The media needs to be more truthful with these headlines. This one makes it look like inflation rose 7.9% in February, when in fact it rose 7.9% in the last twelve months. Still bad, but very different from a 7.9% jump in one month.
And yes, they do clarify that point in the article, which suggests that the headline is purposely misleading to get more clicks.
Another regular frustration is when they say how much a proposed bill will cost but fail to say over how many years. It took me a long time to understand that because spending bills for new indefinite programs are are rarely passed with a bipartisan 60-vote majority in the senate (the last one was the ACA (which was a actually party line vote), and before that Medicare part D in the first Bush administration), they are passed through reconciliation and the rules limit that to a 10 year spending commitment.
It still wouldn’t be that hard to include “over 10 years”, or in 2023 for yearly budget increases like military spending. Instead they regularly say “this bill will cost $X” and a casual reader has little context in terms of what it would add to the yearly budget in % terms.
CNBC is just really shoddy in general with details like this, in addition to having a strong tendency towards negative reporting and negative headlines in general.
Truthful and media are basically a juxtaposition these days. "Inflation rose .8% in February..." probably just doesn't have the same ring. Although they could have just said "YoY Inflation rose 7.9% in February..."
Enough with bashing reporters (aka "The Media") in general. The work is difficult, but important. If we keep bashing the whole profession then there will be no incentive, or funding, for it to improve, since people will move on to getting their news from even less trustworthy sources.
Feel free to criticize individual reporters and articles though. That's how things improve.
I mean, YoY is more useful than monthly numbers (because there's always seasonal variation in certain goods). But yes, the title could have been worded more clearly.
I think that’s a reasonable request. Inflation rose at a 7.9% annualized rate in February. However, I’ve always been bothered by the official inflation numbers as they use a single gameable metric (CPI) to describe a complex phenomenon.
The Consumer Price Index (CPI) uses a single number to explain a general rise in prices that affects different consumer segments very differently. For example, it uses a methodology that basically excludes house prices by instead measuring owner equivalent rent. So a 30% y/y increase in house prices is under-reported.
Also is uses a specific basket of consumer goods to measure price increases, one that largely excludes high inflation items such as energy, healthcare and higher education. If these things are important to you, your personal inflation rate is likely much higher.
Finally, the CPI is calculated using a process of hedonic adjustments - but these only work one-way. For example, if steak gets too expensive, then the CPI basket may swap out ground meat instead, but if the price of a 50” flat screen TV comes down, then it is reflected in CPI with no hedonic adjustment.
I think hedonic adjustments do happen in both directions in the survey-based method used.
“What did you spend money on?” captures the fact that more people are prone to buy more 50” TVs when they cost 3 tanks of gas than when they used to cost 6 weeks of pay.
When items purchased are judged to be of lower quality than before, they are penalized in the adjustment process just as the converse happens.
Is that all? My per m³ and per kw rates for gas and power will triple when my contract runs out in May. And since companies are not even offering fixed-rate contracts anymore it probably won't be the end.
If that were the return on a portfolio in a down market, someone might wonder if it were a scam or theft - and then it lands that yes, that is exactly what it is. When a government funds itself and its coalition by debasing its currency with interest rates lower than the rate of inflation (which are in effect, negative), reducing the purchasing power of their peoples' dollar, causing consumer prices to rise relative to their supply chain input factors, and deplating the value of the peoples incomes and savings - that is a straight distraction theft by a sanctimonious bandit who tells you they are robbing you for your own good.
As I understand it, lending and increasing debt is simply the en vogue way of governments to make sure they can finance their budgets.
(And budgeting is one of the most important ways in which governments implement their election programmes.)
There's different ways in which governments can finance new/increased/additional expenses:
1. raise taxes
2. cut other spending
3. take on more debt
With Modern Monetary Theory MMT being enticing and shiny .. and balanced budgeting as just an annoying unnecessary burden on energetic and enthusiastic policy making as the predominant narrative (which is perpetually being pushed by most media; and I have the impression most people fall for it, even though it's dangerous and unsound IMO) .. it seems obvious that politicians - who want to get reelected - tend to choose option 3.
