So, a problem I've been having: whenever I write about inflation I get angry mail to the effect that real people don't care about fancy economists' measures of underlying inflation, they care about the prices they pay, which are soaring. Two problems 1/
First, when we say that consumer sentiment is strangely low given the fundamentals, those calculations are always done with overall consumer prices, not core inflation. The supposed sin of out-of-touch economists isn't happening 2/
But the perception that economists are using fancy numbers to pretend that inflation is down seems to be a zombie; no matter how many times you try to kill it, it won't die. Sigh 4/
Yeah, "inflation on groceries is going down" is fine but that just means they're getting expensive less quickly. They're still expensive though! Groceries still cost a large chunk of my paycheck! It's not going to feel better until wage growth outpaces inflation for a while (not holding my breath)
Cost more than what? That's the real question. Because groceries have always "cost more." Every year they cost more, on an absolute basis. They always have.
I view it as this. Prices OF COURSE go up, and the rate can be steady, alarming, or even dip back sometimes. But when a majority of employers do not give annual raises that outpace inflation, so that we can spend AND save, then it “looks” like inflation is out of control, but it’s our pay.
The sudden (and temporary) spike in inflation was like sudden impact to your knee. Now it's sensitive to even small shocks. And it'll take time for that to heal.
Before, you didn't notice the small shocks because your knee was healthy. But now even small impacts hurt.
correct. people notice the price of food. they notice that the best price for x is now $3 when it used to be $2 when it is something they deal with daily. The price of appliances, cars, furniture, etc... is not nearly as noticeable or important to most people.
But it ain't true. Is gas higher than it was in the depths of the 2020? Yes. But the peak was 18 months ago, and it's well below that now and comparable with prices paid in the middle of the 2010s.
I had someone claim eggs were $6/dozen the other day. They're $2 at my local supermarket, less at Costco. People remember prices that go up, ignore the ones that hardly change. And of course some are just trying to make the admin look as bad as possible.
Your concern seems to be high prices. Not inflation per se. If inflation is going down, an economist might say that's a good thing. If your response is "but prices are still high" your not talking about inflation.
Grocery and gas hasn't come down for the same reason. There are cartels that conspire to keep them high. Only so much can be done on oil bc Saudis suck. The government on the other hand is kinda working on the food angle. That's part of the anti trust battles going on today. Undoing Reagan policies.
I've found that it really depends on the grocery store and the item. As Smokey Robinson and The Miracles sang, "You better shop around." Now that most stores are online, it's even easier to compare prices and look for sales.
people's gut on inflation is not the year-on-year number: it's what "prices used to be before they went up". unless there's deflation, prices won't be what they "used to be (unspecified timeline)" so they feel bad.
My housing costs are 10% lower than 4 years ago. I never hear a single inflation alarmist mention that. There are huge partisan gaps in how people view the economy and they fixate on data that reinforces their idea.
And lots of these people are reporting their personal economic situation is good.
I would love to know who this imaginary person is who pays less in housing, less in living expenses, less on gas, and makes more money, and yet complains about inflation
Sure doesn’t describe any real people I know
Millions of people, myself included, refinanced in 2020. Going from 4% to 2.5% is huge. Homeowners insurance went up a few thousand and property tax up a thousand but offset by a lot less in interest cost.
Agreed, entirely. My housing costs are about 15% lower than they were four years ago, because I was able to get my rent dropped during the depths of the pandemic.
I don’t know what shithole you’re living in, but my rent is 50% higher than it was 4 years ago, if I had to get a new place it would be up another 50% for something comparable, and median home price has gone up by 40%.
