tag:blogger.com,1999:blog-582368152716771238.post7453744331437583964..comments2024-03-28T05:14:02.071-05:00Comments on The Grumpy Economist: Inflation expectationsJohn H. Cochranehttp://www.blogger.com/profile/04842601651429471525noreply@blogger.comBlogger42125tag:blogger.com,1999:blog-582368152716771238.post-31044431825670754962021-06-08T18:35:39.816-05:002021-06-08T18:35:39.816-05:00Okay, so where does the average guy hedge his reti...Okay, so where does the average guy hedge his retirement who is 5 years out? Or ten years out? Farm Guyhttps://www.blogger.com/profile/00714308509290449235noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-11247611510431543662021-04-29T22:49:50.704-05:002021-04-29T22:49:50.704-05:00This comment has been removed by the author.LALhttps://www.blogger.com/profile/08196675112184615614noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-24091339542177087212021-04-29T22:47:06.678-05:002021-04-29T22:47:06.678-05:00I had thought surveys on inflation rate changes we...I had thought surveys on inflation rate changes were considered remarkably good compared to all other forecasting models (Ang et al. 2006). I have used this to believe in the efficient market hypothesis for the overall price level and the hope that it can be studied under rational expectations models. To me this is what the rational expectations revolution is all about, following by analog what Muth (1961) explained for the observations about surveys of prices in simple markets.LALhttps://www.blogger.com/profile/08196675112184615614noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-36320810481016015202021-04-23T16:17:09.268-05:002021-04-23T16:17:09.268-05:00I can't say nothing about inflation. The only ...I can't say nothing about inflation. The only prediction I'm going to make is this: If we do start to get runaway inflation, no economic forecaster is going to predict it, but a year in all of them will say how obvious it was in retrospect. Book it. Kailerhttps://www.blogger.com/profile/18077588475487129146noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-60370775828019469902021-04-21T21:22:39.749-05:002021-04-21T21:22:39.749-05:00"Auto Dealers’ Record Sales Take a Back Seat ..."Auto Dealers’ Record Sales Take a Back Seat for Investors: Supply constraints lead to impressive profits today but raise real concerns about business for the rest of the year"<br /><br />By Jinjoo Lee | April 21, 2021 | https://www.wsj.com/articles/auto-dealers-record-sales-take-a-back-seat-for-investors-11619024671<br /><br />A year ago, auto dealers saw their profits crumple as the pandemic hit both demand and supply: Consumers stopped buying as many cars as they hunkered down, while auto makers halted manufacturing. Today, they have hit a sweet spot. Consumers are eager to buy cars but manufacturing bottlenecks in things like semiconductors are limiting supply, lifting pricing for both new and used vehicles.<br /><br />Both AutoNation and Lithia Motors which sell new and used vehicles, blew past Wall Street expectations on their top and bottom lines. First-quarter sales jumped 27% and 55% for the two auto dealers, respectively, compared with a year earlier. The two also beat expectations on net income. The numbers represent significant bumps even compared with pre-pandemic 2019.<br /><br />Auto retailers have seen brisk business as they capitalize on tight supply for new cars. The average new-car price in March was 9.3% higher than a year ago, while used cars have gotten 14% more expensive, according to data from Edmunds. ...Fat Manhttps://www.blogger.com/profile/09554029467445000453noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-48706153493046437802021-04-21T21:17:30.842-05:002021-04-21T21:17:30.842-05:00Still No Inflation:
"Procter & Gamble Wi...Still No Inflation:<br /><br />"Procter & Gamble Will Raise Prices in September: Price increases on baby products, adult diapers and feminine-care brands come as the company reports slowing growth in latest quarter"<br /><br />By Sharon Terlap | April 20, 2021 | https://www.wsj.com/articles/procter-gamble-will-raise-prices-in-september-11618916498<br /><br />Procter & Gamble Co. this fall will start charging more for household staples from diapers to tampons, the latest and biggest consumer-products company to announce price increases.<br /><br />The maker of Gillette razors and Tide detergent cited rising costs for raw materials, such as resin and pulp, and higher expenses to transport goods.<br /><br />The announcement, which P&G said could be a precursor to broader increases, follows a similar move last month by rival Kimberly-Clark Corp.