AOC says inflation is propaganda

It’s now 3%, you completely ignore it was upwards of 9%, and that’s overall. The prices all set higher and many stayed higher.
Your grocery bill math is erroneous right off the bat.

 

One, as far as substitution, so in your mind the price index basket should still have horse and buggies and betamaxes, correct? Of course the basket should change as preferences change. If apples go up and instead you buy pears, there is comparatively less inflation due to apples. You don’t have inflation due to shit people don’t buy.

In terms of food and energy, those are a part of CPI. You don’t seem to understand that. Sometimes the fed looks at CPI excluding food and energy to look at the smoother underlying trend, but they are still part of CPI.

You don’t include the price of homes because a home is an investment. CPI is measuring consumption. If you include the price of houses, then also you include the price of stocks, buildings and other investments. Consumer price inflation is measured via various measures of rent, which is a form of consumption.

 

In a normal world, maybe. In a post-pandemic world, prices haven't come down once the supply chains got back to normal.

There's no reason for that other than the lean times in 2020 meant limited or no CEO bonuses and now they are going to use the pandemic as an excuse to get them back and more.

 

You realize the top line inflation number excludes food and energy?
Go pull food prices from 2020 and compare to now, way more than a 3% year of year even if you compound it.

 

Yep, if the production costs go up a business can not continue to exist selling its products for less than the cost of production. They go out of business and you have no products.

 

The issue for consumers is that when prices go up a lot, then stay there, it takes a while before people perceive things as being back to normal. They still remember when things were 20% cheaper a couple of years ago.

 

What top line inflation number are you talking about? CPI includes food and energy.

 

prices haven’t come back down because there was a lot of excess money thrown into the economy. If it was truly just a supply issue, then yes, prices should come back down. But in addition the governments of the world spent a lot of extra money which itself caused inflation.

 

This thread proves that failure to understand inflation is a bipartisan endeavor.

 

That’s not the issue here. The issue is that with tighter supply, the equilibrium prices for goods goes up. When prices go up but your supply costs don’t as much, you make more profits. You had tight supplies, and governments dropping money out of helicopters and not shockingly companies raised prices to balance supply and demand - which increased profits.

The increase in profits was an inevitable reaction to and result of the supply and demand shocks. Not the cause.

 

Most of the time CPI is quoted excluding food and energy.
The reason is those can be a bit more volatile and you don’t want to try chasing blips due to one off issues(like chicken or eggs shooting up due to a mass culling for avian flu.

I think we are mostly in agreement here. The poster who stated a $200 grocery bill is now $2 more due to 3% year over year inflation is just wrong, the math isn’t even correct.

 

Agree.

Part of the issue was the need to increase wages to try to draw workers back once the reopen began, that certainly had effects in the construction industry, which was fueled by cheap money. A real self sustaining problem in that case.

 

I fully understand why the fed often excludes food and energy to try to understand underlying trends. I’m not the one that is saying CPI excludes food and energy.

 

Core CPI is most often what is the headline number when they report.
That’s the one that’s in the news mostly.

For example the last core CPI was 4.7%, not the 3% the poster mentions (actually last CPI was 3.2%).

That’s quite a difference.
By my research.

 

Again, I understand this.

The core CPI 4.7 was a year over year measure. Pretty much all of that is due to housing which is basically proxies for rent. Actual new rents have been going down for a while, but cpi rents are based on what renters are paying now, including existing leases, so it tends to lag 6 to 12 months.

July CPI report shows inflation gauge rose 3.2%, less than expected

What you are already seeing and continue to see is core cpi cooling as CPI shelter measures catch up to rent costs which are decreasing and have flattened.

 

Yeah I know you understand, it was more for general discussions.

 

I think you are confused. The 3% number does include food and energy.

 

So when when we get the report tomorrow, it’s replacing the reading we had last August which was a disgusting 8.3%.

Inflation estimated at 3.6% means prices are still going up at a faster pace than the Feds want.

Cost of living didn’t go down, it’s just increasing slower than it did in 2021 and 2022.

Wages still have a long way to go to catch up with what inflation we experienced. We didn’t start seeing wages outpace inflation until earlier this year.

 

i thought it was 3.2% in july

P.S. where are all the deficits hawks?!?!?! Inflation is crushing our debt IN REAL TERMS.

in fact, in econ there are 3 ways to pay gov debt....cut spending, raise taxes or inflation.

a pack of gum might soon cost 32T

 

And you’re confused if you really think $200 in groceries a year ago are $2 more now or you’re just being obtuse about it.
Amusing you called out Pubs for being bad at math when your own math is wrong in your example.