Because of this current mainstream opinion about government debt/budgeting, option 3 is currently the least damaging to politicians' popularity .. which is why it's chosen practically all the time.
If citizens want less money printing, they simply need to put pressure on politicians to make use of options 1 (raise taxes; for the rich) and 2 (cut other spending) instead of option 3.
I've seen this asked on social media platforms and I'll admit ignorance on the matter, but this seems like a place to get better analysis.
What does it really mean when inflation is going crazy, but also many businesses are making really absurd, record profits? Is that a normal occurrence in periods of high inflation? It really feels more like price gouging than inflation to me, but like I said, I'm ignorant about economics.
How much inflation can be explained by the changes in the labor pool and government spending, compared to companies just charging more and hoarding more?
This would not surprise anyone who lives in a country with a weak currency, like Argentina or Turkey. The currency is devalued and you earn more and more Pesos or Liras, but they are worth less and less. I understand that you live in the United States and that you are used to measuring things against the Dollar. So you consider the Dollar as something fixed. Now that your currency is devaluing, businesses income (and your income) is going to increase, but only nominally.
> Is that a normal occurrence in periods of high inflation?
Yes, even during stagflation. Inflation means the price of some things rise really fast, and profits grow together, while other things rise very slowly, profits go negative and the companies stop being measured on that indicator.
Besides, as a rule, inflation pushes earning into the things that are renegotiated often. That is most of the companies prices (they are renegotiated every time you go in a store), and almost none of the workers salaries.
> What does it really mean when inflation is going crazy, but also many businesses are making really absurd, record profits?
If a business' costs go up, they can raise their prices to maintain their margins.
> How much inflation can be explained by the changes in the labor pool and government spending, compared to companies just charging more and hoarding more?
If the main components are food and energy, then the things you listed are less likely to be the causes. Though energy prices could be a reflection (pre-Ukraine) of more economic activity generally as people stop staying at home and (e.g.) travel.
> What does it really mean when inflation is going crazy, but also many businesses are making really absurd, record profits?
That's...normal.
Outside of stagflation (which is exceptional among inflationary conditions, hence the special name) inflation tends to be positively correlated with economic growth which is positively correlated with profits
Inflation suddenly becoming an issue right around the same time that a rapid bounce back from the COVID slowdown took hold wasn't a weird coincidence.
Thinking inflation is positively correlated with profits is like getting punched in face is positively correlated with increased healing. Or Earth quakes are good for economy because they create more economic activity.
Is there a way to calculate exactly how much this affects the every day person? Specifically what I'm looking for is a table breaking down the costs by category.
For example - I don't really drive that much on a day to day basis compared to the average American, and so if it's a huge 50% increase in gas prices yoy, that over indexes the inflation number for me because I might drive 80% less than the average American. So I would assume that inflation is really <7.9% for me.
Inflation rates tend to be calculated from the average on many different things. So it can be tricky to understand how much it's really affecting. Imagine it like this: if it only was measuring for the prices of potatoes and gas, and potatoes went up by 2.5% and gas did the same by 7.5%, then the inflation would be like 5% but it's not clear
Source: In my country, the government forces some product prices to be limited so they can trick us in to believing that the problem is smaller than it actually is
Readit News
And yes, they do clarify that point in the article, which suggests that the headline is purposely misleading to get more clicks.
It still wouldn’t be that hard to include “over 10 years”, or in 2023 for yearly budget increases like military spending. Instead they regularly say “this bill will cost $X” and a casual reader has little context in terms of what it would add to the yearly budget in % terms.
https://bulloakcapital.com/blog/is-cnbc-biased/
Feel free to criticize individual reporters and articles though. That's how things improve.