<br /><br />“This is one of the bigger increases in commodity costs that we’ve seen over the period of time that I’ve been involved with this, which is a fairly long period of time,” said P&G Operating Chief Jon Moeller, a 33-year company veteran.<br /><br />Mr. Moeller said P&G aims to improve and add features to products, as the company increases prices so that consumers feel they are getting more. The price increases, to take effect in September, will be on baby products, adult diapers and feminine-care brands and will be in the mid- to high-single-digit percentage points, the company said.<br /><br />The last time big consumer-products companies raised prices significantly because of materials costs was 2018, when surging pulp prices drove up the cost of diapers, toilet paper and other products.<br /><br />Global supply chains, already struggling due to the Covid-19 pandemic, have seen additional disruptions. The February freeze that triggered mass blackouts in Texas led to chemical-plant shutdowns and caused a shortage in raw materials that in turn sent prices for polyethylene, polypropylene and other chemical compounds to their highest levels in years.<br /><br />Kimberly-Clark, maker of Huggies diapers and Scott paper products, said its percentage increases would be in the mid- to high-single digits and take effect in late June. They will apply to the company’s baby- and child-care, adult-care and Scott bathroom tissue businesses.<br /><br />Several food makers have raised prices as well. Hormel Foods Corp. said in February that it raised prices on its turkey products, such as Jennie-O ground turkey, in response to higher grain costs. J.M. Smucker Co. said it recently raised prices for its Jif peanut butter and that it might do the same with pet snacks because of higher shipping costs and other inflationary pressure.<br /><br />The Labor Department said last week that its consumer-price index—which measures what consumers pay for everyday items, including groceries, clothing, recreational activities and vehicles—jumped 2.6% in the year ended March, the biggest 12-month increase since August 2018.<br />* * *Fat Manhttps://www.blogger.com/profile/09554029467445000453noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-12934657233675229152021-04-21T06:29:59.844-05:002021-04-21T06:29:59.844-05:00"Or, heaven forbid, the law could include acr..."Or, heaven forbid, the law could include across the board spending cuts that kick in when an inflation target is hit. With the restriction that marginal tax rates cannot exceed 100%, DoDeals and company will sooner or later have to discover that one."<br /><br />Maybe John Cochrane should address TIPs. Right now, the higher the inflation rate the higher the level of government spending on TIPs.<br /><br />Shouldn't this be the other way around - Treasury Deflation Protection securities (TDPs)?<br /><br />With higher inflation, the spending by government on it's securities should be negative (not positive).FRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-82139554584203812362021-04-21T00:14:46.739-05:002021-04-21T00:14:46.739-05:00I wonder if we're not on the brink of such a &...I wonder if we're not on the brink of such a "wages breakout"? Everywhere one sees "We're Hiring" signs, yet the daily paper is filled with employer complaints that they have no takers. At some point, some desperate employer is going to think to offer a little more. And as that practice catches on . . . here we go!Anonymoushttps://www.blogger.com/profile/12133781825986127895noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-57414597342270296802021-04-20T17:32:54.311-05:002021-04-20T17:32:54.311-05:00I ask again on how the US will have a wages break ...I ask again on how the US will have a wages break out. It matters not if expectations are rising if agents have little power to lift wagesNot Trampishttps://www.blogger.com/profile/12738633092867411422noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-52562304931548401282021-04-20T13:02:05.582-05:002021-04-20T13:02:05.582-05:00Our Monetary Economics professor in the 1970's...Our Monetary Economics professor in the 1970's was Philip Cagan, who we called "P Dot," which is how he denominated the inflation variable. His famous result, looking at hyper-inflations, is that "the parameters of money demand functions estimated during hyperinflation generally satisfy the condition of dynamic stability that precludes the inflation from being self-generating, or displaying period-to-period oscillations." Stable monetary policy was assumed to lead to stable prices. Of course, the 70's were about oil and "supply shocks," but the real insight was the role of expectations (adaptive for Professor Cagan, which lead to the rational expectations insights according to Professor Muth's little model on commodities). I