra benefits (and they are in some states).

My God, a 66 year old retiring? This is a moral outrage, and we need to demand that everyone must work until 80. What forum am I on again?

I think the point being made wasnt so much about retirement as it was about someone taking advantage of unemployment benefits since he viewed it as near to full income replacement  (or more) instead of working at all. Why get paid to work when you can get paid as much if not more for not doing anything? The kicker, I thought, is that if you file for unemployment aren't you supposed to be showing some sort of 'proof' that you're actively searching for a job?