Deleted Comment
Dead Comment
The Consumer Price Index (CPI) uses a single number to explain a general rise in prices that affects different consumer segments very differently. For example, it uses a methodology that basically excludes house prices by instead measuring owner equivalent rent. So a 30% y/y increase in house prices is under-reported.
Also is uses a specific basket of consumer goods to measure price increases, one that largely excludes high inflation items such as energy, healthcare and higher education. If these things are important to you, your personal inflation rate is likely much higher.
Finally, the CPI is calculated using a process of hedonic adjustments - but these only work one-way. For example, if steak gets too expensive, then the CPI basket may swap out ground meat instead, but if the price of a 50” flat screen TV comes down, then it is reflected in CPI with no hedonic adjustment.
Deleted Comment
“What did you spend money on?” captures the fact that more people are prone to buy more 50” TVs when they cost 3 tanks of gas than when they used to cost 6 weeks of pay.
When items purchased are judged to be of lower quality than before, they are penalized in the adjustment process just as the converse happens.
(And budgeting is one of the most important ways in which governments implement their election programmes.)
There's different ways in which governments can finance new/increased/additional expenses: 1. raise taxes 2. cut other spending 3. take on more debt
With Modern Monetary Theory MMT being enticing and shiny .. and balanced budgeting as just an annoying unnecessary burden on energetic and enthusiastic policy making as the predominant narrative (which is perpetually being pushed by most media; and I have the impression most people fall for it, even though it's dangerous and unsound IMO) .. it seems obvious that politicians - who want to get reelected - tend to choose option 3.
Because of this current mainstream opinion about government debt/budgeting, option 3 is currently the least damaging to politicians' popularity .. which is why it's chosen practically all the time.
If citizens want less money printing, they simply need to put pressure on politicians to make use of options 1 (raise taxes; for the rich) and 2 (cut other spending) instead of option 3.
What does it really mean when inflation is going crazy, but also many businesses are making really absurd, record profits? Is that a normal occurrence in periods of high inflation? It really feels more like price gouging than inflation to me, but like I said, I'm ignorant about economics.
How much inflation can be explained by the changes in the labor pool and government spending, compared to companies just charging more and hoarding more?
Yes, even during stagflation. Inflation means the price of some things rise really fast, and profits grow together, while other things rise very slowly, profits go negative and the companies stop being measured on that indicator.
Besides, as a rule, inflation pushes earning into the things that are renegotiated often. That is most of the companies prices (they are renegotiated every time you go in a store), and almost none of the workers salaries.
If a business' costs go up, they can raise their prices to maintain their margins.
> How much inflation can be explained by the changes in the labor pool and government spending, compared to companies just charging more and hoarding more?
If the main components are food and energy, then the things you listed are less likely to be the causes. Though energy prices could be a reflection (pre-Ukraine) of more economic activity generally as people stop staying at home and (e.g.) travel.
That's...normal.
Outside of stagflation (which is exceptional among inflationary conditions, hence the special name) inflation tends to be positively correlated with economic growth which is positively correlated with profits
Inflation suddenly becoming an issue right around the same time that a rapid bounce back from the COVID slowdown took hold wasn't a weird coincidence.
For example - I don't really drive that much on a day to day basis compared to the average American, and so if it's a huge 50% increase in gas prices yoy, that over indexes the inflation number for me because I might drive 80% less than the average American. So I would assume that inflation is really <7.9% for me.
Source: In my country, the government forces some product prices to be limited so they can trick us in to believing that the problem is smaller than it actually is
* https://www.bls.gov/news.release/cpi.t01.htm
For anyone in Canada, StatCan has a "Personal Inflation Calculator":
* https://www150.statcan.gc.ca/n1/pub/71-607-x/71-607-x2020015...
http://www.shadowstats.com/alternate_data/inflation-charts
-7.9% in a month?!!!
Then i read the "to"
Bleh, that is almost nothing for us (Argentina, that is good for 2 months, twelve sounds like paradise.. )