admit to not having much of a grasp of the New Monetary Theory, but the focus of the inflation years (1970-90) lead us expectations and actual fiscal and monetary policy. I find to convenient to go back to the origins and core ideas, and here the lesson was that expectations depend on information and using that information to make predictions of outcomes; and even if the information is the same among actors, the predictions are not. Muth might have better coined his article "Information and Expectations;" the term rational expectations is a little misleading. <br /><br />So, we are again at a point where the monetary and fiscal actions are troubling; and the question is when and how will that information be translated into most likely divergent expectations; and how will those expectation effect inflation. <br /><br />These are old memories; but it seems that someone - even professionals - under 40 to 50 will lack memories of the post Viet-Nam and post Great Society inflations experienced by the US Economy.<br /> dennis l. hallhttps://www.blogger.com/profile/00040081175789772469noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-45120649408249595272021-04-20T06:56:42.973-05:002021-04-20T06:56:42.973-05:00I have family in the auto dealership industry and ...I have family in the auto dealership industry and they tell profits are higher than they have ever been in the used market. The Donkhttps://www.blogger.com/profile/14153840277624094270noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-26063055492021072872021-04-20T02:17:04.641-05:002021-04-20T02:17:04.641-05:00"Inflation? Not officially. the same car last..."Inflation? Not officially. the same car last year probably had the same sticker."<br /><br />Surely inflation calculations must include actual transaction prices for new cars and not just MSRP.realisthttps://www.blogger.com/profile/15859878286157071663noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-22380086747125193432021-04-19T22:46:45.416-05:002021-04-19T22:46:45.416-05:00You underestimate how stable the system under the ...You underestimate how stable the system under the current fiscal regime. The income tax system is graduated and capital gains and inventory profits are not indexed so that inflation increases real tax revenue. That is the source of fixed inflation expectations.Anonymoushttps://www.blogger.com/profile/02280433427165254936noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-86202856759220041672021-04-19T22:05:23.715-05:002021-04-19T22:05:23.715-05:00I take everything that the Wall Street Journal put...I take everything that the Wall Street Journal puts out with a large grain of salt.<br /><br />Here are wholesale lumber and construction material inventories relative to sales:<br /><br />https://fred.stlouisfed.org/series/R4233IM163SCEN<br /><br />April 2020 - 1.77 : 1<br />February 2021 - 1.47 : 1<br /><br />Notice that both of these values are SIGNIFICANTLY higher than what they were back in the 1990's.<br /><br />From 1993 to 2006, the average inventory to sales ratio for lumber and construction products was about 1.2 to 1.<br /><br />Post housing bubble crash, that value has risen and remained elevated.<br /><br />Also, as far a sawmill and lumber employment goes, that started cratering well before the pandemic set in:<br /><br />https://fred.stlouisfed.org/series/CES3132100001<br /><br />2000: 620 Thousand people employed in the production of wood products<br />2006: 573 Thousand people employed in the production of wood products<br />2010: 339 Thousand people employed in the production of wood products<br />Jan 2020: 411 Thousand people employed in the production of wood products<br />Apr 2020: 374 Thousand people employed in the production of wood productsFRestlyhttps://www.blogger.com/profile/09440916887619001941noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-7177087115814773862021-04-19T20:02:21.832-05:002021-04-19T20:02:21.832-05:00A more serious follow up. Is it wise to tie fiscal...A more serious follow up. Is it wise to tie fiscal policy to uncertain macro forces? Aren't we supposed to be doing fiscal policy in such a way as to make things as predictable as you can? <br /><br />Do we really want actors making decisions with even more uncertainty plopped on top? Or is it time to just throw everything into tax exempt fixed income assets?James Carlylehttps://www.blogger.com/profile/06778250145758547603noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-70687757139476321532021-04-19T19:59:11.723-05:002021-04-19T19:59:11.723-05:00And yet lots of countries with big populations of ...And yet lots of countries with big populations of low wage workers have experienced severe inflationsJames Carlylehttps://www.blogger.com/profile/06778250145758547603noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-88320471324802423342021-04-19T19:00:59.870-05:002021-04-19T19:00:59.870-05:00The CEA tweetstorm is a lot to take in and as a la...The CEA tweetstorm is a lot to take in and as a layman I'm confused by definition of inflation. Here is what I do know though:<br /><br />Unclogging supply chains is not a temporary action. Employers a pumping money at the problem because production is bottlenecked by a labor shortage exacerbated by the fact that the marginal benefit of working is very low relative to state+fed unemployment. To get people off the couch and to the plant floor we pay more.<br /><br />I guess I missed the part where humans are econs so wage rates arent going down - but employment may<br /><br />Price changes have passed through already- freight carriers are charging more and fewer companies offer guaranteed free next day. Consumers will adjust to getting less for more.<br /><br />These could be transitory changes - but what does CEA see as the unwind plan here? Supply chain is unclogged and businesses which found that they misread price elasticity over the past few years will suddenly charge less?<br /><br />Anonymousnoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-10823186789844000232021-04-19T18:47:23.789-05:002021-04-19T18:47:23.789-05:00Well, I say this every time but I will repeat it. ...Well, I say this every time but I will repeat it. You cannot have a discussion about inflation in America without noting the role of housing costs and property zoning.Benjamin Colehttps://www.blogger.com/profile/14001038338873263877noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-91283842233699186042021-04-19T18:32:29.594-05:002021-04-19T18:32:29.594-05:00"How the Pandemic Made Lumber America's H..."How the Pandemic Made Lumber America's Hottest Commodity"<br /><br />https://www.wsj.com/video/how-the-pandemic-made-lumber-america-hottest-commodity/7EF10647-3D43-4B71-BD10-55635ECCBFE6.html<br /><br />Fat Manhttps://www.blogger.com/profile/09554029467445000453noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-81891954830965530972021-04-19T18:29:47.478-05:002021-04-19T18:29:47.478-05:00Anonymous is invited to do better and show me the ...Anonymous is invited to do better and show me the paperwork.Fat Manhttps://www.blogger.com/profile/09554029467445000453noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-8889385281656676612021-04-19T17:22:44.726-05:002021-04-19T17:22:44.726-05:00for inflation to break out then you need what is c...for inflation to break out then you need what is called down under a wages break out. without that it just won't happen.<br />Funny how both you and others whop insist inflation will break out simply ignore this.Not Trampishttps://www.blogger.com/profile/12738633092867411422noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-43008562079179739942021-04-19T17:02:49.711-05:002021-04-19T17:02:49.711-05:00Or, heaven forbid, the law could include across th...Or, heaven forbid, the law could include across the board spending cuts that kick in when an inflation target is hit. With the restriction that marginal tax rates cannot exceed 100%, DoDeals and company will sooner or later have to discover that one. John H. Cochranehttps://www.blogger.com/profile/04842601651429471525noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-45422774351455769402021-04-19T16:50:13.512-05:002021-04-19T16:50:13.512-05:00Are such taxes easy to implemented? How will it af...Are such taxes easy to implemented? How will it affect behavior? Are there no potentially severe distortion effects associated with such a policy? How likely are people to hold onto assets vs trigger sell offs in anticipation big higher taxes? How is wealth even being measured here?James Carlylehttps://www.blogger.com/profile/06778250145758547603noreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-26578863117006478792021-04-19T15:45:34.938-05:002021-04-19T15:45:34.938-05:00Bill, when energy sources dry up and prices spike ...Bill, when energy sources dry up and prices spike in the winter, just put on a sweater like Jimmy Carter advised to conserve energy. Lol.David Seltzernoreply@blogger.comtag:blogger.com,1999:blog-582368152716771238.post-6154455334562608292021-04-19T15:22:04.393-05:002021-04-19T15:22:04.393-05:00Is inflation anticipated because of supply shocks ...Is inflation anticipated because of supply shocks related to the virus? Or using MV=PQ as a way to think about inflation; as productivity across the globe increases post pandemic, wouldn't prices remain relatively stable as price and quantity demanded are inversely proportional. Comments are welcome.David Seltzernoreply@blogger.com